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@wyndrum, sorry to say but your post makes no sense, because you comparing a rapid growth company to a value play...to knock this into context...
Boo SP 5yrs ago was 32p...today 320p I.e 10x soon to be more when over 400.
Next SP 5yrs ago was £80...today £63.50 I.e decline off approx 25%!
If you looked at PEs you would have missed Boo.
A high p/e is irrelevant and in fact good for all growth companies, its a common characteristic...so you can understand amazon has a p/e off 118 still today...is it overvalued?
Other rapid growth stocks in US like DKNG operating at pe of 925! Its still flying and will continue to do so!
I know which company id be boo or nxt? One will rocket over the years whilst the other plays like a saturated value stock, toppsy turvy...Boo all day!
By all means move onto next if you think its safer. But its fair to say you don't understand how PE works or its limitations.
Of course their growth will continue.
The pandemic has advanced online sales by 5 years, something that was never factored for and works massively in Boohoo's favour.
They continue to open up more websites globally, further growth.
More acquisitions resulting in more growth.
Their own factories to increase margin and cope with demand better.
They still have plenty of opportunities to grab and a lot more market share to grab, growth is guaranteed and the next five years for them should be more like 40% per year or higher, certainly not under 25%
Wyndrum, valid point but the amount of cash that BOO has an effect on how much weight you put to PE ratio. This very subject was covered really well in an article back in Jan.
https://simplywall.st/news/despite-its-high-p-e-ratio-is-boohoo-group-plc-lonboo-still-undervalued/
The question for all is whether you think growth will continue?? I think its undervalued.
Greet insight.
How do you think they achieved 433 previously & do you think they can regain that high?
Thanks wyndrum
in case any have been wondering why Boo's SP still seems somewhat rooted given every company reporting is declaring ballistic on line sales I will remind all again that Boo is already very highly valued.
As an example Next have a PER of 13.06
Boo has a PER of 52.33. So Boo is valued at 4 times greater than Next
Next's full year accounts last year showed £4b turn over with £750m profit
Boo's last year accounts showed £1.2b turnover and £73m profit
And Boo are valued 4 times GREATER than Next.
This shows the high premium already levied on Boo to continue to grow at a colossal rate. (I think they will not disappoint this time around but at the same time shareholders must appreciate that this is not a one way ticket as, at some stage, Boo's valuation will reduce to the mean. (if it did it over night you could divide the SP by 4 and be looking at 80p per share....)
As I say I think there is still plenty of gas in the tank now but to project 20 years ahead and a £60 share price is a best I think a stretch
"At John Lewis stores, online sales surged by 73% in the six months to 25 July, "helping to offset the impact of shop closures". They now account for more than 60% of sales overall for the department store chain, up from 40% before the pandemic hit."
https://www.bbc.co.uk/news/business-54187674
"Announcing its financial results for the first six months of the year, including a 34% drop in sales"
https://www.bbc.co.uk/news/business-54187614
"City analysts are forecasting a 40% increase in net income across the group this year. The company has used its size and cash generation to swoop on struggling peers."
https://www.fool.co.uk/investing/2020/09/16/the-boohoo-share-price-is-now-the-right-time-to-buy/
I don't see this going under 310... strong support... Blue close again as looks like MARKET is going to recover during day... Good thing is PRICE is held really well... 320 may get broken again... but if we can get over 330 is going to be very bullish and push over 350 easy...
Maybe I can see us maybe hovering down to around 305p this week, the real fun I feel starts next week.
All signs are looking promising - exciting times.
Interesting that todays opening price was 310 - is that the definition of a tree shake...
We have 9 trading days to buy in at 310-320 for a 25% to 50% gain - be greedy
I now stand stronger next to this calculation from yesterday as Next business is going to Boohoo
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I have been looking at the numbers & think 480 is a reasonable target for 6 months time, with an interim SP on 400 approx come Sept 30.
If you look at 2016-2020 numbers they grow 44% to 97% every year without fail.
In 2020 they did 1.234B revenue generating 91M profit.
Extrapolate the growth at 50% (they guide 25% but 44% is the lowest they've done & lets face it Covid will be 50-100%) so a conservative 50% puts Feb 2021 @ 1.85B revenue with 135M profit!
Current Market Cap is 4B would be 6B giving a 480 SP
Compare ASOS who did 2.73B revenue with only 35M profit & now have a 5B Market Cap
Boohoo looks more interesting as multiple brands, better worldwide presence & higher profit than ASOS.
Also through Social media & celebrity endorsements they seem to have better momentum
ASOS is 'only' growing at 13% - 19%
What do you think? Have I missed anything? If they already achieved 433 before the scandal then the 400-480 range seems perfectly achievable based one the above data?
So from this it looks like a 50% gain is achievable in 6 months
"be greedy only when others are fearful"
Warren Buffett
Next SP is up 2.63% on H1 results
https://www.lse.co.uk/rns/NXT/results-for-the-half-year-ending-july-2020-6yghgzj5x4aw2i6.html
Next last year did 3.997B revenue with 854M profit
BUT in H1 their sales from RNS were -33% down with guidance for -12% down on full year - Ouch!
They only made 9M profit H1 - down massivly
In store sales are clearly declining & people are moving online
Boohoo last year was 1.234B revenue with 90M profit
H1 guidance is 25% growth that they will achieve or exceed
Estimated H1 profit should be around 55-60M+
That is a lot more than Next
This is excellent news for Boohoo