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SpartanNash

Nasdaq:SPTN
Snowflake Description

Undervalued established dividend payer.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
SPTN
Nasdaq
$1B
Market Cap
Food Distributors
Company description

SpartanNash Company distributes and retails grocery products. More info.


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3 Month History
SPTN
Industry
5yr Volatility vs Market

Value

 Is SpartanNash undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of SpartanNash to its discounted cash flow value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

Current Discount
Amount off the current price SpartanNash is available for.
Intrinsic value
>50%
Share price is $35.68 vs Future cash flow value of $92.66
Current Discount Checks
For SpartanNash to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • SpartanNash's share price is below the future cash flow value, and at a significant discount (> 20%).
  • SpartanNash's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avacados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for SpartanNash's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are SpartanNash's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Overvalued based on earnings compared to the Food and Staples Retailing industry average.
  • Good value based on earnings compared to the overall market.
Price based on expected Growth
Does SpartanNash's expected growth come at a high price?
  • Good value based on expected growth next year.
Price based on value of assets
What value do investors place on SpartanNash's assets?
  • Good value based on assets compared to the Food and Staples Retailing industry average.
X
Value checks
We assess SpartanNash's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) (Click here or on bar chart for details of DCF calculation.)
  2. Is the PE ratio less than the market average, and/ or less than the Food and Staples Retailing industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Food and Staples Retailing industry average (and greater than 0)? (1 check)
  5. SpartanNash has a total score of 5/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (49.57%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (Free cash flow to Equity)

The calculations below outline how an intrinsic value for SpartanNash is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$699

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $243 × (1 + 2.5%) ÷ (8.49% – 2.5%)

Terminal value based on the Perpetuity Method where growth (g) = 2.5%:
$4,129

Present value of terminal value:
$2,747

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value

Value = Total value / Shares Outstanding ($3,445 / 37)

Value per share:
$92.66

Current discount (share price of $35.68): 61%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.49% = 2.47% + (0.8 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.662 = 0.539 (1 + (1- 30%) (32.5%))

Levered Beta used in calculation = 0.8



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in US.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (10%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is SpartanNash expected to perform in the next 1 to 3 years based on estimates from 5 analysts?

    The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

    Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
    3 year growth
    71%
    Expected earnings growth over 3 years.
    Future Earnings growth analysis
    Is SpartanNash expected to grow at an attractive rate? We look at the 1 year and 3 year growth below.

    Are SpartanNash's annual earnings growth expected to exceed 3.6% over the next 3 years?

    • After 1 year
    • After 3 years
    1 & 3 year estimated growth in earnings
    Past and Future Earnings per Share
    The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occured. We also show the highest and lowest estimates looking forward to see if there is a wide range.
    Analysts growth expectations
    2 year growth check
    Super high growth metrics x1.5?

    Which of the these is expected to increase by over 50% in 2 year's time?

    • Revenue
    • Cash flow data unavailable.
    • Profit
    Performance in 3 years
    In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
    • SpartanNash is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

    Improvement & Relative to industry
    • Expected to be less than the Food and Staples Retailing industry average.
    • A decline in SpartanNash's performance (ROE) is expected over the next 3 years.
    X
    Future performance checks
    We assess SpartanNash's future performance by looking at:
    1. Is the growth in earnings expected to beat the low risk savings rate, plus a premium to keep pace with inflation, in 1 year and 3 years? (2 checks)
    2. Does the average analyst expect Revenue to increase by 50% or more in 2 years? (1 check)
    3. Does the average analyst expect Operating Cash Flow to increase by 50% or more in 2 years? (1 check)
    4. Does the average analyst expect Net Income (Profit) to increase by 50% or more in 2 years? (1 check)
    5. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
    Some of the above checks will fail if the company is expected to be loss making in the relevant year.
    SpartanNash has a total score of 3/6, see the detailed checks below.

    Note: If no +3 year data is available, +2.5 year data may be used.

    Note 2: We use GAAP per Share in all our calculations.

    Full details on the Future part of the Simply Wall St company analysis model.

    Past Performance

     How has SpartanNash performed over the past 5 years?

    The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
    Past earnings growth
    Below we compare SpartanNash's growth in the last year to its industry (Food and Staples Retailing).
    Past Earnings growth analysis
    We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
    • SpartanNash's earnings growth has not matched the industry average in the past year.
    • SpartanNash's 1 year earnings growth is negative.
    • SpartanNash has improved earnings in the past 5 years.
    Profit History
    SpartanNash's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
    Performance last year
    We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
    • Poor return on shareholders funds (ROE) last year.
    • SpartanNash performed worse than the Food and Staples Retailing industry average based on return on assets (ROA) last year.
    • Performance based on revenue producing assets (ROCE) is broadly the same over 3 years.
    X
    Past performance checks
    We assess SpartanNash's performance over the past 5 years by checking for:
    1. Has earnings per share (EPS) increased in past 5 years? (1 check)
    2. Has the EPS growth in the last year exceeded that of the Food and Staples Retailing industry? (1 check)
    3. Is the current EPS growth higher than the average annual growth over the past 5 years? (1 check)
    4. Is the Return on Equity (ROE) higher than 20%? (1 check)
    5. Is the Return on Assets (ROA) above industry average? (1 check)
    6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
    The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
    SpartanNash has a total score of 2/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations.

    Full details on the Past part of the Simply Wall St company analysis model.

    Health

     How is SpartanNash's financial health and their level of debt?

    A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

    The boxes below represent the relative size of what makes up SpartanNash's finances.

    The net worth of a company is the difference between its assets and liabilities.
    Net Worth
    • SpartanNash is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
    • SpartanNash's cash and other short term assets cover its long term commitments.
    Balance sheet
    This treemap shows a more detailed breakdown of SpartanNash's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
    Assets
    Liabilities and shares
    The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
    • High level of stock/ inventory/ unsold assets.
    • Total debt is covered by short term assets.
    Historical Debt
    Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

    The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

    If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
    • The level of debt (52%) compared to net worth is high (greater 40%).
    • The level of debt compared to net worth has been reduced over the past 5 years (55% vs 52% today).
    • Total debt is well covered by annual operating cash flow (greater than 20% of total debt).
    • Interest on debt is not strongly covered (ideally 5x) by earnings (earnings are 2x annual interest expense).
    X
    Financial health checks
    We assess SpartanNash's financial health by checking for:
    1. Are short term assets greater than short term liabilities? (1 check)
    2. Are short term assets greater than long term liabilities? (1 check)
    3. Has the debt to equity ratio increased in the past 5 years? (1 check)
    4. Is the debt to equity ratio over 40%? (1 check)
    5. Is the debt covered by short term assets? (1 check)
    6. Are earnings greater than 5x the interest on debt (if comapany pays interest at all)? (1 check)
    7. SpartanNash has a total score of 4/6, see the detailed checks below.


    Full details on the Health part of the Simply Wall St company analysis model.

    Dividends

     What is SpartanNash's current dividend yield, its reliability and sustainability?

    Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
    Annual Dividend Income
    Dividend payments
    1.88%
    Current annual income from SpartanNash dividends. Estimated to be 1.71% next year.
    If you bought $2,000 of SpartanNash shares you are expected to receive $38 in your first year as a dividend.
    Dividend Amount
    Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
    • Paying above low risk savings rate. (1.75%)
    • Paying below the markets top dividend payers. (3.18%)
    Historical dividend yield
    It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

    We also check to see if the dividend has increased in the past 10 years.
    • Dividends per share have been stable in the past 10 years.
    • Dividends per share have increased over the past 10 years.
    Current Payout to shareholders
    What portion of SpartanNash's earnings are paid to the shareholders as a dividend.
    • Dividends paid are well covered by net profit (2.5x coverage).
    Future Payout to shareholders
    • Dividends after 3 years are expected to be well covered by net profit (4x coverage).
    X
    Income/ dividend checks
    We assess SpartanNash's dividend by checking for:
    1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
    2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
    3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
    4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
    5. How sustainable is the dividend, can SpartanNash afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
    6. SpartanNash has a total score of 5/6, see the detailed checks below.


    Full details on the Dividends part of the Simply Wall St company analysis model.

    Management

     What is the CEO of SpartanNash's salary, the management and board of directors tenure and is there insider trading?

    Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
    CEO
    Dennis Eidson, image provided by Google.
    Dennis Eidson
    COMPENSATION$4,607,180
    AGE63
    CEO Bio

    Mr. Dennis Eidson has been the Chief Executive Officer of SpartanNash Company since October 15, 2008. Mr. Eidson has been the President of Spartan Stores Inc. since October 22, 2007 and has been Chief Executive Officer since October 15, 2008. He has been the President of Nash Finch Co. since November 19, 2013. He serves as the President at U Save Foods, Inc. He has experience in the grocery retail and distribution industry. He served as President of SpartanNash Company from October 22, 2007 to August 2016. He served as Chief Operating Officer of Spartan Stores Inc., from February 21, 2007 to October 2008. He served as an Executive Vice President of Spartan Stores Inc. and also its Executive Vice President of Marketing and Merchandising from March 17 2003 to October 22, 2007. He served as the President of Borman's, Inc. (also known as, Farmer Jack Supermarkets). He served as the Chief Operating Officer of SpartanNash Company from February 21, 2007 to October 2008 and as Executive Vice President from February 13, 2007 to October 2008, Executive Vice President of Merchandising since March 17, 2003 and Executive Vice President of Marketing from March 17, 2003 to February 13, 2007. He served as Divisional President and Chief Executive Officer of Great Atlantic and Pacific Tea Company's (A&P) Midwest region from October 2000 to July 2002, its Executive Vice President of Sales and Merchandising from March 2000 to October 2000 and Vice President of Merchandising of A&P's Farmer Jack division from June 1997 to March 2000. He was instrumental in implementing successful and disciplined category management programs for A&P's Farmer Jack retail Grocery Operations. He served as an Assistant General Manager for Nash Finch, Inc.'s Michigan operations. He has spent his entire career working in the Michigan and Ohio region's Grocery Industry, has a profound knowledge of Grocery Industry Primary Markets. He has been Chairman of the Board at SpartanNash Company since June 02, 2016. He has been a Director of SpartanNash Company and Spartan Stores Inc. since October 22, 2007. He serves as a Director of Heart Of West Michigan United Way. He has been a Director of Nash Finch Co. since November 19, 2013. Mr. Eidson is a Graduate of Michigan State University's Food Management program.

    CEO Compensation
    • CEO's compensation has been consistent with company performance over the past year.
    • CEO's compensation is higher than average for a company of this size and profit level.
    Management Team Tenure

    Average tenure of the SpartanNash management team:

    Management tenure
    3.1 years
    • The tenure for the SpartanNash management team is about average.
    Management Team

    Dennis Eidson

    TITLE
    Chairman and Chief Executive Officer
    COMPENSATION
    $4,607,180
    AGE
    63

    Dave Staples

    TITLE
    President
    COMPENSATION
    $1,991,288
    AGE
    54

    Chris Meyers

    TITLE
    Chief Financial Officer and Executive Vice President
    COMPENSATION
    $852,916
    AGE
    46

    Kathy Mahoney

    TITLE
    Chief Legal Officer
    COMPENSATION
    $1,082,936
    AGE
    62

    Tammy Hurley

    TITLE
    Chief Accounting Officer and Vice President of Finance
    AGE
    51

    Dave Couch

    TITLE
    Chief Information Officer and Vice President
    COMPENSATION
    $224,700
    AGE
    66
    Board of Directors Tenure

    Average tenure of the SpartanNash board of directors:

    Board tenure
    9 years
    • The tenure for the SpartanNash board of directors is about average.
    Board of Directors

    Dennis Eidson

    TITLE
    Chairman and Chief Executive Officer
    COMPENSATION
    $4,607,180
    AGE
    63

    Dave Staples

    TITLE
    President
    COMPENSATION
    $1,991,288
    AGE
    54

    Yvonne Jackson

    TITLE
    Independent Director
    COMPENSATION
    $200,947
    AGE
    67

    Michel Foret

    TITLE
    Independent Director
    COMPENSATION
    $203,447
    AGE
    71

    Douglas Hacker

    TITLE
    Independent Director
    COMPENSATION
    $195,947
    AGE
    62

    Tim O'Donovan

    TITLE
    Lead Independent Director
    COMPENSATION
    $205,947
    AGE
    72
    Recent Insider Trading
    • SpartanNash insiders have sold more shares than they have bought in the past 3 months.
    Who owns this company?
    X
    Management checks
    We assess SpartanNash's management by checking for:
    1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
    2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
    3. Is the average tenure of the management team less than 2 years? (1 check)
    4. Is the average tenure of the board of directors team less than 3 years? (1 check)
    5. SpartanNash has a total score of 6/6, this is not included on the snowflake, see the detailed checks below.


    Note: We use the top 6 management executives and board members in our calculations.

    Note 2: Insider trading include any internal stakeholders and these transactions.

    Full details on the Management part of the Simply Wall St company analysis model.

    Company News

    Articles
    Announcements

    Company Info

    Description

    SpartanNash Company distributes and retails grocery products. It operates in three segments: Food Distribution, Military, and Retail. The Food Distribution segment offers approximately 60,000 stock-keeping units, such as dry groceries, produce, dairy products, meat, delicatessen items, bakery goods, frozen food, seafood, floral products, general merchandise, beverages, tobacco products, pharmacy, and health and beauty care products to independent retail locations, food service distributors, and corporate-owned retail stores. This segment also offers value-added services to independent food distribution customers. The Military segment sells and distributes grocery products to military commissaries and exchanges located in 45 states across the United States and the District of Columbia, Europe, Puerto Rico, Cuba, Bahrain, and Egypt. The Retail segment operates retail stores in the Midwest and Great Lakes regions primarily under the banners of Family Fare Supermarkets, VG’s Food and Pharmacy, D&W Fresh Markets, Sun Mart, and Family Fresh Market; and fuel centers primarily at its retail stores under the banners of Family Fare Quick Stop, D&W Quick Stop, VG’s Quick Stop, Forest Hills Quick Stop, and Sun Mart Express Fuel. Its retail stores offer branded perishable food products, such as dry groceries, produce, dairy products, meat, delicatessen items, bakery goods, frozen food, seafood, floral products, general merchandise, beverages, tobacco products, health and beauty care products, and pharmacy services, as well as approximately 7,100 private brand items primarily under the Spartan and Our Family, Open Acres, Top Care, Tippy Toes, Full Circle, B-leve, PAWS Premium, and Valu Time names. As of December 31, 2016, this segment operated 157 retail stores; and 30 fuel centers. The company was formerly known as Spartan Stores, Inc. and changed its name to SpartanNash Company in May 2014. SpartanNash Company was founded in 1917 and is headquartered in Grand Rapids, Michigan.

    Details
    Name:SpartanNash Company
    Ticker:SPTN
    Exchange:NasdaqGS
    Founded:1917
    Market Cap:$1,327 million
    Website:http://www.spartannash.com
    Listings
    Map

    850 76th Street, SW, Grand Rapids, 49518, United States

    Number of employees
    Street

    Current staff
    Staff numbers
    11,500
    SpartanNash employees.
    Industry
    Industry:Food Distributors
    Sector:Food and Staples Retailing