In part 1 of this series, we looked at Century Link (CTL). Now let’s take a peek at Spartan Stores Inc (SPTN)..
Spartan Stores Inc (SPTN): Quote / Chart Recent TTM P/E 10.70; Recent next full year forward P/E (FY2012) 9.60; Recent dividend yield 1.40%.
Spartan Stores Inc is based in Grand Rapids, Michigan and is the eleventh largest grocery distributor in the US. It supplies approximately 350 independent grocery stores in Michigan, Indiana and Ohio. Spartan Stores also owns and operates 96 retail supermarkets in Michigan, including Family Fare Supermarkets, Glen’s Markets, D&W Fresh Markets, Felpausch Food Centers and VG’s Food and Pharmacy. The company is committed to growth and is doing so by both building and with acquisitions.
Spartan recently completed consolidating their warehouse operations to Grand Rapids closing the dry goods warehouse in Plymouth. This will save them between $2 and $3 Million a year, along with a tax benefit related to the warehouse closure. The move was the result of a major warehouse re-racking project in Grand Rapids resulting in a significant increase in warehouse capacity and improved operational efficiency.
They replaced their entire fleet of trucks in 2009. The new trucks are more dependable and cost effective, have lower maintenance costs, improved fuel efficiency, and technically advanced exhaust systems that reduce carbon emissions.
They have recently closed 4 under performing stores and bought a chain of 6 stores (Glen’s Markets) that is significantly improving sales and margin. They also completed the acquisition of VG’s Food and Pharmacy stores that included 17 stores and 15 pharmacies in 2009. They had one store closed for major remolding that has since reopened and one store that has relocated that is showing greatly improved sales.
They will be opening 4 new quick stops/gas stations in connection with existing stores in the near future. Spartan Stores currently owns and operates 20 Quick Stop Fuel and Convenience centers. The Company plans to build more Quick Stops under additional retail banners in the coming years.
During 2009, they increased assets by $124 million, added just over $100 million to net sales, and boosted net earnings by $4.49 million as compared to 2008 resulting in a operating earnings per diluted share of $1.78, a $0.20 increase over 2008. This was done largely in a state that suffered with nearly a 15% unemployment rate for much of this time.
Recent regulatory changes to accounting practices had about a $0.02 negative effect on earnings last year (many other stock earnings have been impacted similarly).
Debt is about $186 million with an interest expense of just under $11 million in 2009. Most of this debt $176 Million is long-term debt with interest and payment schedules that are at manageable levels. They have $139,000 that comes due this year and another $193,000 that comes due in the next three years. They hold a 0.48 debt to asset ratio. They have an additional $100 million borrowing capacity under their curretn credit facility.
They do not engage in speculative derivatives trades, however they have entered into an interest rate swap arrangement that will hedge against future rate increases. Their cash and cash equivalents increased quarter over quarter too,
They have beat earnings projections in 21 of the last 22 quarters; the exception was a $0.02 miss.
The recent dividend payout ratio was 1.40% and they have paid a dividend for 17 straight quarters since beginning payouts. Cost of the dividend is manageable at $3.4 million a year in MRQ.
This one looks like a winner to me. I think this stock should eventually trade over $30 again. I haven’t got quite the historical data base on this stock that I do on most of the S&P500 companies, and have only fairly recently started investing in it myself, so I haven’t been tracking it for long, but it looks like I will be in the future.
Have a great day trading,
Disclosure: I currently have investments in Spartan Stores Inc.
Disclaimer: This article is intended to provoke thought about investment possibilities. Acting on the information provided is at your own risk. You are urged to do your own due diligence, and where appropriate, seek professional investment advice before acting on any information contained in these articles.