Financial Trading Blog
Stock of the day 03/12/2015 – Sports Direct International PLC
After spiking at £7.64 towards the end of January Sports Direct began to fall across the first few months of the year, with disappointing Christmas results, the departure of its M&A boss and increased pressure over its use of zero-hour contracts helping it on its way to a 2015 nadir of £5.92 by the end of April.
However, the Tory election win soon got things back on track, with Sports Direct seeing a near 5% jump on the day of the results alone. The end of May saw a similar rise with controversial founder and majority owner Mike Ashley stating that the company’s performance was running ahead of expectations. Hovering around the £6.80 for the first half of June, Sports Direct then saw another surge as RBC Capital reported that the company’s online services had led to an unexpected sales boost, sending the stock back above the £7 by the start of July.
(Source: IT-Finance.com 03/12/2015)
The company’s preliminary full year results, announced in mid-July, provided the next bit of good news, with Sports Direct posting a 4.7% rise in total sales to £4.8 billion alongside a muscular 31% jump in pre-tax profits to £313 million. This helped send Sports Direct to a 2015, and 14 month, peak of £8.21 by the start of August, only for the bearish trading of that month to push Sports Direct just below the £8 mark by the start of September.
Despite a trading statement confirming that the company’s trading continued to be in line with expectations, Sports Direct continued to fall across September, touching £7.40 before rising back to £7.80 at the start of October. However, the near €50 million full acquisition of Irish retailer Heatons, of which the company already owned 50%, didn’t go down well with investors, causing Sports Direct to plunge 17% across the first half of October to hit a 5 and a half month low of £6.50.
Yet the purchase of Direct Golf towards the end of October appears to have gotten investors back on board with Sports Direct, which eventually re-crossed the £7 mark by the end of November following news that Scottish football club Rangers had repaid its £5 million loan. Sports Direct sits a current trading price of £7.25 (IT-Finance.com, 03/12/2015).
Sports Direct International PLC has a consensus rating of ‘Buy’ with an average target price of £8.63.
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