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Is FTSE 100 stock Sainsbury’s a steal at this price?

first_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. The UK’s spending habits have changed dramatically over the last month, or so.  Food has suddenly become the biggest expense for many of us. This should be great news for supermarkets such as FTSE 100 member J Sainsbury (LSE: SBRY), right?But today’s full-year results haven’t gone down particularly well with the market. This isn’t to say trading last year was bad.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Group sales were pretty much flat at just under £32.4bn. The company also highlighted it had outperformed competitors on the grocery front. Underlying pre-tax profit fell 2% to £586m. That was mostly due to a tricky first half hit by increased costs and poor weather.  But let’s not kid ourselves — investment is a forward-looking game. Holders are justifiably more interested in what’s been going on since the coronavirus sent the world into an economic tailspin. On this front, it’s a real mixed bag.Strong demand but…As might be expected, Sainsbury said it had seen strong demand for food as the lockdown came into force and many people began stockpiling. Online retailer Argos — owned by the FTSE 100 constituent — also saw higher sales in early March as people were forced to adapt to working from home. Somewhat predictably, however, the UK’s second-biggest supermarket said demand had normalised over recent weeks. This was partly the result of people adapting to a new normal. It’s also because, as far as Argos is concerned, it couldn’t deliver and install certain items in customer’s homes.In addition to this, the company also saw “materially reduced” sales in product like clothing and fuel. This makes perfect sense given that the only journeys many of us are making are around our homes… in our pyjamas.This trade-off in sales was predictable. As such, it looks like it was the company’s outlook on business that has mostly ruffled investors’ feathers today.…an uncertain outlookLike most businesses, Sainsbury believes it’s “impossible” to know the full financial impact of Covid-19 right now. Nevertheless, outgoing CEO Mike Coupe said the company was working on the presumption that business will remain “disrupted” until mid-September. This is even if lockdowns have been eased by the end of June.Should all this come to pass, Sainsbury estimates underlying pre-tax profit for this year would be “broadly unchanged.” While grocery sales might be good, the cost of protecting its staff and customers, employing thousands of temporary workers to meet demand, and weaker sales elsewhere, will bring things down.Of course, the situation could be worse if the UK lockdown were to be lifted and then reimposed.Better FTSE 100 opportunitiesAs things stand, I just can’t get excited about investing in the company. Even once the coronavirus storm passes, I suspect incoming CEO Simon Roberts faces an uphill task. After all, the prospect of a deep recession will likely have a huge effect on consumer demand, even for ‘essentials’. Combine this with the hyper-competitive nature of its sector, and the fact dividends have been put on hold until later this year, the bull case for Sainsbury begins to look less compelling.So, while a forecast price-to-earnings ratio of 10 may look initially tempting, I think investors should look elsewhere in the FTSE 100 if they really want to see their money grow. A steal, it’s not. Enter Your Email Address Paul Summers | Thursday, 30th April, 2020 | More on: SBRY Is FTSE 100 stock Sainsbury’s a steal at this price? Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Paul Summers Image source: Getty Images. center_img Our 6 ‘Best Buys Now’ Shares Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. “This Stock Could Be Like Buying Amazon in 1997” Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Simply click below to discover how you can take advantage of this.last_img read more

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