where is this puppy heading?, page-4

Thanks for your views.  The positive view on TRS is based on the last AR results not being "as bad" as some predicted.  So, while there has been a turn around in losses, the AR still showed:

• Net Profit After Tax (NPAT) down 1.9% to $14.2m
• Return to ‘same store’ sales growth in the second half of 2015, but down 0.8% for the year overall

On the positive side:

• Total sales rose 6.4% to $756.8m
• Costs rose slightly overall with store expenses as a percentage of sales up 0.4 points to 34.3% and admin costs rose but remained at 4.8% of sales
• Return to positive free cash flow, ended the year with a net cash position of $5.3m from net debt of $17.4m in 2014 (I believe this was the singular reason for the stock's rerating)
• Closed 9 underperforming and/or high-cost (rent) stores and opened 15 during the year

Most commentators see TRS as being expensive now given its high PE and what will be only moderate growth (SPs tend to prematurely react to expectations).  One of the things saving them, for the time being, is the unexpected pause in the decline in value of the aussie dollar.  If the A$ resumes its decline, TRS may be squeezed, although I believe this effect is overly emphasised by some.  Commentators are also looking to the 1/2 years results to see if TRS delivers on their outlook guidance.

I am a holder and am playing the devil to solicit views: in 12 weeks' time, I will be very much in the green or losing the profits that have built up over the last few months.  The way I see it, the bigger risk is on the downside (from here) than the upside as the latter would require substantially better growth than has been delivered to date, no matter how impressive their turnaround has been.