Financial Trading Blog
Stock of the day 06/04/2016 – Dunelm Group PLC
After starting 2016 effectively smack bang in the middle of its persistent trading bracket Dunelm soon suffered the same fate as the rest of the market, plunging to a 15 month low of £8.11 by the end of January. Lifting away from this level (as it has consistently done for the past few years), only to resume its fall soon after, Dunelm finally received a market-besting boost with its half year announcement towards the middle of February.
(Source: IT-Finance.com 06/04/2016)
That update saw Dunelm reveal an over 10% increase in revenue to £448.1 million for the 26 weeks to 2nd January 2016, with pre-tax profits jumping by a similarly impressive 10.7%, from £68.2 million to £75.5 million (admittedly these results did include 8 days of the Christmas period, not the 2 reported in the previous year’s figures). Yet the good news didn’t end there; Dunelm bolstered its dividend by 3.1p to 9.1p per share, whilst also announcing a special 31.5p per share dividend as part of its capital structure policy.
Needless to say investors were thoroughly impressed by Dunelm’s data, sending the stock 12.5% higher in the immediate aftermath of the announcement. Add onto that the broader market recovery as February wrapped up and Dunelm was testing its £10 resistance level (sneaking to £10.12 at the start of March) for the first time since last December. Since then things have become a bit rockier for the stock, however, general market malaise and a downgrade from Jefferies taking the stock to a current trading price of £9.12 (IT-Finance.com, 06/04/2016).
In terms of its interim statement Dunelm’s figures might see a comedown from their post-Christmas highs, whilst investors will be keen to hear an update on the company’s plan to increase their presence in London.
Dunelm Group PLC has a consensus rating of ‘Hold’ with an average target price of £9.13.
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