Store Expansion In Poland And Colombia Will Build Market Influence

Key Takeaways

• Store expansion and private-label innovation across multiple markets drive revenue and margin growth by capturing new consumer trends and premiumization.
  
• Operational efficiency, omnichannel focus, and successful integration of new acquisitions support profitability, resilience, and strengthened competitive positioning.
  
• Rising labor costs, competitive pricing pressures, and limited geographic diversification threaten margins and earnings stability, while high investment needs may strain financial flexibility if growth lags.

Catalysts

Operates in the food distribution and specialized retail sectors in Portugal, Poland, Colombia, and internationally.

• Sustained store network expansion in Poland, Colombia, and new markets such as Slovakia increases scale and revenue growth potential, leveraging urbanization and rising middle-class consumer demand in Central and Eastern Europe (impact: group revenues, operating leverage).
  
• Strong focus on operational efficiency and productivity (e.g., cost discipline, store remodeling, optimized supply chain) is expected to offset inflationary wage pressures, supporting resilient EBITDA and net margins (impact: earnings resilience, margin stability).
  
• Continued investment in a broad private-label assortment, quality fresh products, and store concepts tailored to health and convenience preferences appeals to evolving demographics and premiumization in Europe, enabling further margin expansion and revenue growth (impact: net margins, top-line growth).
  
• Strategic omnichannel development and technology integration, combined with market-leading price competitiveness, position the company to benefit from accelerating digital adoption and larger basket sizes, expanding the addressable market (impact: revenue, earnings growth).
  
• Effective execution in integrating newly acquired stores/banners (e.g., Colsubsidio in Colombia) and capitalizing on ongoing industry consolidation enhances market share and profitability, supported by a robust balance sheet and active CapEx program (impact: revenue, operating margins, competitive positioning).

Jerónimo Martins SGPS Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Jerónimo Martins SGPS's revenue will grow by 6.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 1.8% today to 2.2% in 3 years time.
• Analysts expect earnings to reach €942.1 million (and earnings per share of €1.49) by about September 2028, up from €615.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €730.3 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 20.3x on those 2028 earnings, down from 21.7x today. This future PE is greater than the current PE for the GB Consumer Retailing industry at 15.8x.
• Analysts expect the number of shares outstanding to decline by 0.91% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.67%, as per the Simply Wall St company report.

Jerónimo Martins SGPS Future Earnings Per Share Growth

Risks

• Persistently rising labor costs across all geographies, especially Poland and Portugal (with increases of around 9% and 7% respectively), risk outpacing sales growth, leading to structural pressure on operating expenses and threatening EBITDA and net margins over the long term.
  
• The highly competitive and low-inflation food retail environment in core markets like Poland and Portugal is driving intensified price wars and frequent promotions, which may constrain the company's ability to raise prices, limit gross margin expansion, and impact overall profitability.
  
• Continued subdued food consumption and lack of clear evidence of trading-up among consumers in main markets suggest muted volume growth and limited opportunities for premiumization, putting sustained top-line (revenue) growth at risk if economic or demographic headwinds persist.
  
• Heavy reliance on Biedronka in Poland, with only modest geographic diversification, means that regulatory changes, local economic downturns, or sector-specific shocks could significantly impact consolidated revenues and earnings stability.
  
• Ongoing and substantial CapEx requirements for store expansion, remodeling, and infrastructure upgrades (including digital integration and sustainability initiatives) combined with thin free cash flow generation and periodically negative cash flows, could strain balance sheet flexibility and weigh on future net income if growth fails to accelerate.

Valuation

• The analysts have a consensus price target of €25.068 for Jerónimo Martins SGPS based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €29.0, and the most bearish reporting a price target of just €22.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €42.2 billion, earnings will come to €942.1 million, and it would be trading on a PE ratio of 20.3x, assuming you use a discount rate of 7.7%.
• Given the current share price of €21.24, the analyst price target of €25.07 is 15.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.