Stock of the day: Metcash Limited
Metcash reported 6.1% sales growth, driven by acquisitions and easing inflation, with strong performances in food, hardware, and liquor.
(AI video summary)
This video was created on 13 September for IG audiences by ausbiz.
Stock of the day: Metcash (ASX:MTS)
Metcash, which held its annual general meeting (AGM) alongside a trading update. The company reported a 6.1% rise in total sales for the financial year up to 8 September, driven by solid growth across its divisions, partly due to recent acquisitions.
Food division performance and inflation easing
Metcash’s food division has performed well in a cost-conscious environment. At the AGM, the company highlighted a moderation in inflation, helping to stabilise costs. Metcash is focused on integrating recent acquisitions and improving cost and cash management. Following this update, the company’s share price rose by 0.8% by midday in Sydney.
Metcash’s defensive appeal and Project Horizon
Though Coles and Woolworths dominate the Australian supermarket industry, Metcash is undergoing a technology transformation called “Project Horizon,” aimed at modernising its operations. Despite tough competition, Metcash is viewed as a defensive stock that appeals to investors seeking stability. Its core divisions—food, hardware, and liquor—offer steady revenue, with low single-digit growth and a reliable dividend yield.
For investors looking for defensive plays, Metcash is an attractive option. However, significant capital growth may be difficult, given the competition in the market.
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