As one of the best performing supermarket stocks of recent years, Morrisons must justify investor faith in the business. Richard Hunter, head of markets at interactive investor, analyses half-year results.
Bumps in the road remain, but Morrisons' journey has certainly become more smooth in recent times.
There are any number of real improvements in fortunes for investors to savour here, with half-year revenues, like-for-like sales and the earnings per share metrics all up strongly.
Meanwhile, net debt has been reduced further and the company's cash generative ability has enabled a 11.4% hike in the ordinary dividend, let alone a special dividend which will bolster the currently paltry yield of 2.3%.
Morrisons is continuing to reinvest in the business, whilst the initial signs regarding its wholesale operations are promising, with the McColl's partnership already ahead of plan.
Source: interactive investor Past performance is not a guide to future performance
There are, however, some hints of caution. The company's traditional weakness in terms of its convenience store and online offerings are still lagging in comparison to its larger rivals, whilst the proposed merger of Sainsbury and Asda will heap additional pressure on an already fiercely competitive sector.
The headline profit figure has fallen sharply due to what should be fairly exceptional items, although this impact is lessened by the fact that underlying profit has risen 9%.
In all, Morrisons has delivered more positives than negatives with this update, somewhat vindicating a share price which has seen a 26% leap in the last six months, and which stands 9% higher over the last year, as compared to a 1.2% drop for the wider FTSE 100.
The company still seems to be at an inflection point and, whilst there are clearly some reasons for optimism, market opinion remains divided on prospects, with the consensus of a shares as a 'hold', suggesting that there may be better value elsewhere.
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