I would describe the FY7/17 results as “not bad” –broadly in line with consensus and the updated guidance issued two months earlier. The share price has held up since the pre-open results announcement and spate of negative news commentary this morning from journalists keen to pen an eye-catching headline (SMH, Biz Insider, Reuters, AFR among them), further supporting my view that a lot of negativity is already priced into the stock. Note, too, that the Street remains negative on the stock - Buy (1 analyst), Outperform (1), Hold (5), Underperform (1), Sell (2) - a useful contrarian indicator.
While MYR may be a fairly mediocre company with an intangibles-heavy balance sheet, I don’t think it’s one that’s going out of business any time soon. The shorts, especially, may not like what they see:
# Operating cash flow at $187mn ($186mn in FY7/16)
# FCF for equity holders (after interest and tax) at $39mn vs. market cap of $595mn, not great, but not a disaster either; the decline vs. FCF in the pcp due mainly to greater spend on PP&E
# DPS of 5c for the year (2c for the 2H), per consensus
# Online sales + 41.1% YoY to $177 million – small but encouraging.
Store closures could be costly in the near term, but savings should emerge longer term.
Of course, if trading conditions get really bad, then the shorts might well win the day. As long as conditions hold, if nothing else, there’s three dividends to come in the next 14 months or so.
I wonder what Solly Lew reckons...
p.s. The plan to spend $600mn (mentioned in the Reuters article at the top of this thread) might not be so well conceived, but is old news – the spend ongoing.
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