WVVI: Is Willamette Valley Vineyards Stock a Buy?

Willamette Valley Vineyards (WVVI - Get Rating) is an Oregon-based winery which is best known for its Pinot noir and Riesling output.

WVVI was founded in 1983 and operates three Oregon vineyards totaling 305 acres. Its wines have won praise from the wine media and awards in U.S. and international competitions. The company is planning to expand its operations with a $13.5 million facility that will focus solely on the production of sparkling wines, and in July it began offering $9.3 million worth of preferred stock to help finance the project, dubbed the Bernau Estate Vineyard, which is slated for a 2022 opening.

Oregon ranks fourth behind California, Washington, and New York in wine production among the states. According to data released in September by the Oregon Wine Board, sales of the locally-produced wines increased nearly 13% year-over-year during 2019, with exports rising 10% year-over-year. WVVI is Oregon’s third largest winery, according to the Portland Business Journal, and is the only one that is publicly traded.

Here’s how our proprietary POWR Ratings system evaluates WVVI:

Trade Grade: A

WVVI is trading at $6.49, which is closer to its 52-week high of $7.05 than its 52-week low of $4.50. The stock has been trading at a steady level for the past few months, and with no major triumphs or hiccups to cause the stock to either soar or crater.

Buy & Hold Grade: B

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The stock’s proximity to its 52-week high, which is a key factor that our Buy & Hold Grade consideration, gives it a B grade, although maybe it should be graded higher. After all, its Q3 earnings report saw WVVI record a gross profit of $4.22 million, up 3.9% year-over-year from the $4.06 million profit in Q3 2019. Its Q3 net income was $896,799, up 5.2% from the $852,200 net income recorded one year earlier. And the stock generated Q3 income applicable of $640,347, or $0.13 cents per share, up by 7.5% from $595,748 or $0.12 cents per share, for the third quarter in the prior year.

Peer Grade: C

This is where WVVI winds up under that proverbial radar: it is ranked #16 out of 29 stocks in the Beverages category, which includes such heavy hitters as PepsiCo (PEP), Diageo (DEO), Coca-Cola (KO) and Anheuser-Busch (BUD). Still, WVVI is holding its own in the middle of this muscular category, ranking higher than some household-familiar brands including Molson Coors Brewing Co. (TAP) and NewAge Beverages Corp. (NBEV).

Industry Rank: A

The Beverages category ranks #21 out of 123 stock categories, with an average POWR Ratings of B.

Bottom Line

Despite the challenges that the COVID-19 pandemic had on the economy, WVVI is performing well. The company had a healthy Q3 – it also posted profits in Q2 and Q1 – and while there were no flashy news announcements this year to put it further into the spotlight, it continues to appeal to investors who prefer stability, compared to flash.

Yes, WVVI is a modest stock compared to its category competition, but sometimes modesty is a virtue. If the social and economic environment rebounds in 2021, particularly in a recovering hospitality industry, WVVI is a stock in a position to benefit.

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WVVI shares were trading at $6.57 per share on Tuesday morning, up $0.08 (+1.23%). Year-to-date, WVVI has declined -5.19%, versus a 15.78% rise in the benchmark S&P 500 index during the same period.

About the Author: Phil Hall

Phil is an experienced financial journalist responsible for generating original content on the weekly Fairfield County Business Journal and Westchester County Business Journal, plus their respective daily online news sites, podcasts and video interview series. He is the winner of 2018, 2019 and 2020 Connecticut Press Club Awards and 2019 and 2020 Connecticut Society of Professional Journalists Award for editorial output. More...