Financial Trading Blog

Stock of the day 27/06/2016 – Dixons Carphone PLC



Can Dixons Carphone mitigate its post-Brexit losses with a strong full year update on Wednesday?


Up until last Friday Dixons Carphone had been having a fairly muted, if still negative, 2016. Kicking off the year at £5.02 the stock immediately began to fall, slumping to £4.27 after the first 3 weeks of trading. The payment of its interim dividend, and a 5% rise in like-for-like sales over Christmas, then helped lift Dixons Carphone back towards £4.75 by the end of the month, only for the stock to suffer in the turbulence that defined the first fortnight of February.

Dixons Carphone PLC Chart June 2016 Spreadex Financial Spread Betting
(Source: IT-Finance.com 27/06/2016)

From that point onwards the stock was in a state of gradual decline, Dixons Carphone just about keeping its head above the £4 mark for the next 3 months. Things picked up in the back half of May, the company’s brief rise capped off with a high of £4.61 following a fourth quarter update that saw CEO Seb James applaud a ‘stonking year’ of trading after posting a 5% jump in like-for-like sales for the 4 months to the end of April.

Yet Dixons Carphone couldn’t remain at that level for long, the pre-referendum run-up taking the stock below £4 for the first time since the end of 2014 before recovering as the polls started to point to a Remain win. Then the results came out, and Dixons Carphone plunged 13%, at one point hitting a 32 month low of £2.41. Dixons Carphone PLC sits at a current trading price of £3.40 (IT-Finance.com, 27/06/2016).

In terms of the company’s full year figures on Wednesday, analysts are expecting Dixons Carphone to post a 17% rise in pre-tax profit to £447 million despite a 3% drop in revenue to £9.6 billion. The company will also be under pressure to update on the impact of the Brexit referendum result, and whether any further store closures will be in the pipeline.

Dixons Carphone PLC has a consensus rating of ‘Buy’ with an average target price of £5.25.


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