$27.62
$50.45
bear $27.62
base $43.66
bull $50.45
margin of safety $22.00
market price* $43.62
The business. Village Super Market, founded in 1937, runs 34 supermarkets under the ShopRite and Fairway names in New Jersey, New York, eastern Pennsylvania and Maryland, plus three Gourmet Garage specialty markets in New York City. It is a member and part-owner of Wakefern Food Corporation, the retailer-owned cooperative that owns the ShopRite, Fairway and Gourmet Garage names and supplies almost all of Village's merchandise. Village must buy at least 85% of its products from Wakefern, and Wakefern returns part of its profit to members as a patronage dividend. In May 2020 Village bought five Fairway stores (Upper West Side, Upper East Side, Kips Bay and Chelsea in Manhattan, and Pelham, NY), a food production center and the Fairway name out of bankruptcy for $73.6 million. Sales were $2.32 billion in the year to July 2025, up from $1.63 billion in fiscal 2016. Most of that growth came from the Fairway deal and from food inflation in 2021 to 2023. Same-store sales rose 2.1% in fiscal 2025. The founding Sumas family controls the company through its Class B shares. Fiscal 2026 ended in July 2026, and its annual report has not yet been filed. How we measured earnings. We start from cash from operations and take out three things: swings in working capital, stock-based pay, and the capital spending needed to keep the stores competitive. Almost all of Village's capital spending goes to replacing, enlarging and remodeling stores it already has. Examples are the Old Bridge replacement store (opened March 2024), Watchung (opened April 2025), and East Orange plus one more replacement store being built for 2026 and 2027. We therefore treat nearly all of it as a cost of staying in business, and only about $1-5 million a year as growth spending. This is the most important accounting judgement in the valuation. Capital spending has run well above depreciation for a decade ($58.8 million against $36.7 million of depreciation in fiscal 2025). As a result, owner earnings run well below reported profit: about $40.7 million in fiscal 2025 against net income of $56.4 million. On this basis, owner earnings per share over the last ten years were $2.12, $1.52, $0.94, $1.68, $1.25, $2.15, $1.90, $2.85, $1.80 and $2.76 for fiscal 2016 to 2025. Lumpy store spending drives most of the swings. Each year's figure ties exactly to net income plus depreciation and other non-cash items, less capital spending. To value the business separately from its finances, we add back the roughly $3.8 million of interest Village pays. We also take out the after-tax interest it earns on its large cash balance and its notes from Wakefern ($13.5 million of interest income before tax in fiscal 2025). We then count that cash and those notes directly as assets. On this pre-financing basis, the business produced a median of about $32.6 million a year ($2.21 a share) from fiscal 2021 to 2025. That window runs from the first full year after the Fairway purchase, because earlier years describe a smaller company. Over the full ten years the median is lower, about $26.8 million. The weakest stretch was fiscal 2017 to 2020, when margins were squeezed and averaged about $20.7 million a year. Recent trend. On this basis, fiscal 2025 rose about 72% over a depressed fiscal 2024, mostly because store spending dropped back after the Old Bridge build. We do not project that rebound forward. In the first nine months of fiscal 2026, net income fell from $40.9 million to $38.8 million. In the April 2026 quarter it fell from $11.2 million to $9.0 million, and same-store sales slipped 0.2%. The company blamed Winter Storm Fern, lower patronage dividends and rebates from Wakefern, more promotional spending, and sales its new Watchung store drew away from its own nearby stores. Management has budgeted $75 million of capital spending for fiscal 2026, though only $33.8 million was spent in the first nine months. The base case therefore starts the next year at $31.5 million, about 10% below fiscal 2025. Growth we credit. Village has added stores mainly by acquisition and has not steadily opened new ones, so we credit no new stores. The only growth we credit is the long record of low single-digit same-store sales gains, which mostly pass through food price increases. We credit it at or below its demonstrated pace. We give no credit to digital sales growth, margin gains, any further acquisitions, or management's 1% to 3% same-store sales outlook for fiscal 2026. Bear case ($27.62 a share). Lower Wakefern patronage dividends, competition from new stores in Village's areas, and rising labor costs in New Jersey bring back a squeeze like fiscal 2017 to 2020, Village's own worst stretch. The business produces $16-20 million a year for four years. It recovers only to $22 million, below its ten-year median, with no growth after that. That level holds for 20 years and then fades to nothing over the following ten. On that path the business is worth about $266 million. Village owes $56.5 million of term loans and $18.3 million of finance leases. All of the term loans are fixed through interest-rate swaps at effective rates of about 1.7% to 5.3% until 2027-2038, which lowers their true cost by about $6.5 million. Against that it holds about $99 million of cash beyond what the stores need, plus $111.2 million of notes from Wakefern at floating rates (as of July 2025), maturing in 2027 to 2029. The balance sheet therefore adds about $141.5 million, giving $407 million for shareholders. Even at the bottom of this case, the business earns several times its interest bill. Base case ($43.66 a share). The business produces $31.5 million next year and grows 1.5% a year for ten years, reaching about $36 million. It holds flat at that level through year 30 and then fades out over ten years. We extend the story that far because of Village's record: nearly 90 years in business, a ShopRite member since 1946, owned real estate at several stores, and store-replacement spending already charged against earnings each year. The business is worth about $502 million. It owes the same roughly $68 million of debt (after the low-rate benefit) and holds about $210 million of cash and notes, so shareholders' value is about $644 million. Bull case ($50.45 a share). The new and replacement stores that opened in 2024-2026 lift volume, and price increases continue. The business starts at $34 million, close to the fiscal 2025 level, and grows 2.5% a year for ten years to about $42.5 million. It holds there through year 35 and then fades out. The business is worth about $602 million, or $744 million with the net cash and notes. What could make this wrong. First, maintenance spending could be structurally higher. If store replacement keeps running at the $75 million budget, ongoing cash earnings would sit near $20 million, close to the bear case. Second, Village depends almost entirely on Wakefern. A cut in Wakefern's patronage dividends, which is already visible this year, flows straight into margins, and part of Village's cash is held as deposits and notes at Wakefern. Third, unionized employees take part in multi-employer pension plans. Village could owe a withdrawal liability if it left a plan or a plan failed, and no case models that. Fourth, the family controls the votes through the Class B shares, so outside holders cannot change capital allocation. On the positive side, Village is cheaply and conservatively financed: its cash and Wakefern notes are nearly three times what it owes. Margin-of-safety price ($22). We are fairly confident in sales and the store base. We are less confident in the level of earnings, because per-share owner earnings have ranged from $0.94 to $2.85 in the last decade, depending mostly on how much the company spends on stores. The worst plausible outcome is a long margin squeeze combined with a permanently higher replacement-spending cycle. With net cash, cheap fixed-rate debt and owned real estate, the company would survive that, but per-share earning power could stay near $1.10-1.40 for years. If we are wrong about both the spending level and how long the business lasts, the shares are worth roughly the high $20s. At $22, about $9.60 of the price is covered by cash and Wakefern notes beyond what the company owes. That leaves roughly $12.40 for an operating business whose median cash earnings before financing were $2.21 a share over the past five years and about $1.44 even in its worst four-year stretch, fiscal 2017 to 2020. The current $1.00 annual Class A dividend is about 4.5% of that price over the holding period. The price assumes a three-to-four-year holding period for the value to be recognized. At $22, the dividend plus a move toward the middle of our range implies a 20% annual return over that period. If the bear case plays out instead, the cash cushion limits the loss of capital. A higher price would depend on the base case, and the record of spending swings does not support relying on it. Change from the previous analysis. Our earlier figures were built on a different basis and are not comparable. The business itself has changed little since then, apart from the softer April 2026 quarter and the lower Wakefern patronage dividends noted above, which are reflected in the lower starting point.