Although underlying pre-tax profits of £85m beat expectations for at least one City analyst, a 1 per cent dip in the bottom line wasn't good enough for Card Factory (CARD) investors. Even a return to like-for-like sales growth over Christmas and analysts' upgrades to current year numbers weren't enough to stop the shares pulling back in response to these results.
The market is still wary about the future trajectory of profitability. As a result of higher staff wages, climbing utility bills and rising input costs, analysts at Peel Hunt believe margins could conceivably contract by as much as 300 basis points. But management believes downward pressure could be mitigated through tighter cost control and better buying practices. Last year, cash profit margins contracted by just 20 basis points, thanks to good discipline on the cost front. What's more, the group remains sufficiently hedged against the US dollar for the remainder of the financial year. Just as well, given that around half of Card Factory's 'costs of goods' are denominated in the greenback.
Analysts at Peel Hunt expect pre-tax profits of £86m for the year ending January 2018, giving EPS of 19.7p, compared with £85m and 19.5p in FY2017.
CARD FACTORY (CARD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 261p | MARKET VALUE: | £891m | |
| TOUCH: | 261-263p | 12-MONTH HIGH: | 361p | LOW: 232p |
| DIVIDEND YIELD: | 3.5%* | PE RATIO: | 14 | |
| NET ASSET VALUE: | 73p** | NET DEBT: | 54% | |
| Year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013† | 300 | 23.8 | na | na |
| 2014 | 327 | 30.1 | 7.5 | nil |
| 2015 | 353 | 42.7 | 10.6 | 6.8 |
| 2016 | 382 | 83.7 | 19.5 | 8.5* |
| 2017 | 398 | 82.8 | 19.3 | 9.1* |
| % change | +4 | -1 | -1 | +7 |
Ex-div: 4 May Payment: 9 Jun *Excludes special dividends worth 15p a share †Pre IPO figures **Includes intangible assets of £330m, or 97p a share | ||||
