Stock of the day 13/07/2015 – Sports Direct International PLC

With the latest earnings season getting underway this week, it isn’t just US stocks in the spotlight as Sports Direct International, one of the UK’s most recognisable brands, reports its full year 2014 results on Thursday.

A rocky 2014 that effectively ended up leaving the company flat on the year has led to a similar performance in 2015. After opening January at £7.18, the stock spiked at a year high of £7.61 on the 20th of that month; however, news a day later that founder Mike Ashley, whose business idiosyncrasies are often the burden of Sports Direct investors, had sold more than £100 million worth of sales dragged the company away from its early highs.


(Source: IT-Finance.com 13/07/2015)

By the middle of February it had hit £6.50, and could only receive a mild bounce following its first quarter statement, which saw a 14.6% increase in quarterly profit to £280.7 million, with a jump in group sales by 11.2% to £655.4 million. Despite these strong figures, Sports Direct soon resumed its decline and by the end of April was trading at a 2015 nadir of £5.92. Part of this decline was inspired by the pre-election jitters in the UK, with the attention to zero hour workers having market ramifications for the company, one of the biggest users of the controversial contracts.

Of course, like most UK stocks, the Tory election victory saw Sports Direct jump by just shy of 5%’ combine that with another leap at the end of May following comments from the company stating that its performance was running ahead of expectations and Sports Direct’s 2015 was back on track. This left it at £6.70 going into June, and a series of big gains across the end of that month lifted the stock back to £7.31. An intraday high on the 1st July of £7.39 left Sports Direct at its best price since January, and whilst it has slipped slightly since then, it is still above its year’s starting price at £7.26 (IT-Finance.com, 13/07/2015).

Based on its bullish statement in May, Sports Direct itself is reporting that it will beat the 23% rise in pre-tax profits to £295 million analysts are expecting, whilst underlying earnings should arrive at the as forecast £380 million. It will be also interesting if the company makes any comment on George Osborne’s recently announced living wage, something that is likely to affect the notoriously low-paying company. Regardless, Sports Direct has a consensus rating of ‘buy’ with an average target price of £8.23.

Monday’s stock news:

Whilst it looks like 2015 will be the ‘year of Greece’, the ‘year of M&A’ is giving it a run for its money, with UK chemical maker Alent joining the fray this morning after it was bought by the USA’s Platform Speciality Products for £1.35 billion. This unsurprisingly saw Alent jump to an all-time high of £4.85, up 44% from the £3.36 the stock was trading at last Friday. It’s the 8th deal of its kind by Platform in the past 3 years as the American company tries to expand its chemical portfolio.

At the other end of the spectrum, proposed changes to credit laws in Poland has taken its toll on International Personal Finance, which tumbled by nearly 18% this Monday to a 2 and a half year low of £3.87. Lonmin, meanwhile, fell to an all-time low of £0.74 this morning following the news that platinum is set for its biggest weekly fall in 9 months.