Supermarket Income REIT PLC ORD (SUPR.L) is positioning itself as a unique player in the real estate sector by focusing exclusively on grocery store properties. As the only LSE-listed company dedicated to this niche, SUPR taps into the omnichannel grocery market—serving both online and physical retail demands—primarily in the UK and Europe. This strategic focus on essential national food infrastructure has helped SUPR build a robust portfolio valued at £1.6 billion.
With a market capitalization of $1.03 billion, SUPR offers investors a compelling dividend yield of 7.59%. This high yield can be particularly attractive in today’s low-interest-rate environment, providing a steady income stream for income-focused investors. However, the payout ratio of 124.59% suggests that the company is currently paying dividends in excess of its net income, which could be a point of concern for those wary of sustainability.
The stock’s current price stands at 83 GBp, with a 52-week range between 65.50 and 86.80 GBp. Technical indicators reveal a relatively stable performance, with the 50-day and 200-day moving averages at 80.18 and 79.84, respectively. The RSI of 58.02 suggests that the stock is neither overbought nor oversold, providing a balanced outlook for potential investors.
Analysts have mixed opinions on SUPR, reflected in the two buy ratings and four hold ratings. The average target price is 85.60 GBp, indicating a modest potential upside of 3.13%. While this may not be particularly enticing for growth-focused investors, it underscores the stock’s stability and capacity for capital preservation, which can be appealing for conservative investment strategies.
One point of concern is the company’s free cash flow, which is reported at -£84,409,128. This negative figure could signal cash flow challenges, which might affect future dividend payments or growth opportunities. On the brighter side, SUPR’s revenue growth of 4.20% indicates some level of business expansion, which could support future profitability.
Despite the lack of data for several key valuation metrics such as P/E Ratio, Price/Book, and Price/Sales, the company’s forward P/E of 1,315.37 suggests that the stock might be overvalued based on future earnings expectations. However, the return on equity of 5.54% is a positive indicator of the company’s ability to generate profits from shareholders’ equity, albeit not exceptionally high.
SUPR’s strategic focus on long-dated, secure, inflation-linked rental income from high-quality tenants provides a buffer against economic fluctuations. As the company continues to target progressive dividends and long-term capital growth, it remains a viable option for investors seeking stability and consistent income in the real estate sector.
Given the essential nature of grocery properties and SUPR’s unique market positioning, the REIT could be an attractive addition to a diversified portfolio, particularly for those prioritizing income over growth. Investors should, however, remain mindful of the potential risks associated with the high payout ratio and negative free cash flow, which warrant careful monitoring.
