Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Food Retail & Distribution industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Food Retail & Distribution Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

Click the button below to learn more about A+ Investor and subscribe today.

3 Undervalued Food Retail & Distribution Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Food Retail & Distribution industry for Monday, June 10, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Food Retail & Distribution industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Ingles Markets, Incorporated’s Value Grade

Value Grade:

Ingles Markets, Incorporated is a supermarket chain in the southeast United States. It operates a total of 198 supermarkets, including 75 in North Carolina, 65 in Georgia, 35 in South Carolina, 21 in Tennessee, one in Virginia and one in Alabama. It operates 189 supermarkets under the name Ingles, and nine supermarkets under the name Sav-Mor. Ingles supermarkets offer customers a variety of nationally advertised food products, including grocery, meat and dairy products, produce, frozen foods and other perishables, and non-food products. Its non-food products include fuel centers, pharmacies, health and beauty care products and general merchandise. It also offers private label items and locally sourced items throughout its market areas. In addition, it focuses on selling products to its customers through the development of certified organic products, bakery departments and prepared foods, including delicatessen sections. It also operates 114 in-store pharmacies and 108 fuel stations.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Ingles Markets, Incorporated has a Value Score of 90, which is considered to be undervalued.

When you look at Ingles Markets, Incorporated’s price-to-sales ratio at 0.23 compared to the industry median at 0.33, this company has a lower price relative to revenue compared to its peers. This could make Ingles Markets, Incorporated’s stock more attractive for value investors.

Ingles Markets, Incorporated’s price-earnings ratio is 7.56 compared to the industry median at 23.18. This means it has a lower share price relative to earnings compared to its peers. This could make Ingles Markets, Incorporated more attractive for value investors.

Now, let’s assess Ingles Markets, Incorporated’s EV/EBITDA ratio, also known as enterprise multiple. At 4.9, when compared to the industry median of 9.0, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Ingles Markets, Incorporated’s shareholder yield is higher than its industry median ratio of 0.06%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Ingles Markets, Incorporated’s price-to-book ratio is lower than its industry median ratio of 1.72. This could make Ingles Markets, Incorporated more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Ingles Markets, Incorporated’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Ingles Markets, Incorporated’s price-to-free-cash-flow ratio is lower than its industry median ratio of 22.58. This could make Ingles Markets, Incorporated more attractive because the lower P/FCF ratio indicates that Ingles Markets, Incorporated is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

United Natural Foods Inc’s Value Grade

Value Grade:

United Natural Foods, Inc. is a distributor of grocery and non-food products and support services provider to retailers in the United States and Canada. The Company operates through two segments: Wholesale and Retail. It also has a manufacturing division and a branded product line division. The Wholesale segment is engaged in the distribution of grocery and non-food products and provides support services to retailers in the United States and Canada. The Retail segment is engaged in the sale of groceries and other products at retail locations operated by the Company. Its other segment includes a single location food manufacturing business, which engages in the importing, roasting, packaging and distributing of nuts, dried fruit, seeds, trail mixes, granola, natural and organic snack items and confections, and the Company’s natural branded product lines, primarily Blue Marble Brands. It offers approximately 250,000 products consisting of national, regional and private label brands.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

United Natural Foods Inc has a Value Score of 93, which is considered to be undervalued.

United Natural Foods Inc’s price-to-book ratio is higher than its peers. This could make United Natural Foods Inc less attractive for value investors when compared to the industry median at 1.72.

You can read more about United Natural Foods Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

G Willi-Food International Ltd’s Value Grade

Value Grade:

G. Willi-Food International Ltd. is a holding company. The Company is engaged directly and through subsidiaries, in the development, import, export, marketing and distribution of a range of over 600 food products around the world. The principal products in the import segment product line include Canned Vegetables and Pickles, Canned Fish, Canned Fruit, Edible Oils, Dairy and Dairy Substitute Products, Dried Fruit, Nuts and Beans, and Other Products. Its brands include Willi-Food, Gold-Frost, Gold Food, Tifeeret, Donna Rozza, Completa, Raskas and Del Monte, among others. The Company's products are marketed and sold to approximately 1,500 customers throughout Israel and outside of Israel. The Company's customers generally fall within one of the two groups, including retail supermarket chains in the organized market, and private supermarket chains, mini-markets, wholesalers, food manufacturers, institutional consumers, such as catering halls, hotels, hospitals and food producers.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

G Willi-Food International Ltd has a Value Score of 67, which is considered to be undervalued.

G Willi-Food International Ltd’s price-earnings ratio is 12.4 compared to the industry median at 23.2. This means that it has a lower price relative to its earnings compared to its peers. This makes G Willi-Food International Ltd more attractive for value investors.

G Willi-Food International Ltd’s price-to-book ratio is higher than its peers. This could make G Willi-Food International Ltd less attractive for value investors when compared to the industry median at 1.72.

You can read more about G Willi-Food International Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Food Retail & Distribution Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Food Retail & Distribution stocks as well as other industrys.

Choosing Which of the 3 Best Food Retail & Distribution Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Ingles Markets, Incorporated stock has a Value Grade of A.
• United Natural Foods Inc stock has a Value Grade of A.
• G Willi-Food International Ltd stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Food Retail & Distribution industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Food Retail & Distribution Stocks

Want to learn more about Food Retail & Distribution stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Food Retail & Distribution Stocks for Monday, June 10
• 3 Undervalued Food Retail & Distribution Stocks for Friday, June 07
• Why United Natural Foods Inc’s (UNFI) Stock Is Down 5.34%
• Why United Natural Foods Inc’s (UNFI) Stock Is Up 15.97%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.