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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Yes, that's the main reason I'm not buying at these prices. If a...
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Last
$32.27 |
Change
0.500(1.57%) |
Mkt cap ! $3.539B |
Open | High | Low | Value | Volume |
$31.71 | $32.44 | $31.63 | $5.077M | 157.5K |
Buyers (Bids)
No. | Vol. | Price($) |
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1 | 143 | $32.25 |
Sellers (Offers)
Price($) | Vol. | No. |
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$32.27 | 8346 | 2 |
View Market Depth
No. | Vol. | Price($) |
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1 | 3878 | 32.220 |
1 | 31 | 32.170 |
1 | 581 | 32.160 |
2 | 704 | 32.140 |
1 | 1796 | 32.120 |
Price($) | Vol. | No. |
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32.270 | 7981 | 1 |
32.320 | 1596 | 3 |
32.350 | 2765 | 1 |
32.390 | 1285 | 3 |
32.430 | 816 | 1 |
Last trade - 16.10pm 13/05/2024 (20 minute delay) ? |
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Last
$32.31 |
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Change
0.500 ( 1.54 %) |
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Open | High | Low | Volume | ||
$31.75 | $32.43 | $31.62 | 10690 | ||
Last updated 15.59pm 13/05/2024 ? |
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MAGNUM MINING AND EXPLORATION LIMITED
Neil Goodman, MD
Neil Goodman
MD
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