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
$32.99 |
Change
-0.210(0.63%) |
Mkt cap ! $3.618B |
Open | High | Low | Value | Volume |
$33.28 | $33.68 | $32.72 | $4.027M | 122.0K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 53 | $32.99 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$33.00 | 500 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
2 | 618 | 32.880 |
2 | 945 | 32.870 |
1 | 685 | 32.820 |
1 | 2385 | 32.810 |
1 | 489 | 32.800 |
Price($) | Vol. | No. |
---|---|---|
33.000 | 500 | 1 |
33.020 | 250 | 1 |
33.140 | 685 | 1 |
33.160 | 618 | 2 |
33.180 | 38 | 1 |
Last trade - 16.10pm 24/06/2024 (20 minute delay) ? |
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LOV (ASX) Chart |