What's Next for Ingles Markets Stock Post-Earnings

This supermarket stock nabbed a record high yesterday

May 11, 2021 at 12:15 PM
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Ingles Markets, Incorporated (NASDAQ:IMKTA) is an American regional supermarket chain based in Black Mountain, North Carolina. The company has operations in six southeastern states and operates roughly 201 supermarkets in total. In addition to its supermarket business, Ingles also owns and operates shopping centers, gas stations, and a milk processing plant.

On May 5, Ingles Markets reported sales and net income for its fiscal second quarter. For the second fiscal quarter of 2021, net sales totaled $1.18 billion and gross profit totaled $310.5 million, or 26.2% of sales. The company's operating and administrative expenses totaled $236.9 million, compared to $228.4 million for the same quarter last year. Its increase in expenses were attributed to higher costs incurred to support additional safety measures related to the COVID-19 pandemic. In addition, IMKTA’s net income totaled $52.2 million for Q2 and its quarterly earnings came in at $2.65 per share.

IMKTA has added over 40% over the past 12 months and is trading up over 66% in the last six months. What's more, the stock touched an all-time high during yesterday's session, and though the security is pulling back today, down 3.1% at $63.39 at last check, the 10-day moving average contained most of this negative price action. Plus, a little lower down, the 50-day moving average could move in once again as potential support. 

Despite this impressive price action, short interest continues to inch higher, and now makes up a solid 9% of the stock's available float. It would take over two weeks to cover all these bearish bets, leaving plenty of room for a short squeeze to push the security even higher. 

Overall, Ingles Markets has experienced a great deal of top- and bottom-line growth since the beginning of the pandemic. For fiscal 2020, the company reported $4.61 billion in revenues, which was a 9.7% increase compared to what was reported in fiscal 2019. IMKTA also reported $178.6 million in net income, which was nearly a 120% increase from the previous fiscal year.

In addition, IMKTA has already increased its trailing twelve-month revenue to $4.76 billion and its trailing twelve-month net income to $226.6 million. Furthermore, Ingles Markets stock currently trades at an extremely attractive price-earnings ratio of 5.66. The only real downfall for IMKTA is its balance sheet. The company only has $8.86 million in cash, whilst its debt total stands at $694.89 million.

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