Metcash Limited share price soars on strong trading update

After a plunge from above $2 per share back in January, some relief is at last in sight for Metcash Limited  (ASX: MTS) shareholders:

source: Google Finance

source: Google Finance

Shares traded at $1.61 as of the time of writing, up 21% in the past week – including 16% in a single day yesterday – as a result of the half-year results that revealed a lift in revenue and profits as well as a significant reduction in net debt.

Like-for-like sales rose in the Grocery division, but earnings plunged as Metcash was forced to slash prices to compete more effectively with Woolworths Limited (ASX: WOW) and Wesfarmers Ltd (ASX: WES), whose shares have also been sold off this year.

With no plans to reinstate its dividend and intense ongoing competition, it remains to be seen if the recent price strength will last.

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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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