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Analyst Says SNAP Benefits Are Safe, Despite New House Bill

Analyst Says SNAP Benefits Are Safe, Despite New House Bill
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The new House farm bill could have a major impact on the supplemental nutrition assistance program, also known as food stamps. The stocks of grocers that accept SNAP benefit cards — such as Walmart Inc (NYSE: WMT), Target Corporation (NYSE: TGT), Kroger Co (NYSE: KR) and SUPERVALU INC. (NYSE: SVU) — could be negatively impacted by the new bill, but Height Capital Markets analyst Stefanie Miller said the bill is unlikely to pass.

The legislation would significantly reduce SNAP benefit spending by enacting work requirements for eligible recipients. Even a Republican-controlled Senate is unlikely to vote in favor of such restrictions, Miller said; instead, the analyst expects Congress to go with what it does best: the status quo.

“We expect Congress will instead extend the current farm bill, which expires on Sept. 30, into mid-2019,” she said. “Next year, Congress must draft a new farm bill; if either or both chambers have a Democratic majority, we would not expect legislation will contain similar restrictions that effectively reduce SNAP benefits.”

In other words, SNAP benefits and SNAP spending appear safe for now, which is good news for grocery investors. In 2017, 42 million Americans received SNAP benefits. Walmart is the single biggest beneficiary of SNAP spending. The company has estimated that roughly 18 percent of all food stamps are redeemed at Walmart.

The House bill that reduces benefits may not ever make it to the Senate for a vote. Democratic Rep. Collin Peterson of North Dakota has said he believes as many as 50 Republicans could vote against the bill in the House.

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Latest Ratings for WMT

Aug 2018ArgusMaintainsBuyBuy
Aug 2018Credit SuisseMaintainsNeutralNeutral
Aug 2018UBSMaintainsNeutralNeutral

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