No. of Recommendations: 1
Doing better than my sausage roll pick then…
Ooof, that's not the shape you want to see on a graph. Unless you want another bite.
The "financial press" suggests the 15% one-day drop in Gregg's stock is merely because they think this period's earnings might be dented by hot weather?? If true, that's a bit short sighted.
As it is now back to prices they first hit in Feb 2019 and last touched in late 2020, it does seem a bit cheap, so I'm thinking I might join you. My main concern is the overwhelming focus on rapid expansion. I don't quite understand why, with sales up 63% in three years comparing 2024 to 2021, profits were up only 30% in the same three year stretch. Very superficially that suggests declining profitability on the incremental business. Is there a more subtle explanation for the falling net margins that I'm missing?
Earnings estimates for this year are lower than the 2024 figure, and so are estimates for 2026 (by a hair), so "consensus" is that they are completely ex-growth from a profit point of view, a cash cow. On the lighter side, that ex-growth earnings yield is 8.2%, considerably better than gilts. If we see 10% I'm in : )
Dips are normal. Or so I tell myself. DG spent the entire last year a fair bit below where I pumped it almost two years ago.
www.mungofitch.com
Jim
