WEIS MARKETS, INC (WMK): what the price requires

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/WMK

Headline

Field	Value
Ticker	WMK
Company	WEIS MARKETS, INC
Current price	$79.63/sh
Composition	Grocery 81% / Pharmacy 14% / Fuel 5% / Manufacturing 0%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin needed	1.1%
Operating margin today	2.2%
Margin compression implied	-1.1pp
Implied growth	3.8%
Multiple paid	18x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 7.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7pp.

Reconcile: at the x-ray's 9.3% required return this reads ~13.1%/yr; the models below use their own rates.

How unusual the bet is: within-range

Reference	Value
vs own history	+0.42σ
cohort percentile (of 69 peers)	41
implied end-window share	0%

Valuation X-Ray

The price is justified by relative-multiple; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	2.03x	5	expensive
Earnings	1.83x	3	expensive
Relative	1.09x	5	expensive
Growth	1.35x	3	expensive

Families that justify the price: Relative Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.4%); the inversion above states its own rate.

Per-Model Detail (n=16)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$12.32	6.46x	yes	FCF base $0.0B, growth 4% (input: historical growth), terminal g 4.0%, WACC 7.4%, 5yr projection
DCF Exit Multiple	Growth	$65.64	1.21x	yes	Exit EV/EBITDA: 13.0x / 15.0x / 17.0x (bear / base = today's held flat / bull), 5yr
Relative Valuation	Relative	$83.27	0.96x	yes	P/E 22x (static sector reference · 2026-04), scenarios: 18.4x / 22.0x / 25.6x (bear / base = reference held flat / bull), EV/EBITDA 14x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$44.16	1.80x	yes	BV/sh $55.39, ROE (TTM) 7.4%, ke 9.3%
Two-Stage Excess Return	Asset	$39.24	2.03x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$59.08	1.35x	yes	Rev $5.0B, growth 4% (input: historical growth; tapered), Terminal P/S: 0.3x / 0.4x / 0.5x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$48.24	1.65x	yes	EPS $4.02, growth 4% (input: historical EPS growth), PEG=4.53 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$33.20	2.40x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.12B × (1−25%) / WACC 7.4% → EPV (no growth)
Residual Income	Asset	$38.51	2.07x	yes	BV $55.39 + 5yr PV of (ROE (TTM) 7.4% − Kₑ 9.3%) × BV; BV grows 4.8%/yr
Graham Number	Asset	$70.78	1.13x	yes	√(22.5 × EPS $4.02 × BVPS $55.39) — Graham's conservative floor
EV/EBITDA Relative	Relative	$73.03	1.09x	yes	EBITDA $0.16B × sector EV/EBITDA 14.0x
FCF Yield	Earnings	$0.01	7963.00x	yes	FCF $24.1M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF Yield	Earnings	—	—	no	—
Ben Graham Formula	Earnings	$57.61	1.38x	yes	EPS $4.02 × (8.5 + 2×4.3%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$11.27	7.07x	yes	BV $55.39 × (ROIC 1.5% / WACC 7.4%)
P/Sales Sector	Relative	$405.17	0.20x	yes	Revenue $5.01B × sector P/S 2.0x
PEG Fair Value	Relative	$25.93	3.07x	yes	EPS $4.02 × (PEG 1.5 × growth 4.3% (input: historical EPS growth)) → PE 6.5x
Earnings Yield	Earnings	$43.46	1.83x	yes	EPS $4.02 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$198.8m
Net debt / NOPAT (after-tax)	-2.46x (net cash)
Net debt / operating income (pre-tax)	-1.84x (net cash)
Interest coverage	2406.2x
Share count CAGR (buyback)	-2.1%
Burning cash	no

Bullet Takeaways

• Weis is a fortress-balance-sheet grocer: a 77-dollar price against book value of about 55.39 dollars per share with effectively no debt, but the trailing ROE of only 7.4 percent is below the cost of equity, so the asset base earns a sub-cost-of-capital return.
• Q1 2026 was strong but does not reverse the long erosion: revenue rose 4.6 percent and net income jumped 42.5 percent, yet operating margins have fallen from 4 percent in 2010 to roughly 2.5 percent as Walmart and Aldi compressed the regional grocery business, which the company flags as intensely price competitive (FY2025 10-K, accession 0000105418-26-000024).
• Quality flags warrant caution: a roughly 22-million-dollar meat-plant inventory misstatement spanning 2022 to 2025 and an Inflation Reduction Act drug-pricing headwind to pharmacy, with the price sitting above the asset and earnings-power frames and justified only by the peer multiple.

Bull Case

The counterintuitive number for Weis Markets is the balance sheet, not the income statement. This is a regional grocer with razor-thin operating margins near 2.5 percent, the kind of business investors assume has no cushion, yet it carries a book value of about 55.39 dollars per share and almost no debt, with the cost of debt reading effectively zero. A 77-dollar stock backed by 55 dollars of mostly tangible, real-estate-heavy book value, much of it owned stores and distribution assets, is a very different risk profile than a leveraged retailer. The thin margin is the business; the fortress balance sheet is the protection, and the two together mean Weis can absorb competitive pressure that would sink a more leveraged peer.

The recent earnings show the model can still produce real operating leverage when sales cooperate. First-quarter 2026 revenue rose 4.6 percent to 1.26 billion dollars, comparable-store sales excluding fuel grew 1.2 percent, and net income jumped 42.5 percent to 27.85 million dollars, with EPS rising to 1.13 dollars from 0.73. On a 2.5 percent margin, a modest revenue gain and disciplined cost control flow through to a large percentage change in profit, which is the upside of operating a low-margin, high-volume model when conditions are favorable. The dividend, at 0.34 dollars a quarter, is comfortably covered and reflects a long history of consistent payment.

The valuation is undemanding for what it is. The price sits within range on the engine's read, justified by the peer-multiple frame, and the inversion implies only about 3.2 percent annual operating growth embedded in the price. For a defensive consumer-staple business selling food that customers buy in every economic environment, a low-single-digit growth assumption is a low bar. Weis is family-influenced, conservatively run, debt-free, and trading near a sensible multiple of normalized earnings with an asset floor well below the price. The bull case is not excitement; it is a durable, recession-resistant cash generator bought at a reasonable price, with the balance sheet doing the work of limiting downside.

Bear Case

The structural truth a Weis holder would rather not face is that this is a slowly shrinking competitive position, not a stable one, and the recent earnings jump does not change the trajectory. The retail food industry is intensely price competitive, as the company itself acknowledges, warning that the competition it encounters may negatively impact its financial condition and results (FY2025 10-K, accession 0000105418-26-000024). The longer arc is the tell: operating income fell from roughly 105 million dollars at 4 percent margins in 2010 to about 84 million dollars at 2.4 percent margins by 2019, despite acquisitions and heavy reinvestment, because Walmart supercenters, Aldi's expansion, and e-commerce grocery steadily compressed both margins and traffic. Weis operates in a slow-growth, aging-demographic region of Pennsylvania that compounds the squeeze. A 42 percent quarterly earnings jump against that backdrop is a favorable quarter, not a reversal of a fifteen-year erosion.

The profitability is also lower-quality than it appears, and that is the second hard fact. Return on equity is just 7.4 percent, well below the roughly 9 percent cost of equity, which means that on its enormous book-value base Weis is not currently earning its cost of capital. A debt-free balance sheet is a virtue, but holding 55 dollars of book value per share while earning a sub-cost-of-equity return on it is also a form of value erosion: the capital would compound faster almost anywhere else. The asset and earnings-power valuation frames both read the stock as expensive precisely because the returns on those assets are weak.

The quality concern is sharpened by an accounting issue. Weis disclosed a roughly 22-million-dollar meat-plant inventory misstatement spanning 2022 through 2025, which suggests recent profitability may have been overstated and raises the question of how clean the reported earnings really are. Pharmacy, one of the higher-margin departments, faces a structural headwind: Q1 pharmacy revenue was hit by about 7.48 million dollars from Inflation Reduction Act Medicare maximum-fair-price provisions, a policy drag that will persist. Put together, the bear case is a low-return, slow-erosion grocer in a hard region, with an accounting blemish and a regulatory drag on its best department, trading above the value its weak returns on assets actually justify.

Valuation

Weis Markets is a low-margin, asset-heavy grocer, and its valuation X-ray splits between a high book value and weak returns on that book. The asset-based excess-return frames land around 40 to 45 dollars, below the 77-dollar price, because while book value per share is a substantial 55.39 dollars, the trailing ROE of 7.4 percent is below the cost of equity, so the excess-return math actually discounts the book rather than adding to it. The zero-growth earnings-power frame lands near 33 dollars, also well below the price, reflecting the thin operating margin. What holds the price up is the relative-multiple frame: at a sector P/E near 22 times, the relative-valuation read lands around 84 dollars, above the price, and the exit-multiple DCF lands near 64 dollars.

Inverting the price gives a gentler read. At the current level the market is paying about 17 times company-wide operating income, implying only about 3.2 percent annual operating growth for five years. For a defensive grocer that is a modest assumption, and each one-percentage-point change in the cost of capital moves the implied growth by about 7 points, so treat it directionally. The point is the price does not require much growth, which is appropriate for the business.

The honest synthesis is that Weis is a balance-sheet story trading at a peer multiple its returns do not quite earn. An investor is paying about 77 dollars for 55 dollars of book value that generates a sub-cost-of-equity return, plus a defensive, debt-free earnings stream and a covered dividend. The asset floor limits downside, and the low implied growth is achievable.

Catalysts

The near-term catalyst is whether the Q1 2026 momentum is durable or a single favorable quarter. Comparable-store sales excluding fuel grew 1.2 percent, so the trend in comps over the next quarters is the cleanest read on whether Weis is holding its ground against discount competition or merely benefiting from food inflation. Cost discipline and any margin recovery would show whether the 42.5 percent net-income jump can be sustained on a thin operating base.

The regulatory and structural catalysts are slower but real. The Inflation Reduction Act Medicare maximum-fair-price provisions cost pharmacy roughly 7.48 million dollars in the quarter, and the trajectory of that drug-pricing drag will weigh on one of the higher-margin departments. Resolution and any further disclosure around the roughly 22-million-dollar meat-plant inventory misstatement is a quality catalyst worth watching, because it bears on the reliability of recent earnings. Capital allocation is the steady signal: the dividend, set at 0.34 dollars a quarter, and any use of the debt-free balance sheet for buybacks, store investment, or acquisitions, show how management deploys a strong balance sheet against a structurally challenged backdrop.

Sources: Weis Markets posts higher Q1 2026 sales, earnings and comps, stocktitan.net; Weis Markets reports first quarter 2026 results, prnewswire.com; Weis Markets Q1 revenue rises 4.6 percent, EPS hits 1.13, stocktitan.net; Weis Markets revenue growth and EPS pressure, simplywall.st.

Peer Cohorts (Per Segment, With Filing Citations)

Retail (whole company) (reported)

• SFM (Sprouts Farmers Market, Inc.)
• (no filing in the citation store)
• KR (KROGER CO)
• (no filing in the citation store)
• ACI (Albertsons Companies, Inc.)
• (no filing in the citation store)

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.