Empire Company Ltd (TSX:EMP.A) has fallen more than 10% since the company released its earnings on December 12. Trading at under $31 on Thursday, the stock was hovering around $35 before investors saw its Q2 report.
The company reported sales of $6.4 billion during the quarter, good for a 3.6% increase from the prior year where its revenue was $6.2 billion.
Same-store sales (excluding fuel) were up by even less, just 2% year over year. Net earnings of $160 million, however, were up an impressive 45%. The company credits the improved bottom line due to its strong performance in the food retailing segment which saw stronger margins than in the prior year.
Empire expects to see greater efficiencies in the future as Project Sunrise, a cost-savings initiative, is expected to deliver even more savings than expected. Management is expecting fiscal 2020 to enjoy $250 million in savings that will strengthen its bottom line even further.
The company may not have had strong growth during the quarter, but it was not a bad performance by Empire. As the stock continues to get closer to its 52-week low, the more attractive it may become for investors.
Trading at a price-to-earnings multiple of around 18, Empire may be a little expensive, given the modest growth that it’s achieving. But it does offer a modest dividend of 1.5% for investors and it could be a good option for income investors if it continues to fall in price.
Year to date, Empire is up just 8% and is trading at levels not seen since June.
