Card Factory Share Discussion Threads

[harry_david] 19/4/2024 13:16

darrin, I agree but there is heaps of opportunity in conventional cards. Their market share is miniscule when taking into account the big supermarkets and numerous other retailers, as well as the other non card growth opportunities.
The shares are so underpriced there has to be prospective bidders assessing them right now.

[beachbum1978] 19/4/2024 12:58

All aboard the Card train…Choo Choo

[darrin1471] 19/4/2024 12:28

I'm not convinced online is important to CF.
Online cards is a different business model to card retail.
Fixed warehousing, picking, packing and courier costs are the same for both high and low priced cards and gifts. Moonpig's average order value is £8.20.
CF strength is it gets 70% gross margins by manufacturing its own cards and wrap. That profit in pence would be a tiny part of a £8.20 avg sale.
CF would have no competitive advantage over Moonpig. Any additional margin made from manufacturing the cards and paper would be lost in lower online volumes compared to Moonpig.

[s34icknote] 19/4/2024 12:01

Seller cleared ???

[aishah] 19/4/2024 10:34

Yesterday's Share Magazine piece:
"CHEAP UK STOCKS - HOW TO TAKE ADVANTAGE OF A COMPELLING BUY OPPORTUNITY"

Card Factory (CARD)
Share price: 94.3p
Market cap: £325 million

A single digit PE (price-to-earnings) ratio, double-digit earnings yield - the inverse of the PE ─ and a plump free cash flow yield suggest Mr. Market underappreciates the earnings power, growth potential and cash generation of Card
Factory (CARD).

The value-focused greeting card-to-party supplies retailer’s revenue has returned to above pre-pandemic levels and the business has positive momentum under chief executive Darcy Willson Rymer’s new growth strategy. Wakefield headquartered Card Factory’s value-focused product offer continues to serve it well during a cost-of-living crisis and heap pressure on arch-rival Clintons, which is heading for a
restructuring with potentially a fifth of its stores to close.

As the consumer backdrop brightens, Shares expects the group’s expanded gift offer could feel the benefit ─ at present it only has a 1.7% share of a UK gifting market worth £13.4 billion.

While the UK greetings card market in which Card Factory has the leading value and volume share is considered low-to-no growth, the birthday cards-to-balloons purveyor is cannily developing partnerships to sell through other retailers, which
currently include Aldi and Matalan in the UK and The Reject Shop in Australia.
The acquisition of SA Greetings in South Africa and a franchise deal with Liwa in the Middle East mean there is an interesting overseas growth angle too.

Back in January, Card Factory delivered yet another upgrade to its earnings guidance following strong Christmas sales across stores and online; Liberum Capital cautions that ‘when (not if) Card Factory get its online business moving, one should maybe be concerned for the likes of Moonpig Group (MOON) and Funky Pigeon’.

Results for the year to January 2024 are slated for 30 April, with the consensus pointing to a 21.5% rise in pre-tax profits to £61.4 million following a
series of upgrades. With Card Factory’s balance sheet in a much healthier position, dividends ─ which were put on pause due to Covid ─ could even be restarted
during the year to January 2025. [JC]

[everton448] 19/4/2024 10:18

I agree - which I had assumed meant that they would not declare any dividends with the forthcoming results but might tell us about dividends which They intend to pay in the financial year which has now started.

[omron] 19/4/2024 09:59

Hi Everton - as FY25 started on 1/2/24 I think they were saying they couldnt pay anything until FY25 because the loan was outstanding until 31/1/24

[everton448] 18/4/2024 18:23

Hi OmronI was simply relying on the company having said that there would be no dividends declared prior to the 2025 financial year

[omron] 18/4/2024 18:07

The FTSE 250 average yield is 3.5% so a dividend of 5-6p could lead to a share price of 140-170p. As a ready reckoner that equates to a PE ratio of 10-11x. The market cap would be 500m-600m and EV would be 630-730. With an ebitda of 120m that suggests an EV/ebitda of 5.25x-6.1x which is not too demanding. It would also lead to readmittabce to the FTSE250. C'mon Darcy and Matthias - declare the dividend!

[omron] 18/4/2024 17:59

Everton - I don't agree with your comment. As long as they have distributable reserves they can declare a dividend. The previous loan agreement had a clause preventing dividends but those loans have now been repaid and so they no longer apply. I think they have made recent statements about a 2.5x dividend cover which would suggest to me a 40% payout ratio. Based on where I expect the eps to end up I believe they will announce a dividend of 5-6p.

[yf23_1] 18/4/2024 17:06

I can't make head nor tail of the (23) balance sheet according to ADVFN.
Its got total non-current liabilities at 191.5m (?? not according to 23 report) and current liabilities at 173m (same as report for 23) but total liabilities at 269m.
Well that doesn't add up.
Is ADVFN data just wrong or are they using different IFRS ?

[everton448] 18/4/2024 13:08

Yes absolutely

[garycook] 18/4/2024 12:48

fft,Totally agree !

[fft] 18/4/2024 12:12

Yes, but a statement can be made that dividends will be reinstated. For example they could say that they intend to restart dividends at 60% of the EPS. Given that EPS for this year will be about 15p, and assuming no growth in FY25, it would be safe to assume an interim dividend (payable in November) of 3p and a full year dividend of 6p (payable next may/June).Instantly, there is a forward yield of nearly 10% and that assumes no growth in FY25.

[everton448] 18/4/2024 11:12

we are, but the results are FY24 which means no divi can be included in those results

[v11slr] 18/4/2024 09:20

Just to be clear, we are already in FY25.

[garycook] 18/4/2024 09:07

Should be made clear on 30/04, when FY results are announced.

[weaverbeever] 18/4/2024 08:22

They have a rule to clear the debt before they can pay dividend. Can't remember exact details.

[garycook] 17/4/2024 10:20

Just need to reinstate the Dividend on 30/04,and CARD will fly.

[harry_david] 17/4/2024 09:21

For most retailers the 10% minimum wage increase this month will be difficult to handle. Card with its obvious pricing flexibility should be well ahead of the pack. It is really hard to fault this company.

[harry_david] 15/4/2024 14:33

Everton, they haven't allowed for a dividend any year, but free cash flow this year just on £30 million and doubling in two years. They sure as hell can afford one.

[everton448] 15/4/2024 11:03

Thanks for this. Do they say anything about dividends?

[harry_david] 15/4/2024 10:16

Interestingly, Liberum used the company's trading statement for their valuation. They say the figures are so much better than the market is recognising that there is no need to speculate on a further lift.