Economic Context - Current economic conditions are characterized as "stagflation-lite," indicating slowing growth alongside inflation, although unemployment remains relatively stable [1] - The impact of tariffs on prices has not fully materialized and may be temporary [1] Defensive Investment Opportunities - Two small-cap food companies are highlighted as defensive plays that are likely to withstand the stagflation environment due to the non-discretionary nature of food products [2] Village Super Market, Inc. (VLGEA) - Operates 34 supermarkets under ShopRite and Fairway brands across several states and is the second-largest member of Wakefern Food Corporation [3] - The company is investing $75 million in capital expenditures for fiscal 2025 to upgrade and expand its supermarket chain, including new store constructions [4] - For the fiscal third quarter, VLGEA reported earnings per share of 75 cents, up from 60 cents a year earlier, with sales increasing 3.2% year over year to $563.7 million [5] - Net income rose 24% to $11.2 million, with adjusted net income increasing 21% to $11.6 million [5] - The stock is trading at 0.19X trailing 12-month EV/sales, significantly lower than the Zacks sub-industry average of 1.15X [6] - The stock's trailing 12-month EV/EBITDA is 4.08X, compared to 18.37X for the Zacks sub-industry [7] Armanino Foods of Distinction, Inc. (AMNF) - Engaged in producing and marketing upscale frozen and refrigerated food products, including pesto sauces and stuffed pasta [8] - For the second quarter ended June 30, 2025, AMNF reported net sales of $19.97 million, a 14% increase from the previous year, with gross profit rising 26% to $9.11 million [9] - Net income climbed 27% to $4.85 million, resulting in earnings per share of 15.44 cents, a 30% increase from 11.86 cents a year earlier [9] - The company has $4.65 million authorized for future buybacks and offers a dividend yield of 1.6% [10] - The stock is trading at 3.81X trailing 12-month EV/sales, higher than the Zacks sub-industry average of 1.57X [10] - The trailing 12-month EV/EBITDA for AMNF is 12.45X, comparable to the Zacks sub-industry average of 12.19X [11] - Both companies are characterized as "steady eddies" with moderate ongoing appreciation potential and currently hold a Zacks Outperform rating [11]

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Group 1 - Village Super Market (NASDAQ: VLGEA) is experiencing a rally that may be attributed to factors beyond the recent broad market rally among micro-cap and small-cap stocks [1] - The company operates ShopRite-branded supermarkets and is based in New Jersey [1]

Core Insights - Village Super Market, Inc. reported a decline of 1.7% in its shares following the earnings report for the quarter ended April 26, 2025, underperforming the S&P 500 index which gained 1.1% during the same period [1] - Despite the short-term reaction, the stock saw a 3.7% increase over the past month, slightly outperforming the S&P 500's 3% gain, indicating investor confidence in the company's performance [1] Financial Performance - For the fiscal third quarter, earnings per share for Class A common stock increased to 75 cents from 60 cents a year earlier [2] - Sales rose 3.2% year over year to $563.7 million from $546.4 million, driven by a 1.9% increase in same-store sales [2] - Net income reached $11.2 million, marking a 24% increase from $9 million a year ago, while adjusted net income was $11.6 million, up 21% from $9.6 million in the prior-year period [3] Business Metrics - Same-store digital sales surged 10% during the quarter, reflecting the company's success in expanding its online presence [4] - Gross profit as a percentage of sales rose slightly to 28.8% from 28.6% in the year-ago period, attributed to higher patronage dividends and rebates from Wakefern Food Corp. [4] - Operating and administrative costs as a percentage of sales fell to 24.8% from 25.2% last year, driven by lower employee-related expenses and advertising costs [5] Management Commentary - Management highlighted that digital sales growth, remodeled store performance, and pricing dynamics in key grocery categories contributed to the positive results [6] - The strategic focus on e-commerce and targeted capital spending to enhance store competitiveness was emphasized [6] Influencing Factors - Internal initiatives and external economic conditions shaped the third-quarter outcomes, with digital sales growth and inflationary trends in food categories bolstering same-store sales [7] - Recent physical store upgrades contributed to improved traffic and basket size, while Wakefern's rebates and lower LIFO charges cushioned the effects of product mix changes and increased promotions [7] Operational Efficiency - Operating efficiency gains contributed to profitability expansion, with management maintaining tight control over discretionary spending [8] - Despite inflation in certain cost categories, Village managed to deliver better adjusted operating margins [8] Developments - The company opened a 72,000-square-foot ShopRite replacement store in Watchung, NJ, on April 9, 2025, following another replacement store opening in Old Bridge, NJ, in March 2024 [10] - These new stores are expected to enhance customer experience and drive foot traffic, with the company now operating 34 supermarkets under the ShopRite and Fairway banners, along with three Gourmet Garage specialty stores in New York City [10]

Sales Performance - Sales for the 13 weeks ended April 26, 2025, were $563,669, an increase of 3.2% compared to the same period in 2024, driven by a 1.9% increase in same store sales and new store openings [63]. - Sales for the 39 weeks ended April 26, 2025, were $1,721,016, an increase of 3.8% compared to the same period in 2024, with same store sales up by 2.2% [64]. - The Company expects same store sales to increase between 1.5% and 2.5% in fiscal 2025 [94]. Net Income and Profitability - Net income for the 13 weeks ended April 26, 2025, was $11,161, compared to $8,966 for the same period in 2024, with adjusted net income increasing by 21% to $11,633 [72]. - Gross profit as a percentage of sales increased by 0.23% in the 13 weeks ended April 26, 2025, primarily due to higher patronage dividends and rebates from Wakefern [65]. - Operating and administrative expenses as a percentage of sales decreased by 0.41% in the 13 weeks ended April 26, 2025, attributed to lower employee costs and advertising expenses [67]. - Adjusted operating and administrative expenses for the 39 weeks ended April 26, 2025, decreased by 0.17% as a percentage of sales compared to the same period in 2024 [68]. Taxation - The effective income tax rate was 30.6% for the 13 weeks ended April 26, 2025, compared to 30.1% for the same period in 2024 [71]. - The effective income tax rate for fiscal 2025 is projected to be in the range of 31.0% to 32.0% [94]. - The effective tax rate may be influenced by tax examinations and changes in tax laws [98]. Cash Flow and Liquidity - Net cash provided by operating activities increased to $71,538 in the 39 weeks ended April 26, 2025, compared to $58,040 in the prior year, primarily due to an increase in net income and changes in working capital [76]. - The Company believes that cash and cash equivalents, operating cash flow, and the Credit Facility will be sufficient to meet liquidity needs for the next twelve months [90]. - The Company has a credit facility with a maximum borrowing amount of $75,000, with interest rates based on the Secured Overnight Financing Rate (SOFR) plus 1.25% [84]. Capital Expenditures and Investments - Capital expenditures for the 39 weeks ended April 26, 2025, totaled $48,705, with significant investments in store construction and technology upgrades [77]. - The budgeted capital expenditures for fiscal 2025 have been revised downward to approximately $65,000 due to a delay in the opening of the East Orange, NJ replacement store, now expected in early fiscal 2026 [78]. Store Operations and Changes - The company opened a 72,000 sq. ft. replacement ShopRite store in Watchung, NJ, on April 9, 2025, replacing a 44,000 sq. ft. store [57]. - The company closed an 8,400 sq. ft. Gourmet Garage store in New York City on November 1, 2023, with no material impact on consolidated financial statements [58]. - The company operates a centralized commissary to enhance production efficiency and product quality across its stores [55]. Working Capital - Working capital decreased to $11,144 at April 26, 2025, from $25,485 at July 27, 2024, with working capital ratios of 1.06 and 1.15, respectively [83]. Pension and Insurance Liabilities - Certain multi-employer pension plans are underfunded, leading to potential increases in contributions and impacts on collective bargaining agreements [98]. - The company utilizes a mix of insurance and self-insurance for various liabilities, with projections of losses being highly variable due to multiple factors [98]. Asset Management - Long-lived assets, including store property and equipment, are subject to impairment testing, which could result in charges if cash flow levels are insufficient [98]. - Goodwill and indefinite-lived intangible assets are tested for impairment annually, with potential charges if acquired businesses do not meet forecasted expectations [98]. - Wakefern provides information system support for business management, which is vulnerable to interruptions that could adversely affect operations [98].

Core Insights - Village Super Market, Inc. reported a net income of $11.2 million for the third quarter of fiscal 2025, representing a 24% increase compared to $9.0 million in the same quarter of the previous year [9] - Year-to-date net income reached $40.9 million, a 17% increase from $35.0 million in the prior year-to-date period [9] - The company experienced a sales increase of 3.2% in the third quarter and 3.8% year-to-date, driven by same store sales growth and new store openings [9][11] Third Quarter Highlights - Sales for the third quarter were $563.7 million, up from $546.4 million in the same period last year, with same store sales increasing by 1.9% [4] - Digital sales contributed significantly to same store sales growth, with a 10% increase noted [9] - Gross profit as a percentage of sales improved to 28.77% from 28.54% year-over-year, attributed to higher patronage dividends and rebates [5] Year-To-Date Fiscal 2025 Highlights - Year-to-date sales totaled $1.721 billion, compared to $1.658 billion in the previous year, with same store sales increasing by 2.2% [11] - Gross profit as a percentage of sales for the year-to-date period was 28.71%, up from 28.48% in the prior year [12] - Operating and administrative expenses as a percentage of sales decreased to 24.20% from 24.39% year-over-year, reflecting improved cost management [13] Financial Performance - Operating income for the third quarter was $13.7 million, compared to $10.2 million in the same quarter last year [20] - Interest expense decreased due to lower average outstanding debt balances, while interest income fell due to lower interest rates on variable rate notes [7][8] - The effective income tax rate for the third quarter was 30.6%, slightly up from 30.1% in the previous year [10] Store Operations - The company opened a new 72,000 sq. ft. ShopRite replacement store in Watchung, NJ on April 9, 2025, contributing to sales growth [9] - The same store sales growth was supported by digital sales, remodeled stores, and higher pharmacy sales, alongside inflation in the meat and dairy departments [4][11]

Core Viewpoint - Dividend stocks trading at low valuations can provide significant long-term upside potential and higher-than-average yields, making them attractive investment opportunities Group 1: Target (TGT) - Target has experienced a significant decline, losing 46% of its value over the past year due to concerns about the economy and discretionary spending [3] - Despite the downturn, Target's business remains stable with a payout ratio of 50%, allowing for dividend safety even amid profit declines [4] - The stock is currently trading at a low P/E ratio of less than 11, compared to the S&P 500 average of 21, and offers a dividend yield of 4.8% [4][5] Group 2: ExxonMobil (XOM) - ExxonMobil's stock has declined by 12% over the past year, influenced by falling oil prices, but it remains an attractively priced dividend stock with a P/E ratio of less than 14 [6] - The company has a strong history of dividend payments, having increased its annual dividend for 42 consecutive years, with a current yield of 3.7% [7] - Earnings for ExxonMobil were down by over $2 billion in 2024, representing a decline of over 6%, indicating potential challenges ahead if oil prices do not recover [7] Group 3: Village Super Market (VLGEA) - Village Super Market offers a dividend yield of 2.9%, higher than the S&P 500 average of 1.5%, and trades at a low P/E multiple of just 9 [9] - The company operates 34 supermarkets on the East Coast, and its sales have risen by 4% to approximately $1.2 billion, with net income growing by 14% to $29.7 million over the past two quarters [10] - Despite being a smaller player in the grocery sector, Village Super Market's strong financials and low valuation make it a compelling dividend stock to consider [10]

Group 1 - The retail space, particularly in the food sector, presents attractive investment opportunities despite historical skepticism [1] - Crude Value Insights focuses on cash flow and companies that generate it, highlighting value and growth prospects in the oil and natural gas industry [1] Group 2 - Subscribers benefit from a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2] - A two-week free trial is available for new subscribers to explore investment opportunities in oil and gas [3]

Group 1 - The thesis regarding Village Super Market, Inc. (NASDAQ: VLGEA) has shifted from "on the fence" to a more positive outlook as bullish sentiments have been validated in 2025 [1] - The performance of VLGEA stock has shown signs of strength, indicating a potential investment opportunity for those interested in the retail sector [1] Group 2 - The article does not provide specific financial metrics or performance data for Village Super Market, Inc. [1] - There is no mention of broader industry trends or comparisons with competitors in the retail market [1]