Big names have garnered the spotlight this reporting season. On Switzer TV [1] this week, Paul Rickard said the season is not too bad, with results from CBA, Cochlear, Boral, AGL and BlueScope all “up there”.
Today, I want to look at stock picks by some of our Switzer Super Report experts and see how they have stacked up this reporting season. These stocks are not in the big market cap league of CBA and BHP but have managed to report some solid results.
Charlie has already provided a detailed analysis on Baby Bunting’s (BBN) maiden results, outlined in today’s article. Charlie made the call back in November 2015 and says there is growth in this business and “my core belief is you can ONLY make sustained capital gains in companies that are sensibly growing their businesses”.
That was then and this is now. The February reporting season saw sales in the infant-goods warehouse chain up 9.2% to $108 million in the six months to December 27.
Let’s look at some other picks from our experts.
Nick Scali
The well-run retailer has barely put a foot wrong in the last few years, according to Tony Featherstone. “An average ROE of 33% over the past five years is outstanding for any company, let alone a small retailer,” Featherstone said in his note [2] on retailers that are beating the retail gloom.
Well, Nick Scali’s half-year profit was a record high – soaring more than 40% to $14.1 million in the six months to December 31. The strong result was on the back of the property market boom in Sydney and Melbourne, as discerning home buyers sought to furnish their homes in the distinct Nick Scali style. The retailer has forecast a rise of up to 41% for its full-year profit and faces a strong growth outlook. The retailer has plans to add up to six more stores to its existing 48 chains over the next year. On the day of Nick Scali’s announcement (9/2/2016), shares in the business rose 6%, while the wider market experienced steep falls.
[3]Source: Yahoo!7 Finance, 18 February 2016
JB Hi-Fi
James Dunn suggested JB Hi-Fi was well positioned [4] for the growth in sales during the December 2015 Christmas season.
Dunn said iPhones, gaming (hardware and software), TV audio, computer and tablet sales were the categories expected to drive JB Hi-Fi to a reasonably strong Christmas sales period.
Indeed, JB Hi-Fi’s net profit rose 7.5% to $95.2 million in the six months ended December, boosted by strong sales in each of these categories.
Earnings-per-share was $0.961, an increase of 7.5% on the prior period. Total sales rose 7.7% to $2.12 billion.
The retailer is gearing up to take market share, following the demise of the Dick Smith stores.
“Our job is to gain market share from any of our competitors – if there are opportunities to get it from others, we’ll take it,” JB Hi-Fi chief executive Richard Murray said.
[5]Source: Yahoo!7 Finance, 18 February 2016
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