Sainsbury’s Share Forecast November 2021 – Time to Buy SBRY?

Shares of UK-based supermarket chain Sansbury’s (LSE: SBRY) are in the green today, currently trading around 290p at the time of writing. This FTSE 100 company has reported a market share gain over the last 6 months and was in a solid position before the festive season came. Amidst a flurry of takeover talks, many investors are wondering whether it’s the right time to buy SBRY.

Sainsbury’s – Technical Analysis

According to the financial statement released by Sainsbury’s, the market cap of the company is at £666.821 billion with total assets worth £2.568 trillion. Revenue for 2020 was at £2904.80 billion with a profit margin of -0.99% compared to £2899.30 billion in 2019.

 

Oscillators for Sainsbury’s such as Relative Strength Index (14)(47.2), Stochastic %K (14, 3, 3)(56.2),  Commodity Channel Index (20)(−39.8),  Average Directional Index (14)(16.6), and Awesome Oscillator(−1.8) are neutral. Moving averages such as Exponential Moving Average (10)(291.6),  Simple Moving Average (10)(291.1),  Exponential Moving Average (20)(292.5),  Simple Moving Average (20)(293.3), and Exponential Moving Average (30)(293.0) are indicating a sell action.

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Recent Developments

Sainsbury’s became the second-largest supermarket in the UK with a 15.2% market share in mid-2021, putting it ahead of peers such as Asda and Wm Morrison. While its shares have fallen around 15% since August, it still has a strong track record of delivering growth, with its sales increasing by an annual 4%-5% over the past five years.

The company hs reported a 5.9 percent revenue growth to £15.7 billion in the first half (H1) of FY22 ended on September 18, 2021. This is an increase compared to the revenue of £14.9 billion in the same period of the previous fiscal. Increased full-price sales bolstered the sale of Sainsbury’s popular Tu clothing range which surged 70 percent on a two-year basis, according to the company. This put gross profit during H1 FY22 rose to £1.2 billion (£0.9 billion), while operating profit increased to £681 million (£43 million).

Should You Buy SBRY Shares?

Sainsbury’s was founded in 1869 by John James Sainsbury with a shop in Drury Lane, London. It became the largest retailer of groceries in 1922 before being overtaken by Tesco in 1995. The Competition and Markets Authority blocked a planned merger with Asda in 2018, citing concerns of increased prices for consumers. Currently, the holding company J Sainsbury plc is divided into three parts – Sainsbury’s Supermarkets Ltd, Sainsbury’s Bank, and Argos. The sovereign wealth fund of Qatar, the Qatar Investment Authority is the largest overall shareholder as of 2021, with a 14.99% stake in the company.

Before the market opened, Sainsbury’s share price was 13 times earnings. This put its valuation on par with rival Tesco. However, in terms of recent share price, Sainsbury’s performed better, increasing by 34% over the last year while Tesco gained just 2%. The superior gains are a result of the company being a bid target following the acquisition of Morrisons by private equity. If these rumours resurface, the share price could rise again. This cannot be the sole reason to buy these shares as the next few months are going to be problematic for the company.

However, Sainsbury’s could serve as a protection against a stock market crash. It has performed better than most in the market as a result of being a defensive stock as it offers essential goods. People will still need to eat and drink, regardless of the underlying cause of the crash. But the huge surge in demand may not be handled well by the company, which is something investors should keep an eye on.

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