Financial Trading Blog
Stock of the day 13/04/2015 – Poundland Group PLC
Since its opened trading at £3.56 back in March of last year, things haven’t necessarily been smooth sailing for the bargain store chain. The company fell to its all-time low of £2.85 in the middle of May, and then spent the rest of 2014 trading between £3.10 and £3.20. Poundland opened 2015 at £3.25 before hitting a low of £3.16 early in January. However, come the 10th February, Poundland had rocketed to £4.20 after it was announced that the company had put in a £55 million big for its main bargain chain rival 99p Stores.
(Source: IT-Finance.com 13/04/2015)
Yet the scrutiny this deal has come under has sent the stock to a current trading price of £3.26; in fact, Poundland’s stock has fallen 13 out of the past 14 trading days, often by 1.5-4.5%. The initial 15.36% gains seen in the aftermath of that deal announcement has been completely lost, with Poundland now trading below its pre-deal price. Poundland’s CEO James McCarthy said he was ‘disappointed and surprised’ by the claims that a full scale investigation into the takeover deal is required, with reports circulating that the company may have to sell 80 of its stores to satisfy the Competition and Markets Authority that the takeover of 99p Stores won’t create too large a market dominance by Poundland.
Whilst the progress of this deal has been Poundland’s main focus, the company should also be announcing its first quarter results for 2015, with analysts forecasting full-year sales of £1.12 billion and adjusted pre-tax profits of £44 million, this latter figure being a 23% increase on this time last year. The strong figures forecasts have countered the bearish situation surrounding the 99p Stores deal, leading to an average rating of ‘hold’ alongside a consensus target price of £3.63.
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