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
$32.87 |
Change
-0.140(0.42%) |
Mkt cap ! $3.605B |
Open | High | Low | Value | Volume |
$33.20 | $33.50 | $32.87 | $7.753M | 234.3K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
2 | 293 | $32.87 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$33.12 | 40 | 3 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 33 | 32.870 |
4 | 1831 | 32.850 |
1 | 690 | 32.830 |
1 | 536 | 32.820 |
1 | 669 | 32.800 |
Price($) | Vol. | No. |
---|---|---|
33.120 | 40 | 3 |
33.190 | 669 | 1 |
33.200 | 40 | 1 |
33.240 | 669 | 1 |
33.290 | 669 | 1 |
Last trade - 16.10pm 28/06/2024 (20 minute delay) ? |
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