Weis Markets, Inc. Company Analysis

Weis Markets, Inc. is a Mid-Atlantic food retailer based in Sunbury, Pennsylvania. It currently operates 204 stores in Pennsylvania, Maryland, New York, New Jersey, West Virginia, Virginia, and Delaware. Weis operates in the food retail market. Weis’s products include bakery products, beer and wine, dairy products, deli products, floral, fresh produce, frozen foods, fuel, general merchandise items, groceries, meats, pharmacy services, prepared foods, and seafood. Weis practices in purchasing from over 150 local farmers in Pennsylvania, Maryland, New Jersey and New York.

Their competition is rather large due to various other markets that take on food sale as a part of their operations. For example, drug stores and retailers such as Walmart and Target which grocery sections in their “super” stores. Major food retailers that it faces tough competition with in the region would be Acme, Safeway, Wegmans, Whole Foods, and Giant Eagle. I decided to compare Weis to Whole Foods because of the impact that Whole Foods is having in the grocery sector since the chain was purchased by Amazon. Further research on the impact of Whole Foods seems universal. Other chains will find it hard to keep up with the "scale, sophistication and the balance sheet” of Whole Foods in order to make the necessary investments to keep up with company.

This was in fact the main cause of a decline in the fiscal years of 2014 and 2015 for Weis Markets. The company profitability suffered because of the cost of marketing initiatives to keep up with the grand competition of the food retail market. Their return on equity dropped from 8.83% in 2013 to 6.54% in 2014 and 6.88% in 2014. This means that the company relied more on its company’s equity for profit considering in most cases, a higher ROE is preferred. When compared to Whole Foods, their ROE was at its highest in 2014 at 15.10%. Whole Foods has maintained an average of about 14% over the past five years. The industry’s overall performance is about 12.67% for an ROE. Weis Markets is currently operating at 8.13% ROE as of October 2017. Which shows a downward trend since the end of FY2016 at 9.54%.

Return on assets is also used to show profitability. It is used as an indicator to show how well a company utilizes its assets to generate a return. The higher the ROA the better management is at generating net income from its asset base. Weis Markets return on assets declined in 2014 respectively. The company went from operating at about 6.43% ROA in 2013 to 4.73% in 2014 and 4.9% in 2015. Whole Foods had higher ROA than Weis Market during these years again. They also peaked in 2014 at 10.29%. Whole Foods averages around 9% in ROA over the last 5 years. Weis Markets is currently operating at 5.39% ROA as of October 2017. Which shows a downward trend since the end of FY2016 at 6.43%.

The current ratio measures a company's ability to pay short-term debt by comparing current assets to current liabilities. The ratio shows a company's liquidity. Usually, a company with a current ratio of 2, meaning current assets twice as large as current liabilities, is preferred. Weis performed above 2 from 2012-2015. At the end of FY2016, they performed at 1.75. This means that Weis has been able to meet its short term debt with its current assets comfortably. This is where Weis seem to be in a better position than its competitors. Whole Foods’ current ratio was only above 2 at the end of FY2012. Otherwise they average around 1.5 over the next 4 years following.

The inventory ratio was key in the analysis