Financial Trading Blog
Stock of the day 01/09/2016 – Topps Tiles PLC
Despite being a smaller stock Topps Tiles’ 2016 story reflects the performance of its sector quite nicely. A solid, if uninspiring, first half of the year saw the company flicker between highs of £1.50 and lows of £1.30, a notch lower than its £1.60 opening price or £1.70 2015 peak. Then the Brexit result happened and the stock, and the DIY and home improvement sector as a whole, went south, Topps Tiles losing a stomach churning 40% in just over a week. That left the company at a 21 month low of 95p, though it has seen a mild recovery since then, climbing back to a current trading price of £1.17 (IT-Finance.com, 01/09/2016).
(Source: IT-Finance.com 01/09/2016)
So we know about its Brexit-plagued market performance; how about the state of its financials? Well, Topps Tiles has been on a bit of a roll update-wise. Back in January it saw a 4.4% rise in like-for-like first quarter sales, slower than the year before but higher than expected, while in April it posted a similar 4.7% increase in same-store Q2 sales.
Arguably the company’s most important statement came in July, as it released its third quarter figures into wilds of the red-soaked post-referendum markets. For the first time in 2016 like-for-like growth was better than the previous year, at 6.2% compared to 6% in Q3 2015, with an early Easter adding an extra 0.6% to the company’s revenue improvement. Crucially, however, Topps Tiles claimed it was ‘too early to ascertain the implications of the UK referendum’, but stated it was ‘confident’ in its ability to ‘outperform the market’ going forwards.
This time around investors will be expecting something a bit more substantial Brexit-wise, especially since builders merchant Grafton Group recently reported that demand had taken a hit in the aftermath of the referendum result, news which provided a drag on Topps Tiles’ own stock price.
Topps Tiles PLC has a consensus rating of ‘Buy’ with an average target price of £1.35.
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