What Do These Ratios Tell Us About Wm. Morrison Supermarkets Plc (MRW)?

What’s next?
Wm. Morrison Supermarkets plc (LON:MRW) has committed to spend 241 million pounds to set up its home delivery service, and the firm is also investing in new smaller, local stores. As a result, total debt is expected to rise from 2.4 billion pounds to 2.7 billion pounds this year.

Morrisons’ online food business isn’t expected to make a positive contribution to earnings until 2016/17, so the next couple of years could see Wm. Morrison Supermarkets plc (LON:MRW)’ profits come under pressure.

Is Morrisons a buy?
Morrisons currently trades on a forecast price-to-earnings ratio (P/E) of 10.5 and a prospective yield of 4.7%.

It’s also worth remembering that Wm. Morrison Supermarkets plc (LON:MRW)’ 2012 operating margin of 5.2% was higher than those of both Tesco (3.4%) and Sainsbury (3.8%).

I think that Morrisons looks like a good income buy at the moment, with long-term growth potential.

Finding market-beating returns
Finding shares that can beat the market over a long period is hard, but if you already hold Wm. Morrison Supermarkets plc (LON:MRW)’ stock, then you might be interested in learning about five-star shares that have been identified by the Fool’s team of analysts as “5 Shares to Retire On.”

The article What Do These Ratios Tell Us About Wm. Morrison Supermarkets? originally appeared on Fool.com.

Roland Head owns shares of Tesco but does not own shares of any of the other companies mentioned in this article. The Motley Fool recommends and owns shares of Tesco.

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