2024-01-22 18:51:40
Quincaillerie Richelieu’s 4th quarter results indicated that pressure on the specialized hardware retailer’s gross margins was still present. (Photo: 123RF)
What to do with the shares of Quincaillerie Richelieu, Canadian Pacific Kansas City and Ag Growth International? Here are some analyst recommendations likely to move prices soon. Note: the author may have an opinion completely different from that expressed.
Quincaillerie Richelieu (RCH, $42.72): pressure on margins causes a fall in the stock
Fourth-quarter results disclosed last Thursday indicated that pressure on the specialty hardware retailer’s gross margins was still present, and the stock price fell 10% during the two trading sessions that followed.
Sales for the quarter totaled $453.7 million, down 0.8% from a year earlier, but slightly above analysts’ consensus expectations of $444 million, reports Zachary Evershed, analyst at National Bank Financial.
Profit margins contracted 380 basis points to 13% compared to the previous year, which resulted in earnings before interest, taxes, depreciation and amortization (EBITDA) of $58.8 million, while the analyst of the FBN had forecast a margin of 13.7% for EBITDA of $60.7M. Earnings per share were $0.51 compared to the analyst’s forecast of $0.54.
The situation will not instantly recover, as management once once more revises downward its EBITDA margin forecast to 12-13% for the year 2024. With this information in hand, Zachary Evershed lowers his profit margin forecast by 13 .2% to 12.6% for the next year.
As a result of this drop in profit margin forecasts, the analyst reduced his target price from $47.50 to $45.50, a multiple of 20.5 times the expected earnings per share in 2025.
Given that this new target price leaves little room for significant appreciation of the stock, the analyst lowers his recommendation from “outperform” to “performance equal to the sector”.
Canadian Pacific Kansas City(CP, $105.45): the effects of network expansion and management operational efficiency will be increasingly evident in 2024
1705950901
#watch #Richelieu #Hardware #Canadian #Pacific #Kansas #City #Growth #International
