Upgraded earnings again!, page-12

Yes, this looks very attractive. What do you estimate the EPS and DPS to be, currently? Commsec is still showing me the old figures, EPS 32.3 and DPS of 26.0.

@visitor180,

I assume you are asking about EPS and DPS figures for FY2017.
Those are not difficult to work out, because the company has told us what they expect NPAT will be, namely $36m to $37m (a 40% increase on FY2016).

This equates to around EPS of ~45cps, and DPS of 32cps (i.e., DPS of 18cps iro the current half).

However, the issue for NCK, as an investment, is not what FY2017 delivers (for this is already known to the market), but what the financial performance of the company looks like in FY2018 and beyond.

Because the past tow or three years have not exactly been very representative years for NCK; in fact, they have been most unusual, with all the planets lining up perfectly for the business: aggressive store roll-out coinciding with elevated consumer confidence driven by the mother all all housing booms.


For a seemingly well run business with good return on capital, this is a great if you can hang on to it long long term. Potential for both EPS and P/E to rise in coming years.

I wouldn't take it as given that EPS will continue to rise, notwithstanding the ongoing store development program. I've seen same store sales go backwards for bricks-'n-mortar retailers in the past, and when it happens, it isn't pretty.

As for an ongoing rise in the P/E, don't count on that, even if NCK's financial performance doesn't miss a beat during the consumer downturn.

Have a look at what happened to JBH when the consumer spending boom of the mid-2000s came to an end: even though JBH continued to grow its profits right through the consumer slowdown, that didn't stop the market from shooting first, and asking questions later.

Despite JBH's pre-eminence as a retailer, the stock was caught up in the P/E de-rating of the entire listed consumer sector. I suspect NCK will be no different.

On my (admittedly modest) financial forecasts for FY2018, NCK is trading on valuation multiples of circa 13.0x P/E and 8.5x EV/EBITDA.

Even after the correction in the share price in recent days, these valuation multiples don't look overly mouth-watering to me, if we are at a point where the consumer is snapping his/her wallet firmly shut (which it looks like is happening).