Card Factory Share Discussion Threads

[woodhawk] 10/1/2020 07:52

I also note that fenner66, keeps harping on, over and over, about Peel Hunt (because they have reduced their share price target) but completely fails to mention Liberium who have maintained their 170p target. I wonder why?

[ukneonboy] 10/1/2020 07:49

Div cover is 1.2 times so perfectly adequate and nothing to worry about

[garycook] 10/1/2020 07:47

Woody,I think typing error 1.2 Dividend cover is nearer the mark.

[woodhawk] 10/1/2020 07:43

"I’m confident in a slow recovery to the share price, and the dividend cover this year is now around 12% for 2020"... I assume you mean the prospective yield is currently circa 12%. Dividend cover is NOT 12%.

[johnybigarms] 10/1/2020 07:32

CF will get studied by analysts over the next week, and value will be found in its numbers, the £5 to £10 million reduction in 2021 profits is estimated now, it’s covered by the omission of the special dividend, but that’s a bonus, not a given, public sentiment will improve over the next few years as we actually Brexit and deals are found, I think the deals with the third party stores will prove to be a great idea, no costs of staff and shops, a margin made with no company outlay, but that needs time to fruition, the cash generation is still good and I feel has helped up well in a difficult high street, the online sales will be at a decent margin and once the public get used to its presence, CF will see ever increasing sales numbers, covering or offsetting the lower footfall in their shops.
I’m confident in a slow recovery to the share price, and the dividend cover this year is now around 12% for 2020

[fenners66] 10/1/2020 07:28

UKN .... lol

So ignore yesterday's recommendation after the data and instead believe the guesses from 4 weeks ago.

Do you use the FT and a pin to choose your "investments" ?

[ukneonboy] 10/1/2020 06:36

marksp2011

your previous post is "old" news. It was issued yesterday morning.

why regurgitate it again ?

this is the opinion of just 1 broker and conversely about 3 / 4 weeks ago regional stockbroker Redmayne Bentley were recommending buying C/F shares

[marksp2011] 10/1/2020 06:21

Peel Hunt downgrades Card Factory after shocking Christmas

Peel Hunt has downgraded Card Factory (CARD) after a ‘truly shocking’ Christmas update.

Analyst Jonathan Pritchard downgraded his recommendation from ‘reduce’ to ‘sell’ and cut the target price from 150p to 100p. The shares tumbled 28.4% to 100.3p yesterday.

‘Card Factory’s Christmas update is truly shocking,’ he said. ‘Like-for-like has collapsed in recent weeks, and management seems to have lost all confidence: forecasts are being decimated, the special [dividend] will become a distant memory and the ordinary will also probably be cut.’

Pritchard said the problems were not all structural as ‘availability was poor through the key Christmas season’.

‘The shares are clearly going to come under severe pressure... but a high single-digit multiple is the best they can expect, and the yield support is essentially gone,’ he said.

[marksp2011] 10/1/2020 05:42

That trading statement is particularly poor. I think it is the third year of "weaker than expected", minimum wage forex etc etc impacting the results. They probably need 4-5% LFL growth to stay still.

profit warning, end of special dividend and a "strategic review" This is a cheap and cheerful vertically integrated retailer or cards, wrapping, balloons etc. How do you change that strategy? All growth for the last few years has come from opening more sites - that has always been a strategy in UK with a shelf life.

I would like to know what exchange rates the company thinks are normal, three years of foreign exchange excuses wear thin.

The surplus capital being returned has never really been surplus

It is another company floated with too much debt and paying out too much cash.

Underlying all this, it does look to make money so I expect the share price will bounce a bit in time but it has been a very poor investment and I don't see that changing anytime soon.

We will see if it is going to survive when the accounts are published - falling LFL sales and revenues, rising debt and stocks and increasing input costs don't make a good picture.

[fenners66] 10/1/2020 00:21

lastchance23
9 Jan '20 - 23:11 - 1581 of 1583
"you cant justify a 28% drop without a decent drop in profit."

For a 1st profit warning for next year they are saying £5-10m
That's say 7-14% of last years pre-tax
Its 200-400% of last years retained.

You are right the trading statement is vague.
Previously they have given info on net debt - but not this time.

Why not ?

Remember , most profit warnings come in threes
Because no one ever wants to own up how bad it is - in case it gets better....

[essentialinvestor] 09/1/2020 23:33

Fenners, good summation.

[leopoldalcox] 09/1/2020 23:19

With a bit of luck this will receive a bid from private equity. There is scope to increase margins and probably close some less profitable stores, just what may appeal

[lastchance23] 09/1/2020 23:11

Fenners - the reporting is still very vague, it is not huge 7% fall in profit like with Aston Martin; its been tough trading conditions with Brexit and election, you cant justify a 28% drop without a decent drop in profit. Rolling out stores is not cheap, my guess is they will cut this back and develop some new initiatives with the strategic review. And again with the special dividend, a special is a luxury in this day and age, yes its a pull for investors, but its not a reason to abandon ship, people have been unrealistic and its been oversold. Its scientific fact, sentiment is more important than the business case, but I think there is some manipulation going on here, look at the chart, you might as well throw darts in the dark. According to simply wall street, fair value is over £2, it has a good ROCE and the forecast ROE in 3 years is 24%, it will never reach fair value like a paypal or TESLA, but its now running below 50% of fair value with extremely low PE to market. For new buyers, this is a bargain.

[riverman77] 09/1/2020 22:59

Agree, the lfl fall itself not too bad. It is the continuous drop in earnings which is worrying and shows no sign of ever bottoming out.

[fenners66] 09/1/2020 22:42

last chance - you are quoting the -0.6% LFL and on the face of it its not much.

Until you drill down through the numbers as we did earlier.

First half was up 1.5%
9 months was up 0.9%
to get to month 11 from there down 0.6% by my calcs is about -3% in the busiest 2 months of the year.

Factor in the cost increases
the company's 1st profit warning of EBITDA down £5-10m next year
a strategic review
and unknown cash to be spent to try and fix things.

That news reflecting in abandoning the special div and giving less confidence in the ord div.

[minerve 2] 09/1/2020 22:14

If you are bullish on this stock you should be relishing the fall. It is an opportunity to build a position and let us hope that it isn't a quick recovery. A stubborn low share price with an improving background in trade is ideal for the investor.

I will do some DCF calculations on this stock and report back....

Hold fast.

[lastchance23] 09/1/2020 21:29

I was in 1.40 and 1.15, 1.08 after seeing director add. Yes paper loss, just going to be annoying logging in reminding yourself to hold for a while, until you can get out of position.

[johnybigarms] 09/1/2020 21:01

Massive overreaction today, the numbers were good considering the bleak year with Brexit and elections and week confidence, I took a punt at 1.40p and will hold for a recovery, seen it all before, NEXT did the same £80 riding high, fell to £38 a share with profits reducing, that’s a 54% drop, but a solid business given time bounces back, £70 a share last week, with Card Factory I’m happy to wait out and collect the dividends, when the dust settles this will find its feet again, it’s only a paper loss as long as you don’t panic and sell out, worth buying a few more at this level

[lastchance23] 09/1/2020 20:34

Hi Bob, time will tell, but the recent down trend is off the charts with technical analysis, and the share price fall does not reflect the fundamentals, a 0.6% reduction in like for like is tiny, if it were 10% or higher, but something is a miss hear. It really depends upon sentiment, people are more fearful of retail now days, but unless people plan stop on giving daughters birthday cards, or want to be scrooge at Xmas, there's a product and a company that's got a well integrated supply chain.

[bargainbob] 09/1/2020 20:21

Last chance cannot see it being a 150 bagger from here.

[lastchance23] 09/1/2020 20:13

CEO bought 10,000 at £1.10 this morning, never will drop to 50p, this is all stop loss games.

[lastchance23] 09/1/2020 20:10

Just commenting on the doubters, guys the RNS was not that bad, a 0.6% decrease in like for like against currency and footfall issues with Brexit and some understandable overheads in the roll out of another 47 stores. If Tesco or Sainsbury had a 0.6% decrease like in recent trading statements the variance would be max 5%, not a 28% sell off, after a recent share price down trend. This is market makers and fun with stop losses. Nobody seems to mention the CEO bought in 10,000 at £1.10 this morning. There are only 2 brokers on HL, one has set reduce and target £1, this is reason for sell off, other is on hold; but this is all share my friend, not enough analysts and not valid consensus...The business itself is market leader and whilst I am not sure about further expansion, with the online integration and word of mouth it may help. Card business is resilient, its not just birthdays, but valentines, anniversary, graduation, driving test, and gift market is huge with lot of corporate xmas parties/do's/sponsorship opportunities. This will probably pick up slightly over next week or so, stay flat, and then bankers will be back in. 3-6 month wait guys, but hold. I forecast minimum £150 by dividend.

[stevieb2190] 09/1/2020 19:35

There are some issues on the horizon without a doubt...i wouldnt get carried away with the aldi deal, i think it will collapse within a year when they realises that staff are wasting valuable time sorting the cards out with envelopes as cards are going naked due to plastic waste ect, that the cards take up valuable space and the fact that everyone including clintons is offering a value range .
There will be issues with wages and i dont just mean minimum wage, they are pushing the boundaries with staff staying after hours..unpaid.to tidy and restock..its only a matter of time a legal action could ensue...card have been opening stores in smaller catchment areas and when you offer 10 cards for a £1 you soon reach saturation..there is even signs of card factory fatigue, a good friend of mine turned 40 and received 6 of the same card...i could go on....on the plus side..i think the australia deal looks a good and more substantial move...there is massive scope for significant price increases without damaging the model..they are cash generative...and i think a tskeover target very soon...these are just my opinions, i think anyone who bought north of £1.40 will struggle in the short tesm to break even but i think things will settle until the first quarter of 2020...as i say just my opinion, love to you all and peace and prosperity for 2020

[smokybenchod] 09/1/2020 18:35

Only clowns are the ones that didn’t listen at 180