Yes, that's the main reason I'm not buying at these prices. If a recession wasn't on the cards, LOV is trading at a cheap multiple. LOV has a lot going it's way though, chiefly geographical diversification and long runway of store growth. Both of these will mitigate the impact of reduced consumer spending.
The macro picture I see is interest rates staying high/rising until economy slows or enters a recession. Then the interest rates will start coming down. That is great for defensive growth stocks e.g CSL as their revenue won't see a drop from a recession but due to lower interest rates the PE ratio they trade at will go up. However with a recession retail sales will take a hit. So, although I am tempted to top up on retail stocks, I think worse is yet to come for them. LOV will very likely be an exception. I think they can maintain bottom line even with a drop in LFL sales due to overall revenue increasing. I'm keen to see how much a 7% decrease in LFL sales impacts the bottom line.
The lowest EBITDA margin in the last 8 years is 25%. This compares to an EBITDA margin of 30% for last year. If we assume a drop to 25% margins for FY24 due to reduced LFL sales, the bottom line takes a hit of around 17% - more or less the growth in store numbers. From there, EBITDA margins should start improving as it's a low base.
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Last
$34.02 |
Change
0.240(0.71%) |
Mkt cap ! $3.731B |
Open | High | Low | Value | Volume |
$34.17 | $34.31 | $33.92 | $2.699M | 79.25K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 245 | $33.96 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$34.03 | 537 | 2 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 245 | 33.960 |
2 | 580 | 33.940 |
1 | 2 | 33.900 |
1 | 351 | 33.890 |
1 | 351 | 33.850 |
Price($) | Vol. | No. |
---|---|---|
34.030 | 537 | 2 |
34.070 | 131 | 2 |
34.220 | 262 | 1 |
34.300 | 1000 | 1 |
34.350 | 330 | 1 |
Last trade - 16.10pm 29/07/2024 (20 minute delay) ? |
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LOV (ASX) Chart |