Ingles Markets, Incorporated (IMKTA - Get Rating) is a leading grocer with operations in six southern states. The company, based in Asheville, North Carolina, runs 198 supermarkets. In addition to its supermarket operations, the company maintains community retail centers, most of which include an Ingles supermarket.

The stock has gained 62.2% over the past year and 12.3% year-to-date to close its last trading session at $96.95. Despite skyrocketing prices and dwindling consumer confidence, retail sales in the United States increased by 1% in June. This enabled the retail giant IMKTA to post consistent returns.

Also, last month, IMKTA’s Board of Directors paid a cash dividend of $0.165 (sixteen and one-half cents) per share on all of its Class A Common Stock and $0.15 (fifteen cents) per share on all of its Class B Common Stock.

Here’s what could shape IMKTA’s performance in the near term:

Robust Financials

During the second quarter ended March 26, 2022, IMKTA’s net sales increased 16.3% year-over-year to $1.37 billion. Its operating income grew 27.9% from the year-ago value to $95.09 million. The company’s net income increased 31.6% from the prior-year quarter to $68.64 million. Its EPS amounted to $3.61.

Discounted Valuation

In terms of trailing-12-month Price/Cash Flow, the stock is currently trading at 5.31x, 67.5% lower than the industry average of 16.30x. Also, its trailing-12-month EV/Sales of 0.42x is 77.9% lower than the industry average of 1.93x. Moreover, IMKTA’s forward Price/Sales of 0.34x is 72.9% lower than the industry average of 1.26x.

Impressive Growth Prospects

Street expects IMKTA’s revenues to rise 3% year-over-year to $4.7 billion and $0.4 in fiscal 2022. In addition, its EPS is expected to rise at the rate of 14.5% per annum over the next five years.

POWR Ratings Reflect Solid Prospects

IMKTA has an overall grade of A, equating to a Strong Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. IMKTA has an A grade for Quality and a B for Stability and Value. Its strong profitability is consistent with the Quality grade. The stock beta of 0.51 is in sync with the Stability grade. In addition, its lower-than-industry valuation justifies the Value grade.

Of the 38 stocks in the A-rated Grocery/Big Box Retailers industry, IMKTA is ranked #2.

Beyond what I stated above, we have graded IMKTA for Sentiment, Growth, and Momentum. Get all IMKTA ratings here.

Bottom Line

The company reported impressive revenue and earnings growth in the last reported quarter. In addition, considering IMKTA’s discounted valuation and increasing retail spending, the stock is poised to soar in the near term. So, we believe the stock could be a great buy now.

How Does Ingles Market Incorporated (IMKTA) Stack Up Against its Peers?

IMKTA has an overall POWR Rating of A, which equates to a Strong Buy rating.  Check out these other stocks within the same industry with A (Strong Buy) ratings: Naturals Grocers By Vitamin Cottage Inc. (NGVC - Get Rating), Albertsons Companies Inc. (ACI - Get Rating), and Kroger Co. (KR - Get Rating).

IMKTA shares were unchanged in premarket trading Tuesday. Year-to-date, IMKTA has gained 12.92%, versus a -13.43% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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