Watch: Empire, Transat and Apple

Mark Petrie will remain mindful of Empire’s projected size of rising prices and operating costs over the next year. (Photo: 123RF)

What to do with Empire, Transat and Apple titles? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from that expressed.

Empire (EMP.A, $37.37): Inflation is a double-edged sword

One week before the unveiling of the quarterly results of IGA’s parent company, Empire, CIBC Capital Markets analyst Mark Petrie is cutting back and revising his forecasts.

Earnings per share that he believes the company should have earned between May 8 through August 6, 2022 jump from $0.76 to $0.72, which would represent a meager 2% increase from the same period l last year.

The analyst is banking on a gross profit margin of 24.7%, or 35 basis points less than in the first quarter of the 2022 financial year, due in particular to the increase in the price of fuel. Earnings before interest, taxes, depreciation and amortization are expected to rise slightly by 2.7% to $598 million, which is below analysts’ consensus expectations.

Empire’s same-store sales will certainly benefit from higher prices linked to inflation, while the consumer price index was around 9.7% during the quarter, recalls the analyst.

However, its performance will be weighed down by the fact that last year, grocery baskets were much fuller than they are today, due to health restrictions. Moreover, in such an inflationary context, consumers are fond of bargains, and prefer products at a discount to those at full price. That’s why its same-store sales should have grown only 0.5%.

During Empire’s September 15 shareholder call, Mark Petrie will remain alert to the company’s projected size of rising prices and operating costs over the next year, as well as ‘to the changes she thinks she’s seeing in consumer behavior.

He will also look at Empire’s outlook for its online platform voila.ca, as well as the progress expected from its electronic fulfillment centers in Montreal and Toronto.

The CIBC Capital Markets analyst estimates that this quarter, its sales will have gained in importance, but that their share will remain minimal compared to its other sources of income. Overall, it is expected to have generated $7.89 million in the first quarter of fiscal 2023.

Empire is also expected to provide more details on the Scene+ loyalty program, which it partly owned alongside Scotiabank and Cineplex in June 2022.

It maintains its target price at $47.

Transat (TRZ, $2.97): an analyst slashes its target price

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