Wickes Share Discussion Threads

[roguetraderuk] 29/3/2022 07:00

cant argue with any of that but mkt sees inflation, energy and rates eating into consumer pockets and hence puts a low rating on the shares. sometimes even good results dont help if mkt is fixated. if you hold shares like these you need patience and make sure that while you wait the underlying story for the company doesnt change for the worse. if it doesnt, then eventually there should be a rerating if the mkts view doesnt come to pass. take bellway today. solid results and they are even reducing dividend cover as they feel confident going forward. the shares will probably do well today but the sector is likely to remain under pressure until the mkt decides otherwise.

[elongate] 29/3/2022 06:36

Liberum are well north at 450p. Consensus may remain somewhere just shy of 350p. But I subscribe to the comment on faster growth, market share, and shareholder returns, as alluded to on 27th.

I have not noticed that 5% guidance from Wickes, but Peel Hunt apparently see more than 5% increase in PBT over the year.

‘Despite much-publicized pressure on consumers, revenue in the first 11 weeks of the year matched those in FY21, Wickes expects to make further progress in FY22, and pretax profit estimates are likely to increase by at least 5%, Peel Hunt says. "Looking further out, the store-investment program has been accelerated and management sees scope for a further 20 store openings over the next five years or so, both of which should help to support the top line. The shares remain severely under-priced," Peel Hunt says.’

It seems Wickes has the right sized model for the times, and as management say they generally turn around the curated inventory to fall in line with their payment cycle for goods already sold.

That view may be reinforced by the likelihood of new store openings, taking advantage of their claim of the efficiency of their operation and competitive weakness. “Secondly, our ability to drive higher sales densities and value enhancing returns through new format stores, plus changes in the competitive landscape, creates an opportunity to enter new catchment areas. As such, we now believe there is scope to open up to 20 new stores over the next five years, although this pipeline will take time to build.”

[tole] 29/3/2022 05:57

https://citywire.com/funds-insider/news/expert-view-moonpig-ted-baker-wickes-trainline-and-oxford-instruments/Wickes is too cheap, says BerenbergShares in building materials and DIY group Wickes (WIX) are 'simply too cheap', according to Berenberg.Analyst Thomas Davies retained his 'buy' recommendation but lowered the target price from 290p to 280p on the stock, which closed up 1.9% at 183p on Monday. Full-year 2021 profits for the group came in ahead of expectations. However, for Davies the key focus was the outlook.'While the UK consumer outlook faces increased challenges, Wickes' exposure to do-it-for-me and local trade customers should support estimates,' he said.'We expect improved sales densities and self-help opportunities to underpin profits, and we expect free cashflow improvements to support capital returns.'Although estimates are up, Davies lowered the target price to reflect lower peer multiples and higher-than-expected capital expenditure on the horizon.'However, with the shares trading on c.7x price/earnings, they are simply too cheap,' he said.

[tole] 28/3/2022 20:19

FTSE Flat, Wickes Delivers Strong 2021, Shares Look Cheaphttps://www.morningstar.com/news/dow-jones/202203253602/ftse-flat-wickes-delivers-strong-2021-shares-look-cheapProvided by Dow JonesMar 25, 2022 11:15 AM GMTWickes Delivers Strong 2021, Shares Look CheapWickes 2021 results were very strong, and its shares still look far too cheap for the value on offer, Liberum says. The home-improvement retailer's current share price fails to reflect the quality of the business and its valuation creation opportunities, the brokerage says. Wickes has raised pretax profit guidance by 5% for 2022, dividends are up with the payout higher than forecast, and capital allocation is an exciting split between investing in faster growth and market share gains, and return excess cash to shareholders, Liberum says. The brokerage retains its buy rating and target price of 450.0 pence on the stock. Shares are up 6.3% at 183.4 pence.

[tole] 28/3/2022 20:18

https://internetretailing.net/views/editorial-next-wickes-loreal-morrisons-and-more-on-new-ways-of-reaching-customers-onlineWickes, meanwhile, has found that digital methods it first developed during the pandemic – such as its virtual kitchen planning services – have helped it keep engaging with shoppers well beyond lockdown. It says digital has helped it to report strong growth in its latest financial year.

[elongate] 28/3/2022 19:07

Yes. I read that. I think it was Asda, and there is increased footfall. About 40 to do over 10 years across B and Q and Castorama. Good scheme. And our local Screwfix is very compact from the customer viewpoint.
It may be just personal and local ( I haven’t been to them all ) but I must say I find B and Q more pleasant, and you can browse. ( likely finish up with something you don’t need) And always somebody about to help. A sort of lounge bar experience as opposed to spit and sawdust Wickes, where it seems if you don’t know exactly what you want it’s not so easy. More trade oriented on core, is Wickes I think. More van loading than cramming into the Fiesta.

[essentialinvestor] 28/3/2022 17:35

Elon, KGF in the process of right sizing a number of B&Q stores following
a successful trial last year. They sub let space to either Aldi or Lidl from memory.

About one third of B&Q stores up for lease renewal over the next 3/4
years, so they should be well placed to reconfigure further if necessary.

Raynes Park might be my nearest B&Q and it's the size of a small town.

Another part of their strategy is to use unneeded retail space as a distribution hub, reducing warehousing costs.

[elongate] 28/3/2022 09:51

‘ mkt hasnt like the shares for a long time and also doesnt like the sector (retail)’

Who said that? Sticking ‘construction’ like these generically in ‘retail’, they probably are top end ‘retail’ bets.

And the govt. supports construction, housing, green things - it has to. Not M and S and the like. I get trousers in M and S. Cement from Wickes.

[elongate] 27/3/2022 19:50

WIX. In line with an enhanced payout ratio of 40%, a final dividend of 8.8p is proposed in respect of the 53 weeks ending 1 January 2022, taking the full year dividend to 10.9p.

KGF. Following the very strong performance in FY 21/22, the Board has proposed a final dividend per share of 8.60p. This results in a proposed total dividend per share of 12.40p in respect of FY 21/22.
And share buybacks. But

10.9p at 180p.
or 12.4p at 264p.

Or

8.8p at 180p.
or 8.6p at 264.

Work things out. I have.

WIX has right sized stores catering for the basic must haves ‘in the trade’. KGF UK has bells and whistles in too much space.
Nothing against KGF. It’s undervalued too.

[careful] 25/3/2022 08:32

They are are expanding and opening new stores and there was growth in other areas.
But who needs growth at these prices and dividends?

[roguetraderuk] 25/3/2022 08:27

mkt hasnt like the shares for a long time and also doesnt like the sector (retail). so the reality is until either of those changes its going to be tough for the shares. they didnt warn, they raised the div but the shares are still on 6 times. issue is growth over next few years, mkt doesnt believe hence f/c flatish earnings out to 24/25.

[careful] 25/3/2022 08:20

Great results.
Should be re rated.

[ifthecapfits] 25/3/2022 08:14

Results not too shabby either.

[s34icknote] 25/3/2022 07:09

Wow that's a good div !!!

[s34icknote] 01/3/2022 16:54

27p eps May be final div of 4 p

[essentialinvestor] 17/2/2022 11:47

Market is now focussed on the next 12 months

and questioning levels of profitability going forward, same applies for KGF.

[buoycat] 16/2/2022 23:38

Predicting profits of not less than £83 million makes forward pe of 6. Seems cheap to me

[lennonsalive] 15/2/2022 09:11

I like the fundamentals, but the chart tells a different story here

[bigt20] 14/2/2022 18:00

ElonGate12 Jan '22 - 12:59 - 56 of 70

I believe there were several under 3%, inheriting shares as a result of the demerger from Travis Perkins. If there were a few such, steadily selling anyway and into any rise, it would put the blocks on, and no holdings notification.

--> good post and may be worries about a possible Russian invasion of Ukraine are effecting the market
BTW - its standard practice to put large shareholdings in Annual Reports.

[theisland] 04/2/2022 22:24

Grahamburn - Wickes floatation was not an IPO to raise cash to expand the business, it was a spin-off. So I don’t understand the logic behind your question... the company has been quite clear it doesn’t aim to open new stores in any meaningful amount. I agree store’s refits would be a good use of capital but, aside from that, I think that when shares trade at such low valuation buying them back is an interesting option and more tax efficient than a dividend - probably Wickes has room to do both. I would be skeptical if they start to expand their store estate at this point in the cycle, especially considering that business is shifting online and most companies in the sector actually need to shrink their estate. Not sure how much cash they need for store refits and IT investments, but if I could choose where to deploy the spare cash I would opt for buybacks. Just a difference in opinion and of course I have no particular insight for what I’m saying and I trust management know what to do.

[elongate] 04/2/2022 21:04

As well as paying a dividend, that is what they have been doing in the second half. First things first.

Capital Investment

Capital investment in the first half totalled £8.7m comprising £4.5m of investment in our store estate, £1.4m supporting range review activity, £1.7m of investment in our digital IT capability together with £1.1m supporting IT separation. Capital investment will accelerate in the second half as we scale up investment in our levers for growth with a full year investment expected of around £30m.

[grahamburn] 04/2/2022 19:50

Why would Wickes buy back shares within less than a year of being floated?

Surely using excess cash to upgrade/expand their estate and increase the efficiency of their various operating channels would be a better medium to long term use of funds.

[theisland] 04/2/2022 17:32

Agreed but it’s not so clear to me if the current macro scenario support the disaster those (ex-excess cash) mid single digit P/E multiples are implying... If inflation is the issue, houses are one of the few assets that can protect ordinary people from erosion in purchasing power and property transaction are rising in U.K. and may continue to do so - they are a big driver of home improvement stores revenue. Inflation makes owning a house vs renting it an increasingly attractive proposition and it’s reasonable to expect that some of the cash saved during the pandemic would go into assets that protect from inflation - like houses. Wickes is also focused on the value segment and this should help. Moreover, 30% of Wickes revenue comes from DIFM, which was put on hold during pandemic and is set for a big recovery going forward. Another 30% is made through local traders, which I suspect have not been able to work at full capacity during covid. Supply shortages are hurting current business but have as well the effect of deferring revenue to future periods and this may suggest that earnings are more sustainable than one might think. The only area which is clear will have a slow down due to though comparable is DIY - but still accounts for only 1/3 of revenue. Also looking back to Wickes historical figures for the last 20 years I see some consistency. Ok it’s cyclical, but it’s not the kind of company that during downturns makes huge losses which would make the effort of coming up with a guess valuation quite fruitless. It always reported profits even during though times... In 2004 Travis Perkins bought Wicks for 950 m (if I remember well what I read) when it had 170 stores - I don’t know if that was the right price at the time, but 18 years have passed and Wickes has grown quite a bit since then and today it has more than 230 stores and it’s a much better business with an attractive omni-channels proposition and reading all the improvements that took place during the last few years management seems very capable. Net of excess cash you can buy the company today for roughly 400 million. I don’t think this is a figure any private buyer would manage to pay to acquire the entire business... What I wish is the company starts buying back shares. I can be wrong and would appreciate so much if someone tell me why - DYOR.