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I’ve lost a bucketload here, and can’t bring myself to average down on this one, but I agree with Rocket that i can’t see this going much further down. Famous last words…
Not that I agree with the buy back programme, would have rather had a special dividend, but at least the price drop means they can buy more shares back at a cheaper price.
PETS is well run but, with a new CEO,.... so RBC Capital Markets, I think, wants to see how she manages the new economic situation..... there was some media talk of pet owners having difficulties with vet fees in this current climate ( no insurance ?) ....but that isnt likely to be among the key PETS customer profile who may well have pet insurance
They are clearly looking to set a new trading range and are trying to create a low to start that off from
I am not invested at present , but I like the company....
AGM is on Thursday - 7th July
Cant say they havn`t reached their target price, so it`s a successful forecast in their eyes. Bought back in as I believe the price is below the true value. Shops adapt to customer spending habits so know what will sell. Be very supprised if this went any lower.
One broker downgrades a stock to 280p and the price falls 10% in an hour. Large volume of sales almost entirely AE. One has to wonder what's really going on here. If anything.
so RBC downgrade to current price 280p against the backdrop of excellent figures and a resilient business with excellent recurring revenue etc....suggesting PETS is fully valued... a strangely timed 'downgrade' just as PETS initiate a buy back programme ...... people love their pets, look after their pets and pet ownership is hardly a fad....fully expect a 'great growth against difficult backdrop' upgrade from the same folk in a few months as they change their 'position', all part of the investment /trading game , let's see what ii's builds a position in PETS over coming months ;-)
RBC Capital Markets downgraded the shares to 'underperform' from 'sector perform' and slashed the price target to 280p from 330p, partly on valuation grounds.
The bank said PETS has a strong position as a specialist player in the UK pet care market. "However, we believe valuation looks full and consensus forecasts look demanding.
"We expect further earnings growth to be more challenging to achieve given mounting pressures on the consumer and a wider spend rotation away from 'pandemic-winning' categories. Hence, we downgrade to underperform."
RBC said current consensus is looking for circa 2% earnings per share growth in FY23, with a further 12% growth in FY24. "Even with investments coming down in FY24 and PETS' more defensive offering, we think that this looks challenging to achieve, given pressured consumer budgets and margin headwinds," it said.
It noted the shares currently trade at around 15x CY23 estimated price-to-earnings, towards the middle of the historic range.
"We note that this is at a premium to others in the UK retail space, and looks demanding for a retailer with 100% UK exposure, at a time when consumer spending is under pressure," RBC said. "We have more valuation upside for some other UK retailers at these levels, such as JD Sports and WH Smith."
RBC said the company has benefited over the last two years from its market leading position in a sector that has seen strong growth. According to data from Statista, 62% of UK households now own a pet, compared to around 40% before the -pandemic, it said.
"Whilst we think that the defensive nature of pet care should provide PETS with some topline resilience, we think that further growth will now be more difficult to achieve in the light of rising cost of living and the benefits from higher spend on new pets fading away."
I'm buying here it's hard to choose where to buy with the market but this will sit nice in the portfolio for years to come the price of dogs and some other pets is crazy and they won't be going anywhere for a while I'm in no rush for the price to raise quick though whilst I accumulate a few more as and when I can. Best wishes to all
I appreciate it's ex div day, however, demand is clearly there :-)
it's not an exact science, but just as an example of volume today to 2pm, provides an idea as to the demand for shares despite brokers lowering the sp/sectors and trying to find a sweet spot for generating trades .... :-)
Vol. Sold 720,561
Sold Value £2,222,342.29
Vol. Bought 1,493,141
Bought Value £4,626,666.46
"Any ideas on what is causing such a slump in the market?"
Robert,
If you need to be asking that...the stock market is something you should keep well away from....
I'm sure I've seen you ask that on another board.
The main reason seems to be US inflation, and fears it is going to roar away uncontrollably. China's covid lockdown is another reason. Cost of living crisis in the UK.
Any ideas on what is causing such a slump in the market?
Robert
very positive double page feature on PETS ... Shares believes Pets at Home is among the sector’s most resilient operators. At the results, Pets at Home expressed confidence that full year 2023 pre-tax profits will be in line with the analyst consensus at that time,
of £151 million with a range of £146 million to £157 million. Including the impact of an accounting policy change, Pets at Home said it expects 2023 underlying pre-tax profit will be £131 million, up from last year’s £126.4 million. In terms of current trading, Pets at Home said the pet care market remains ‘robust and in growth’, with registrations into its Puppy & Kitten club ‘continuing well ahead of pre-pandemic levels and growth in customer spend maintained across all categories and channels’. Traffic is up both in stores and online........
HSBC also highlights the retailer’s structural growth, market leadership, high free cash flow yields and net cash. ‘We think it is wrong that Pets at Home has been caught up in the retail
sell-off, it is just a very different demand profile to discretionary peers, more akin to staples, but with structural growth underpinning demand’,...........In addition, the high-quality retailer offers an attractive dividend yield of between 4.1% to 4.6% based on the ordinary dividends of 14p and 15.8p......
Based on 31st March 2023 guidance:
eps = Profit after Tax = £120.8m / 500m shares less buyback 14m = 486m shares = 24.85p for 31st March 2023.
Using average P/e Ratio of 16 means the share price in 12 months time = 397p.
Therefore , share price range is £3.70 - £3.97 for NEW CEO.
As per my previous post : Before all the analysts crank the numbers: Results shows eps at 23.16p x conservative p/e ratio = 347p. Based on the average Pets at Home P/e Ratio which is 16. Therefore 23.16 x 16 = 370p.
New RNS out.
''Pets at Home’s customers have maintained higher spending, while registrations into its ‘Puppy and Kitten club’ continue well above pre-pandemic levels. Ongoing themes of “pet humanisation” - animals being considered as family members - and more affluent owners being prepared to fork out for premium products, meant Pets at Home expects to keep growing underlying pre-tax profit to £131mn in 2023, compared to £126.4mn in the year to 31 March.''.....''Broker Numis considers Pets at Home “meaningfully undervalued” with a current forward PE of 12, as three-quarters of its sales are within the non-discretionary bracket and look less likely to be caught out by negative consumer sentiment. A 48 per cent increase in dividends and a £50mn share buyback programme won’t go amiss either...... Upgrade to Buy.''
https://www.investorschronicle.co.uk/news/2022/05/25/pets-at-home-holds-onto-animal-ownership-boom
she is probably contracted to do so....but a good early start to do it.... I think she will do well... it is a well oiled machine and runs well..so..she can let a lot of day to day stuff just carry on whilst working on growth decisions..... nice position to step into
Onwards and upwards for PETS.
Strong signal of intent from CEO designate, £100k of your own money into your new company!
Excellent news today and excellent SP recovery
Really good results ....what they didn't tell you I have now moved up from 330p to ....
A Share Valuation with 500m in issue means eps was 23.16p x 15 P/e ratio = 347p.
Dividend
The Board has recommended a final dividend of 7.5 pence per share, an increase of 36% on the prior year.
This takes the total dividend for the year to 11.8 pence per share, an increase of 48% on the prior year, reflecting our strong cash performance and balance sheet.
The final dividend will be payable on 12 July 2022 to shareholders on the register at the close of trading on 16 June 2022
14th June - Last Day to buy to get the dividend - buy before close of trading
15th June - Ex Dividend Day
16th June - Registrar Day of those Holding at close on 14th June
12th July - Dividend Pay Day
Eleonora Dani, analyst at Shore Capital, said:
"As we continue to believe that [Pets at Home's] valuation does not reflect the underlying quality of the business, we reiterate our 'buy' recommendation.