August 4, 2022
Ingles Market (IMKTA) reported Q3 results this morning with revenue rising 14% to $1.46 billion and diluted EPS (for class A shares) dipping 6% to $3.57. Management citied rising fuel and food costs, as well as supply chain issues and labor costs as crimping gross margin.
Ingles Market (IMKTA) Reports and TransMedics (TMDX) Taps the Market
Ingles Market (IMKTA) reported Q3 results this morning with revenue rising 14% to $1.46 billion and diluted EPS (for class A shares) dipping 6% to $3.57. Management citied rising fuel and food costs, as well as supply chain issues and labor costs as crimping gross margin. Gross profit in the quarter was 24.1% versus 26.4% a year ago. Interestingly, the press release downplayed the role of gas sales and instead focused on grocery comparable sales, which were up 5.7%. When the 10Q comes out we’ll be able to see exactly how much gas sales grew. With oil now below 100 (actually below 90 today, which is where it was in February) Ingles has two more quarters in which oil gas “should” continue to be a tailwind. But obviously it depends on where the price of oil goes.
Back to the main event, Ingles is now in the fourth quarter of fiscal 2022. With signs that inflation pressures may be easing and some price increases already passed on, we could see gross margin expansion in fiscal 2023. But again, that depends on what develops. In any event, shares of IMKTA continue to work and are trading up modestly again today. Keeping at buy. BUY
TransMedics Group (TMDX) surprised me by announcing a $100 million equity offering yesterday after the close. I knew the company would need to raise cash at some point but wasn’t expecting it this soon, though I can’t say I don’t agree with the decision. The stock is acting well and having the cash in the bank will certainly give management more options and a better ability to plan ahead. Very roughly, with a $1.09 billion market cap and $100 million in stock being offered, you’d expect to see a meaningful decline in the share price today to account for the dilution. But as I’ve said before about equity offerings, investors tend to focus on the value that can be created with the capital raise more than just the dilution, assuming an offering isn’t used to pay to keep the lights on. We’ll know more when pricing comes out, but in the meantime, I’m encouraged by the share price reaction and am keeping TMDX at buy. BUY