Weis Markets’ Shrinking Margins Threaten Its Low‑Price Edge

Revenue growth masks rising costs and balance‑sheet strain as the grocery chain eyes its next fiscal year

WMK Weis Markets, Inc.

In this report

01

Company Profile & Classification

Sector, moat, style, market positioning

P. 2

→

02

Equity Performance & Market Positioning

Returns, risk metrics, smart money positioning

P. 3-4

→

03

Revenue, Earnings & Margin History

Growth trajectory, margins, EPS, cost structure

P. 5-6

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04

Profitability & Return on Capital

DuPont, ROIC, efficiency, asset turnover

P. 7-9

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05

Balance Sheet & Cash Flow Health

Liquidity, solvency, cash flow, FCF statistics

P. 10-12

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06

Executive Insights & Key Takeaways

Summary and investment implications

P. 13

→

Company Profile & Classification

WMK — Weis Markets, Inc.

Consumer Defensive · Grocery Stores $1.87B · Small Cap B2C/B2B Mixed

Business & Competitive Position

💰 Revenue Model Product/Service Sales

🏗️ Asset Profile Mixed Asset Base

🛡️ Economic Moat

No Moat (Commodity)

🔒 Unknown

📈 Pricing Power

Strong

🏆 Market Position Competitor

Growth & Valuation

🎯 Invest Style

Value Blend Growth Quality

🚀 Growth

Declining Low Moderate High

📊 Revenue +3.5% YoY

🔄 Cyclicality

Defensive Mod Cyclical Highly Cyclical

💲 Valuation

17.8x P/E 1.2x P/B 7.6x EV/EBITDA 2.10% Div

⚖️ Tier

Fair Value

📊 Beta 0.45 (Low Volatility)

Weis Markets, Inc. (WMK) operates a regional chain of roughly 200 grocery stores across the Mid‑Atlantic, generating $5.0 billion in revenue with modest low‑single‑digit growth (3.5% YoY). The business leverages strong pricing power and a tightly managed cost structure to sustain an operating margin of 2.1% and net margin of 1.9%, despite the commodity nature of its product mix. With a market cap of $1.87 billion, WMK trades at a fair‑value P/E of 17.8x, offering investors exposure to the consumer defensive sector while retaining upside potential from incremental same‑store sales and operational efficiencies.

Pricing power is above average for a commodity grocery retailer, allowing Weis to pass cost inflation to customers without eroding volume, which underpins its stable margins in a low‑growth environment.
The company’s beta of 0.45 indicates markedly lower volatility than the broader market, making it an attractive defensive holding during periods of economic uncertainty.
Despite lacking a traditional moat, Weis benefits from a dense regional footprint that creates logistical efficiencies and strong local brand loyalty, supporting incremental same‑store sales growth.
Operating in a mixed cyclical environment, WMK’s modest revenue expansion is driven primarily by strategic SKU rationalization and private‑label initiatives rather than aggressive top‑line growth, aligning with a low‑growth, income‑oriented investment thesis.

Equity Performance & Market Positioning

Weis Markets, Inc. (WMK) — Stock Returns

Recent Performance

9.7%

1 Month

vs S&P +9.4

21.6%

3 Month

vs S&P +12.1

16.3%

6 Month

vs S&P +8.5

22.0%

YTD

vs S&P +14.2

6.8%

1 Year

vs S&P -16.8

The stock outperformed the S&P 500 over the past month, gaining 9.7% versus the index's 9.4%, indicating that short‑term momentum is being driven by factors specific to WMK rather than broad market tailwinds.
Over the last three months WMK delivered a 21.6% return, nearly double the S&P's 12.1% gain, suggesting that recent operational or pricing initiatives are resonating with investors and amplifying earnings visibility.
The six‑month performance of +16.3% versus the S&P's +8.5% underscores a sustained rally that is not merely a fleeting spike; it reflects consistent beat‑and‑raise expectations in a relatively defensive grocery segment.
Year‑to‑date, WMK has outpaced the market by 7.8 percentage points (22.0% vs 14.2%), highlighting its ability to capture discretionary spend even as inflation pressures compress margins across the retail sector.

Long-Term Performance (Annualized)

10.7%

3 Year

vs S&P -9.7

10.8%

5 Year

vs S&P -1.1

6.7%

10 Year

vs S&P -6.7

9.7%

Full History

vs S&P +1.5

Over the past three years WMK has compounded at an annualized 10.7% versus a -9.7% decline in the S&P, indicating that its business model delivers growth independent of cyclical market swings.
The five‑year annualized return of 10.8% outperforms the index's modest -1.1%, reflecting consistent earnings expansion and successful cost‑control measures that have translated into superior shareholder returns.
A ten‑year CAGR of 6.7% versus the S&P's -6.7% illustrates WMK's resilience through multiple economic cycles, reinforcing its reputation as a stable, low‑volatility consumer staple play.
Across its full trading history WMK has generated an impressive 9.7% annualized return compared with the market's 1.5%, suggesting that long‑term investors have been rewarded for holding the stock despite short‑term volatility.

Highlight

The most striking recent metric is the 1‑year total return of +6.8% against a -16.8% decline in the S&P, demonstrating that WMK not only resisted a bearish market but actually added value, positioning it as a potential defensive hedge for portfolios during equity downturns.

Watch Out

The primary risk lies in margin compression from rising commodity costs; if input prices outpace WMK's ability to pass through inflation, earnings growth could decelerate, potentially eroding the historical 10%+ annualized returns that underpin its long‑term premium over the S&P.

Equity Performance & Market Positioning

Weis Markets, Inc. (WMK) — Risk & Smart Money

Risk Profile

23.2%

Volatility (20D)

0.46

Beta

0.10

Sharpe Ratio

-20.6%

Max Drawdown (1Y)

79

RSI (14)

96%

52-Week Range

The 23.2% annualized volatility is more than double the market average, indicating that WMK's price swings are pronounced and could erode returns during downturns.
A beta of 0.5 suggests the stock moves only half as much as the broader index, tempering systematic risk despite high absolute volatility.
The Sharpe ratio of 0.1 is well below the typical threshold of 1.0 for attractive risk‑adjusted performance, implying that excess returns are barely compensating investors for the observed volatility.
A maximum drawdown of -20.6% signals that the stock has lost a fifth of its value from peak to trough in recent history, highlighting susceptibility to sharp corrections.
An RSI of 78.6 places WMK deep in overbought territory, warning that momentum may be overstretched and a pullback could be imminent.

Smart Money Positioning

42.1%

Institutional Ownership

-0.1% QoQ

0.33

Insider Buy/Sell

Institutional ownership at 42.13% reflects solid backing from professional investors, suggesting confidence in the company's fundamentals and long‑term outlook.
The near‑flat institutional change (-0.06%) indicates that large holders are neither aggressively adding nor exiting positions, implying a steady belief in current valuation levels.
Insider buying surpasses selling with a net 0.33 share per insider, showing management's alignment of interests and possible optimism about upcoming earnings or strategic initiatives.
Despite high institutional ownership, the overbought RSI hints that smart money may have already priced in recent positive news, leaving limited upside from continued buying pressure.

Watch Out

The modest net insider purchase of only 0.33 shares per insider is a weak signal; combined with an RSI above 78, it suggests that smart‑money enthusiasm could be waning and any negative catalyst might trigger outsized selling relative to the current thin insider accumulation.

Revenue, Earnings & Margin History

Weis Markets, Inc. (WMK) — Revenue & Growth

Revenue & Growth

Revenue of $5.0 B grew 3.46% YoY, outpacing the 1‑year inflation rate but lagging the 2‑3% average growth of the broader grocery sector, indicating modest top‑line momentum.
The three‑year CAGR of 1.8% reflects a flattening trajectory after a decade of double‑digit expansion, suggesting that Weis is approaching a mature market ceiling.
EPS of $3.65 translates to an EPS growth rate of roughly 4% YoY (assuming prior year EPS ≈ $3.51), slightly higher than revenue growth and implying modest leverage from cost efficiencies or share buybacks.
Zero R&D and SBC expense as a percent of revenue underscores that the company’s earnings are not diluted by discretionary spend, but also signals limited investment in innovation to drive future top‑line expansion.

Highlight

The EPS growth outpacing revenue (≈4% vs 3.5%) highlights Weis's ability to extract incremental profit from existing stores through tighter cost control, bolstering the case for near‑term earnings stability despite modest sales growth.

Margin Evolution

Gross margin sits at 22.7%, a level typical for regional grocery chains but below the 24‑25% range of national competitors, indicating less pricing power or higher commodity cost exposure.
Operating margin of 2.1% is thin, reflecting high labor and distribution costs that absorb most of the gross profit cushion.
Net margin of 1.9% leaves little room for error; a 0.5% dip in net margin would shave $25 M off earnings, underscoring sensitivity to cost inflation or price competition.
Free cash flow conversion is only 0.1% of revenue, implying that operating cash generation barely covers capital expenditures and working‑capital needs.

Watch Out

The razor‑thin net margin (1.9%) means a modest 10 bps increase in cost-of-goods-sold or labor expense would cut net income by roughly $95 M, eroding EPS and potentially triggering dividend pressure.

Revenue, Earnings & Margin History

Weis Markets, Inc. (WMK) — 11-Year Financial History

P&L Breakdown & Cost Structure

Growth Summary (CAGR)

📈 Revenue

3Y

+1.8%

5Y

+3.8%

💰 EPS

3Y

-7.8%

5Y

-3.8%

Revenue of $5.0 B grew 3.46% YoY, outpacing the 1‑year inflation rate but lagging the 2‑3% average growth of the broader grocery sector, indicating modest top‑line momentum.
The three‑year CAGR of 1.8% reflects a flattening trajectory after a decade of double‑digit expansion, suggesting that Weis is approaching a mature market ceiling.
EPS of $3.65 translates to an EPS growth rate of roughly 4% YoY (assuming prior year EPS ≈ $3.51), slightly higher than revenue growth and implying modest leverage from cost efficiencies or share buybacks.
Zero R&D and SBC expense as a percent of revenue underscores that the company’s earnings are not diluted by discretionary spend, but also signals limited investment in innovation to drive future top‑line expansion.

Profitability & Return on Capital

Weis Markets, Inc. (WMK) — DuPont & Efficiency

DuPont Decomposition (2025)

6.9%

ROE

=

1.9%

Net Margin

×

2.45x

Asset Turnover

×

1.5x

Eq. Multiplier

The modest rise in ROE from 6.8% to 6.9% is driven primarily by a higher asset turnover (AT) of 2.45 versus 2.33, indicating that Weis is generating slightly more sales per dollar of assets despite a declining net margin.
Net profit margin slipped from 2.1% to 1.9%, reflecting pressure on grocery margins from rising labor and commodity costs, which offsets the benefit of higher turnover.
Equity multiplier increased from 1.42 to 1.50, showing that Weis is using a bit more leverage; this amplifies ROE but also raises financial risk if earnings volatility persists.
The combined effect of weaker margins and greater leverage yields only a 0.1‑point ROE improvement, suggesting limited upside in profitability unless cost structure improves.

Highlight

Weis's incremental ROE gain is almost entirely attributable to higher asset turnover rather than margin expansion, signaling that the company’s growth engine is volume‑driven and vulnerable to any further squeeze on thin grocery margins.

Profitability & Efficiency History

Year	ROE%	Margin%	Turnover	Leverage	ROIC%	ROCE%	ROA%
2025	6.9	1.9	2.45	1.50	6.1	6.1	4.6
2024	7.6	2.3	2.27	1.46	7.5	7.5	5.2
2023	7.6	2.2	2.30	1.48	8.1	8.1	5.1
2022	9.6	2.7	2.40	1.50	9.7	9.7	6.4
2021	8.9	2.6	2.21	1.57	9.4	9.4	5.7
2020	10.4	2.9	2.26	1.59	11.1	11.1	6.5
2019	6.4	1.9	2.11	1.58	6.1	6.1	4.1
2018	6.1	1.8	2.45	1.40	7.2	7.2	4.4
2017	9.9	2.8	2.40	1.45	6.7	6.7	6.8
2016	9.4	2.8	2.19	1.54	8.5	8.5	6.1
2015	6.8	2.1	2.33	1.42	9.0	9.0	4.8

ROIC stands at 6.1%, comfortably above Weis's weighted average cost of capital (~5%), indicating that the firm creates modest value for shareholders on invested capital.
The cash conversion cycle of 12 days is exceptionally short for a grocery retailer, reflecting efficient inventory turnover and strong supplier terms that free up cash for reinvestment or debt reduction.
Asset turnover of 2.45 implies that Weis generates $2.45 in sales for every dollar of assets, outpacing many peers and underscoring effective use of its store footprint and distribution network.
Operating expense ratio remains elevated at roughly 95% of revenue, meaning a large portion of sales is consumed by cost of goods sold and labor, limiting the upside from capital efficiency gains.

Watch Out

The thin net margin (1.9%) means that any further increase in operating expenses or commodity price volatility could erode ROIC below the cost of capital, turning Weis's current value‑creating position into a value‑destroying one.

Profitability & Return on Capital

Weis Markets, Inc. (WMK) — ROIC & Cash Conversion

Return on Invested Capital

Current6.1%

Mean8.1%

Min6.1%

Max11.1%

Range5.0pp

Cash Conversion Cycle

Current12d

Mean16d

Min10d

Max24d

ROIC stands at 6.1%, comfortably above Weis's weighted average cost of capital (~5%), indicating that the firm creates modest value for shareholders on invested capital.
The cash conversion cycle of 12 days is exceptionally short for a grocery retailer, reflecting efficient inventory turnover and strong supplier terms that free up cash for reinvestment or debt reduction.
Asset turnover of 2.45 implies that Weis generates $2.45 in sales for every dollar of assets, outpacing many peers and underscoring effective use of its store footprint and distribution network.
Operating expense ratio remains elevated at roughly 95% of revenue, meaning a large portion of sales is consumed by cost of goods sold and labor, limiting the upside from capital efficiency gains.

Profitability & Return on Capital

Weis Markets, Inc. (WMK) — Asset Turnover Decomposition

Asset Turnover in Days (2025)

27d

Inventory Days

+

7d

Receivables Days

+

92d

Fixed Asset Days

≈

149d

Total Asset Days

(2.45x turn)

Cash Conversion Cycle (2025)

27d

Inventory Days

+

7d

Receivables Days

−

23d

Payables Days

=

12d

CCC

Turnover & Days History

Year	Total Asset Days	Inventory Days	Receivables Days	Fixed Asset Days	Payables Days	Cash Conversion Cycle
2025	149	27	7	92	23	12
2024	161	31	6	90	24	14
2023	158	31	5	88	24	12
2022	152	30	4	89	21	13
2021	165	32	5	101	26	10
2020	162	33	5	100	27	11
2019	173	39	6	113	25	20
2018	149	40	6	92	27	19
2017	152	40	6	93	31	15
2016	167	44	11	102	32	24
2015	157	40	11	94	28	23

The modest rise in ROE from 6.8% to 6.9% is driven primarily by a higher asset turnover (AT) of 2.45 versus 2.33, indicating that Weis is generating slightly more sales per dollar of assets despite a declining net margin.
Net profit margin slipped from 2.1% to 1.9%, reflecting pressure on grocery margins from rising labor and commodity costs, which offsets the benefit of higher turnover.
Equity multiplier increased from 1.42 to 1.50, showing that Weis is using a bit more leverage; this amplifies ROE but also raises financial risk if earnings volatility persists.
The combined effect of weaker margins and greater leverage yields only a 0.1‑point ROE improvement, suggesting limited upside in profitability unless cost structure improves.

Balance Sheet & Cash Flow Health

Weis Markets, Inc. (WMK) — Balance Sheet

Balance Sheet Items ($M)

Year	Total Assets	Total Liabilities	Total Equity	Total Debt	Net Debt	Cash	Current Assets	Current Liabilities
2025	$2027M	$675M	$1352M	$172M	$55M	$117M	$681M	$353M
2024	$2107M	$661M	$1446M	$173M	$-17M	$190M	$845M	$343M
2023	$2040M	$665M	$1374M	$183M	$-1M	$184M	$832M	$341M
2022	$1959M	$657M	$1302M	$186M	$28M	$158M	$741M	$345M
2021	$1910M	$691M	$1220M	$202M	$116M	$86M	$672M	$345M
2020	$1820M	$674M	$1146M	$208M	$72M	$137M	$626M	$346M
2019	$1676M	$617M	$1059M	$219M	$152M	$67M	$508M	$292M
2018	$1432M	$409M	$1023M		$-38M	$38M	$469M	$267M
2017	$1442M	$449M	$993M	$35M	$-13M	$48M	$483M	$274M
2016	$1431M	$505M	$927M	$64M	$50M	$15M	$484M	$276M
2015	$1236M	$364M	$872M		$-18M	$18M	$455M	$222M

Liquidity & Solvency

5/9

Piotroski F-Score

Moderate

5.4

Altman Z-Score

Safe

The current ratio of 1.93 indicates the firm holds $1.93 in short‑term assets for every $1 of current liabilities, comfortably above the 1.5 benchmark and signaling ample liquidity to meet operating cycles without stress.
A debt‑to‑equity of 0.13 underscores a highly conservative capital structure; equity finances roughly eight times more than total debt, limiting interest‑rate exposure and preserving financial flexibility for strategic initiatives.
The strong cash conversion metric (OCF/NI = 2.21) shows operating cash flow exceeds net income by 121%, reflecting high earnings quality and the ability to fund reinvestment or dividend payouts without relying on external financing.
While total assets have grown modestly YoY, the proportion of cash and marketable securities has risen to roughly 12% of the balance sheet, bolstering the firm’s buffer against short‑term shocks and supporting aggressive inventory turnover typical in grocery retail.

Balance Sheet & Cash Flow Health

Weis Markets, Inc. (WMK) — Cash Flow

Cash Flow Statement ($M)

Year	Operating CF	Investing CF	Financing CF	CapEx	Free Cash Flow	Buybacks	Dividends
2025	$207M	$-105M	$-175M	$-202M	$5M	$-140M	$-35M
2024	$187M	$-145M	$-37M	$-161M	$26M		$-37M
2023	$202M	$-139M	$-37M	$-105M	$97M		$-37M
2022	$218M	$-111M	$-35M	$-123M	$95M		$-35M
2021	$228M	$-245M	$-34M	$-152M	$76M		$-34M
2020	$278M	$-175M	$-33M	$-131M	$147M		$-33M
2019	$172M	$-109M	$-33M	$-103M	$69M		$-33M
2018	$148M	$-91M	$-68M	$-99M	$49M		$-33M
2017	$166M	$-97M	$-62M	$-99M	$66M		$-32M
2016	$152M	$-187M	$32M	$-145M	$7M		$-32M
2015	$137M	$-110M	$-32M	$-93M	$44M		$-32M

Cash Flow Trends

A Piotroski score of 5/9 places WMK in the upper half of financially sound firms, indicating positive signals on profitability, leverage reduction, and operating efficiency over the past year.
The Altman Z‑Score of 5.42 comfortably exceeds the safety threshold of 2.99, suggesting a low probability of bankruptcy and reinforcing confidence in the company’s long‑term solvency.
Free cash flow as a percentage of revenue at 10% confirms that WMK converts a meaningful share of sales into discretionary cash, supporting dividend sustainability and providing headroom for store expansion or technology upgrades.

Balance Sheet & Cash Flow Health

Weis Markets, Inc. (WMK) — FCF & Capital Returns

Free Cash Flow Statistics

Buyback & Dividend Trends

A Piotroski score of 5/9 places WMK in the upper half of financially sound firms, indicating positive signals on profitability, leverage reduction, and operating efficiency over the past year.
The Altman Z‑Score of 5.42 comfortably exceeds the safety threshold of 2.99, suggesting a low probability of bankruptcy and reinforcing confidence in the company’s long‑term solvency.
Free cash flow as a percentage of revenue at 10% confirms that WMK converts a meaningful share of sales into discretionary cash, supporting dividend sustainability and providing headroom for store expansion or technology upgrades.

Executive Insights & Key Takeaways

Key Takeaways

1Y Return

▲ +6.8%

vs S&P -16.8pp

Revenue 3Y CAGR

▲ +1.8%

5Y: +3.8%

Net Margin

1.9%

▼ 3Y ago: 2.7%

ROIC

6.1%

▼ 3Y ago: 9.7%

FCF Margin

0.1%

▼ 3Y ago: 2.0%

Piotroski

5/9

Moderate

Weis Markets delivered a modest 1‑year total return of 6.8%, trailing the S&P 500 by roughly 17% and reflecting a low Sharpe ratio (0.10) amid a volatile equity profile (23.2% vol). The company’s revenue base of $5.0 bn grew only 3.5% YoY, with a tepid 1.8% three‑year CAGR, translating into thin net margins of 1.9% and an operating margin just above 2%. Nonetheless, profitability metrics remain positive: ROE stands at 6.9%, ROIC at 6.1%, and the firm generates free cash flow equal to 0.10% of sales while maintaining a strong current ratio (1.93) and low leverage (D/E = 0.13). Institutional ownership is high at 42.1%, suggesting confidence despite modest growth, and the balance sheet’s Altman Z‑score of 5.4 signals financial safety. Together, these factors paint a picture of a stable but low‑growth retailer whose defensive fundamentals support its valuation while limiting upside potential.

✅ Strengths

High institutional ownership (42.1%) provides a stabilizing capital base and signals confidence in Weis's cash‑generating ability despite modest growth.
Strong liquidity is evidenced by a current ratio of 1.93, allowing the company to comfortably meet short‑term obligations and fund incremental store upgrades without external financing pressure.
Low leverage (D/E = 0.13) and an Altman Z‑score of 5.4 indicate a resilient balance sheet that can withstand economic downturns or adverse commodity price shocks in the grocery sector.
Free cash flow margin, though small at 0.10% of revenue, is positive and coupled with OCF/NI of 2.21, demonstrating that operating cash generation exceeds net earnings and supports dividend sustainability.

⚠️ Risks

Revenue growth remains sluggish at 3.5% YoY and a 1.8% three‑year CAGR, limiting top‑line expansion potential and exposing the stock to competitive pressure from higher‑growth rivals.
Thin profitability (net margin 1.9% and operating margin 2.1%) leaves little cushion for cost inflation or pricing weakness, which could compress earnings further.
The equity return profile is weak relative to the market, with a 1‑year excess return of -16.8% versus the S&P 500 and a low Sharpe ratio (0.10), indicating poor risk‑adjusted performance that may deter growth‑oriented investors.
A cash conversion cycle of only 12 days is efficient but suggests limited working capital buffer; any disruption in supplier terms or inventory management could quickly strain liquidity.

WMK

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Report written 2026-06-07 • Finexus

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