Will Card Factory Deliver A Sweet Earnings Message To Investors?
Connor Campbell | Aug 08, 2017 13:48
By Connor Campbell, Financial Analyst, Spreadex
Like so many UK stocks, a stellar opening 5 months of 2017 led to a far trickier situation for Card Factory (LON:CARDC) from June onwards. Back at the end of January the stock got things kick-started with a solid post-Christmas update, with total sales for the 11 months to the end of December rising 4.3% and like-for-likes up 0.4%. And while both of those figures were quite a sharp drop-off from the 8.1% and 2.8% growth seen the year previous, investors still responded positively to the news, eventually leading Card Factory to £2.88 by mid-March.
Here the stock suffered a bit of disappointment, as its full year results at the end of that month revealed a 1.1% dip in pre-tax profit to £82.8 million due to a combination of lower footfall, rising wages and sterling’s sustained slump. Yet Card Factory soon overcame this brief market blip, and with the help of Theresa May’s snap election announcement in mid-April managed to push above £3 and beyond.
The next milestone came on the 25th May, the day of its first quarter update, as Card Factory struck an 11 month peak of £3.42. The stock was helped to that high by a 6.1% rise in underlying group sales – admittedly with the boost of an extra trading day – and the subsequent promise that it would return surplus cash to investors towards the end of the current financial year.
However, it was here that things became more difficult for Card Factory. Pre-election jitters, the chaos of the actual result, rapidly rising inflation and stagnant wages all plagued the stock in June and early July, dragging it to a 3 month low of £2.83. Yet since then the stock has mounted a spirited comeback, and now sits at a current trading price of £3.25.
In terms of Thursday’s statement, any news on its recent trial entry in Ireland, as well signs that the wider retail concerns of the last few months haven’t had too much of an impact on its performance, will be welcome.
Card Factory PLC has a consensus rating of ‘Buy’ with an average target price of £3.83.
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