What Will J Sainsbury plc’s Christmas Update Tell Us Next Week?

Will J Sainsbury plc (LON: SBRY) get the New Year off to a flying start with good Christmas trading figures?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

J Sainsbury (LSE: SBRY) (NASDAQOTH: JSAIY.US) will be the first of our FTSE 100 supermarkets to report on its Christmas trading period, as we’re scheduled to get a third-quarter update on Tuesday 7 January.

It looks like it’s been an interesting Christmas too, as the last-minute rush could push the UK’s annual retail volumes above £340bn, although the price wars have put intense pressure on profits. 

Late faller

It’s relatively recently that Sainsbury’s share price has plunged, losing 42% since November 2013 to 245p, as forecasts suggest a 19% fall in earnings per share (EPS) for the year ending March 2015, followed by a further 12% drop the year after. Despite Sainsbury being the shopping preference for many who want things a little more upmarket, it seems they’re not immune to the attractions of Lidl and Aldi.

Should you invest £1,000 in Marks and Spencer right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Marks and Spencer made the list?

See the 6 stocks

Having said that, Sainsbury’s shares are the most shorted on all the FTSE 100 and FTSE 250 at the moment, according to data compiled by Markit. And there are some major hedge funds apparently amongst the short-sellers, which would suggest they consider Sainsbury to be the most overvalued in its sector right now.

Overvalued or undervalued?

And that’s with the price fall putting Sainsbury’s shares on the lowest P/E ratio of the big three, with relatively lowly ratings of 9.4 and 10.7 for the next two year-ends. With forecasts being cut, the punters seem to be expecting Sainsbury’s to be the last to effect a turnaround even though it’s the only one paying strong and well-covered dividends — we’re looking at twice-covered yields of 5.4% and 4.5% if forecasts prove accurate.

For its first half to the end of September, Sainsbury’s reported a fall in underlying sales of just 0.3% with underlying pre-tax profit down 6.3%, but underlying EPS dropped by 12.7% to 14.5p. And in statutory terms, once the one-offs are included, the company reported a pre-tax loss of £290m and a loss per share of 18p.

No recovery yet?

And looking to the longer term, Sainsbury’s said it expects the trend in supermarket like-for-like sales (excluding convenience stores and online shopping) to be “negative for the next few years“.

Although full-year EPS forecasts are steadying at 26p, and despite Sainsbury shares being on a low P/E multiple, there’s a decidedly bearish consensus amongst brokers who expressed a preference. But the biggest group of them are still on a Hold stance, suggesting that they have no more idea of how the sector will go in the next couple of years than the rest of us.

Should you buy Marks and Spencer now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Road 2025 to 2032 new year direction concept
Investing Articles

Is the Rolls-Royce share price still undervalued in 2025?

After massive growth in the Rolls-Royce share price, Charlie Carman considers whether the FTSE 100 aerospace and defence stock is…

Read more »

Businessman hand flipping wooden block cube from 2024 to 2025 on coins
Investing Articles

How an investor could target a £43k lifelong passive income starting with just £5 a day

Harvey Jones says it's possible to build a high-and-rising passive income by investing small, regular sums in FTSE 100 shares.…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

£10,000 invested in Lloyds shares on 7 April is already worth…

After a dip in early April, Lloyds shares are back to their 30%+ year-to-date gain in 2025. And analysts are…

Read more »

Tariffs and Global Economic Supply Chains
US Stock

What I’d look to buy as the US stock market heads for the worst month since 1932

Jon Smith sifts through the US stock market to try and find some ideas that have fallen in value recently…

Read more »

Businessman hand stacking up arrow on wooden block cubes
Growth Shares

Prediction: I think £1,000 invested in this UK stock could double by 2030

Jon Smith runs through a FTSE 250 stock with a market cap just over £1bn that he feels has the…

Read more »

Businessman hand flipping wooden block cube from 2024 to 2025 on coins
Investing Articles

With £10k in savings, here’s how an investor could target a second income of £500 a month

£10k in savings could be the foundation needed towards a powerful second income. Our writer details some steps necessary to…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing For Beginners

£1k invested in the FTSE 100 on ‘Liberation Day’ is now worth…

Jon Smith talks about the volatility in the FTSE 100 in the weeks since the tariff announcements and flags up…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

Barclays’ share price is down 7% from March, so is now the right time for me to buy?

Barclays’ share price has dipped recently, which could mean a bargain to be had. I took a deep dive into…

Read more »