DB:PIK

Stock Analysis Report

Executive Summary

Pick n Pay Stores Limited, an investment holding company, engages in the retail of food, clothing, general merchandise, pharmaceuticals, and liquor in South Africa and Rest of Africa.

Rewards

Trading at 66.6% below its fair value

Earnings are forecast to grow 11.28% per year

Earnings grew by 16.4% over the past year

Risk Analysis

Has a high level of debt

Unstable dividend track record



Snowflake Analysis

Solid track record, good value and pays a dividend.


Similar Companies

Pepkor Holdings

JSE:PPH

Share Price & News

How has Pick n Pay Stores's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PIK has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.5%

PIK

0.2%

DE Consumer Retailing

0.3%

DE Market


1 Year Return

-11.6%

PIK

0.6%

DE Consumer Retailing

13.8%

DE Market

Return vs Industry: PIK underperformed the German Consumer Retailing industry which returned 4.8% over the past year.

Return vs Market: PIK underperformed the German Market which returned 17.1% over the past year.


Shareholder returns

PIKIndustryMarket
7 Day0.5%0.2%0.3%
30 Day2.0%-1.8%1.3%
90 Day0.5%0.5%5.2%
1 Year-8.6%-11.6%4.6%0.6%17.4%13.8%
3 Year-4.3%-12.5%2.7%-7.5%15.9%5.7%
5 Year5.3%-8.1%14.5%-3.2%27.9%10.6%

Price Volatility Vs. Market

How volatile is Pick n Pay Stores's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Pick n Pay Stores undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PIK (€3.76) is trading below our estimate of fair value (€11.26)

Significantly Below Fair Value: PIK is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: PIK is good value based on its PE Ratio (18.3x) compared to the Consumer Retailing industry average (19.2x).

PE vs Market: PIK is good value based on its PE Ratio (18.3x) compared to the German market (20.6x).


Price to Earnings Growth Ratio

PEG Ratio: PIK is poor value based on its PEG Ratio (1.6x)


Price to Book Ratio

PB vs Industry: PIK is overvalued based on its PB Ratio (13x) compared to the XE Consumer Retailing industry average (1.6x).


Next Steps

Future Growth

How is Pick n Pay Stores forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

11.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PIK's forecast earnings growth (11.3% per year) is above the savings rate (-0.4%).

Earnings vs Market: PIK's earnings (11.3% per year) are forecast to grow slower than the German market (13.2% per year).

High Growth Earnings: PIK's earnings are forecast to grow, but not significantly.

Revenue vs Market: PIK's revenue (6.7% per year) is forecast to grow faster than the German market (4.8% per year).

High Growth Revenue: PIK's revenue (6.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PIK's Return on Equity is forecast to be very high in 3 years time (43.3%).


Next Steps

Past Performance

How has Pick n Pay Stores performed over the past 5 years?

15.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PIK has high quality earnings.

Growing Profit Margin: PIK's current net profit margins (1.8%) are higher than last year (1.7%).


Past Earnings Growth Analysis

Earnings Trend: PIK's earnings have grown by 15.4% per year over the past 5 years.

Accelerating Growth: PIK's earnings growth over the past year (16.4%) exceeds its 5-year average (15.4% per year).

Earnings vs Industry: PIK earnings growth over the past year (16.4%) exceeded the Consumer Retailing industry 0.5%.


Return on Equity

High ROE: Whilst PIK's Return on Equity (71.23%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Pick n Pay Stores's financial position?


Financial Position Analysis

Short Term Liabilities: PIK's short term assets (ZAR12.4B) do not cover its short term liabilities (ZAR16.3B).

Long Term Liabilities: PIK's short term assets (ZAR12.4B) do not cover its long term liabilities (ZAR14.3B).


Debt to Equity History and Analysis

Debt Level: PIK's debt to equity ratio (116.3%) is considered high.

Reducing Debt: PIK's debt to equity ratio has increased from 39.9% to 116.3% over the past 5 years.

Debt Coverage: PIK's debt is well covered by operating cash flow (99.6%).

Interest Coverage: PIK's interest payments on its debt are well covered by EBIT (20.7x coverage).


Balance Sheet

Inventory Level: PIK has a high level of physical assets or inventory.

Debt Coverage by Assets: PIK's debt is covered by short term assets (assets are 4.6x debt).


Next Steps

Dividend

What is Pick n Pay Stores's current dividend yield, its reliability and sustainability?

3.47%

Current Dividend Yield


Dividend Yield vs Market

company3.5%marketbottom25%1.3%markettop25%3.6%industryaverage3.5%forecastin3Years3.8%

Current dividend yield vs market & industry

Notable Dividend: PIK's dividend (3.63%) is higher than the bottom 25% of dividend payers in the German market (1.38%).

High Dividend: PIK's dividend (3.47%) is low compared to the top 25% of dividend payers in the German market (3.58%).


Stability and Growth of Payments

Stable Dividend: PIK's dividend payments have been volatile in the past 10 years.

Growing Dividend: PIK's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (67.5%), PIK's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PIK's dividends in 3 years are forecast to be covered by earnings (62.2% payout ratio).


Next Steps

Management

What is the CEO of Pick n Pay Stores's salary, the management and board of directors tenure and is there insider trading?

2.5yrs

Average management tenure


CEO

Richard William Brasher (57yo)

7yrs

Tenure

R64,467,400

Compensation

Mr. Richard William Peter Brasher, BSc (Hons) has been the Chief Executive Officer of Pick n Pay Stores Ltd. since January 23, 2013. Mr. Brasher served as the Chief Executive Officer of the U K and ROI at ...


CEO Compensation Analysis

Compensation vs Market: Richard William's total compensation ($USD4.47M) is above average for companies of similar size in the German market ($USD1.50M).

Compensation vs Earnings: Richard William's compensation has increased by more than 20% in the past year.


Management Age and Tenure

2.5yrs

Average Tenure

57yo

Average Age

Experienced Management: PIK's management team is considered experienced (2.5 years average tenure).


Board Age and Tenure

9.8yrs

Average Tenure

61yo

Average Age

Experienced Board: PIK's board of directors are considered experienced (9.8 years average tenure).


Insider Trading

Insider Buying: PIK insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Buy€821,63425 Nov 19
Pick n Pay Employee Share Purchase Trust
EntityCompany
Shares189,966
Max Price€4.33
Sell€7,42812 Nov 19
Alex Mathole
EntityIndividual
Shares1,786
Max Price€4.16
Sell€1,228,59406 Nov 19
Richard S. van Rensburg
EntityIndividual
Role
Member of the Board of Directors
Chief Information Officer & Executive Director
Shares291,439
Max Price€4.27
Buy€11,78502 Sep 19
Jonathan Ackerman
EntityIndividual
Role
Member of the Board of Directors
Customer Director & Executive Director
Shares3,456
Max Price€3.41
Buy€5,90526 Aug 19
Alex Mathole
EntityIndividual
Shares1,700
Max Price€3.47
Buy€8,62621 Aug 19
David Friedland
EntityIndividual
Shares2,500
Max Price€3.45
Buy€8,88619 Aug 19
David Friedland
EntityIndividual
Shares2,500
Max Price€3.55
Buy€59,73215 Aug 19
Gareth Ackerman
EntityIndividual
Role
Chairman of the Board
Non-Executive Chairman
Shares17,000
Max Price€3.52
Buy€62,00629 Apr 19
The Jongus Trust
EntityCompany
Shares14,200
Max Price€4.37

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Richard William Brasher (57yo)

    CEO & Executive Director

    • Tenure: 7yrs
    • Compensation: R64.47m
  • Suzanne Ackerman-Berman (56yo)

    Director of Transformation & Executive Director

    • Tenure: 9.8yrs
    • Compensation: R6.70m
  • Wendy Ackerman

    Honorary Life President

    • Compensation: R65.00k
  • Raymond Ackerman (88yo)

    Founder

    • Compensation: R65.00k
  • Jonathan Ackerman (52yo)

    Customer Director & Executive Director

    • Tenure: 9.8yrs
    • Compensation: R4.04m
  • Richard S. van Rensburg (57yo)

    Chief Information Officer & Executive Director

    • Tenure: 10.6yrs
    • Compensation: R14.88m
  • Paula Disberry

    Executive of Commercial & Marketing

    • Tenure: 2.5yrs
  • Debbie Muller (57yo)

    Head of Legal Department & Company Secretary

    • Penny Gerber

      Divisional Director of Corporate Finance

      • Lerena Olivier

        CFO & Executive Director

        • Tenure: 0.3yrs

      Board Members

      • Richard William Brasher (57yo)

        CEO & Executive Director

        • Tenure: 7yrs
        • Compensation: R64.47m
      • Hugh Herman (79yo)

        Lead Independent Non Executive Director

        • Tenure: 10.3yrs
        • Compensation: R910.00k
      • Suzanne Ackerman-Berman (56yo)

        Director of Transformation & Executive Director

        • Tenure: 9.8yrs
        • Compensation: R6.70m
      • Raymond Ackerman (88yo)

        Founder

        • Compensation: R65.00k
      • Jonathan Ackerman (52yo)

        Customer Director & Executive Director

        • Tenure: 9.8yrs
        • Compensation: R4.04m
      • Gareth Ackerman (61yo)

        Non-Executive Chairman

        • Tenure: 9.8yrs
        • Compensation: R4.44m
      • Dave Robins (65yo)

        Non-Executive Director

        • Tenure: 18yrs
        • Compensation: R413.00k
      • Jeff van Rooyen (69yo)

        Independent Non-Executive Director

        • Tenure: 12.8yrs
        • Compensation: R883.00k
      • Richard S. van Rensburg (57yo)

        Chief Information Officer & Executive Director

        • Tenure: 10.6yrs
        • Compensation: R14.88m
      • Lerena Olivier

        CFO & Executive Director

        • Tenure: 0.3yrs

      Company Information

      Pick n Pay Stores Limited's company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Pick n Pay Stores Limited
      • Ticker: PIK
      • Exchange: DB
      • Founded: 1967
      • Industry: Food Retail
      • Sector: Consumer Retailing
      • Market Cap: R31.685b
      • Listing Market Cap: R1.990b
      • Shares outstanding: 476.18m
      • Website: https://www.pnp.co.za

      Number of Employees


      Location

      • Pick n Pay Stores Limited
      • Pick n Pay Office Park
      • 101 Rosmead Avenue
      • Cape Town
      • Western Cape
      • 7708
      • South Africa

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      PIKJSE (The Johannesburg Securities Exchange)YesOrdinary SharesZAZARNov 1992
      PIKDB (Deutsche Boerse AG)YesOrdinary SharesDEEURNov 1992
      PKPY.YOTCPK (Pink Sheets LLC)ADRUSUSDOct 2008

      Biography

      Pick n Pay Stores Limited, an investment holding company, engages in the retail of food, clothing, general merchandise, pharmaceuticals, and liquor in South Africa and Rest of Africa. It owns, franchises, and invests in hypermarkets, supermarkets, local stores, clothing stores, liquor stores, pharmacy stores, superstores, build stores, punch stores, and express stores under the Pick n Pay and Boxer brands, which offer food products, wine, clothing, and health and wellness products. The company also offers its products through online. In addition, it acquires and develops retail and distribution sites; and provides financial, travel, bill and electricity payment, Web ticket, and courier services, as well as gift cards. The company operates a network of 1,795 owned and franchised stores. The company was founded in 1967 and is based in Cape Town, South Africa. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/26 21:09
      End of Day Share Price2020/01/24 00:00
      Earnings2019/09/01
      Annual Earnings2019/03/03


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.