Card Factory Share Discussion Threads

[mallorca 9] 10/1/2020 09:33

The Naked Trader website was updated yesterday …..

he has added to his short here and strongly feels that it will have gone to zero within 2 years !
Huge debt !

[mallorca 9] 10/1/2020 09:11

and yet the CEO yesterday picked up 10k shares at £1.09 !

[bargainbob] 10/1/2020 09:09

As Edmund J says , they have a good management time recently joined , so internally they knew they needed to change things .

Though his timing to buy was out by a few days . Though he did suggest invest half before and half after results . Ouch.

[smokybenchod] 10/1/2020 09:02

Talk of dividend cover and yields is largely irrelevant as profits are falling every year which will impact forward cover and they are currently revising the dividend policy. This is the reason for the markdown in share price - the outlook statement which was weak, not the current year trading. The market clearly can’t see any path back to profit growth and neither could I at £3 which is why I sold.

[eezymunny] 10/1/2020 08:59

It's frightening how with falling LFL's and gently rising costs EBITDA absolutely collapses.

My little spreadsheet says a 5% lfl fall in sales and costs rising around 3% causes EBITDA to fall from c. 90m to c. 55m. Then debt/ebitda starts to trouble the banks (covenants not mentioned in AR AFAICS!)?

CARD ain't going bust in a hurry but one wonders if they'll live to regret all those special divis instead of paying down debt. Gross arrogance IMVHO.

[garycook] 10/1/2020 08:52

MM,s totally taking liberties atm 2/1 Buys sells,and they mark it down.There must be an overhang !

[bargainbob] 10/1/2020 08:11

Minerve , watching with interest . Ready to join the paty.

[johnybigarms] 10/1/2020 08:02

The shorters will always slag a company, the longs will see value in a company, and yes I meant the prospective dividend is around 12%

[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.