Sainsbury’s Shares: Analyst Cuts FY26 EPS Forecast

Shore Capital reduced its FY26 earnings per share (EPS) forecast for Sainsbury (LON: SBRY) by approximately 8%, despite a solid performance in FY25.

The adjustment comes as the supermarket signals flat Retail EBIT guidance amid competitive market dynamics.

Sainsbury slightly outperformed expectations in FY25, with adjusted pre-tax profit coming in 1.4% ahead of Shore Capital’s estimate, driven by a 15% year-on-year increase in core grocery earnings before interest and tax (EBIT).

There was also an improvement in general merchandise margins. Argos, however, showed a year-on-year decline.

Shore Capital, which classifies Sainsbury as a “house stock,” praised CEO Simon Roberts for delivering a “firm base to progress.” 

“Sainsbury delivered well in FY25, slightly beating (by 1.4%) our PBT estimate underpinned by a very strong core Sainsbury performance,” wrote Shore Capital. “We cut FY26F EPS by c.8%, something we sense the market has priced in on a PER of 11.3x, EV/sales of 0.36x and EV/EBITDA multiple of only 5.3x.”

Looking ahead, Shore noted that Sainsbury’s plan to retain its value credentials could limit short-term earnings growth, particularly with Asda attempting to stabilise its market position. 

“We see this as precautionary but sensible,” the note said, suggesting potential for upward revisions if competitive behaviour remains rational.

Despite the downgrade, Shore continues to see value in Sainsbury’s stock. The firm also highlighted a £200 million buyback and the planned £250 million special dividend.