Despite the Super Retail Group Ltd (ASX: SUL) share price climbing over 2.5% higher today, the retail conglomerate's shares are still down 20% since the turn of the year.
Are its shares in the buy zone?
I think they are. At just 12x trailing earnings and providing a trailing fully franked 5.6% dividend, I think that Super Retail's shares offer investors the winning combination of both value and income.
Especially given the positive start to FY 2018 the company has had.
At its annual general meeting yesterday management advised that the first 16 weeks of trade in FY 2018 has seen almost all of its segments deliver solid sales growth over the prior corresponding period.
According to the release, Super Retail's Auto segment has experienced a 6% lift in sales during the first 16 weeks of FY 2018, with like-for-likes sales growth of 4%.
Its BCF business has posted a 7% increase in sales and a 2% lift in like-for-like sales.
Finally, the company's Sports segment has delivered a 5% increase in sales, with like-for-like sales growing 2% on the prior corresponding period.
What are the brokers saying?
I'm not alone in thinking that Super Retail is a buy. According to notes out of both Citi and Deutsche Bank, the two leading brokers have retained their buy ratings on the retailer's shares following its AGM.
While Citi has a $9.00 price target on its shares, Deutsche Bank is far more bullish and thinks that Super Retail's shares are worth $11.00. That would mean potential upside of over 32% from the current share price.
Overall, I think this all adds up to Super Retail being a great investment option today. I would suggest investors choose it ahead of other beaten down retailers such as Myer Holdings Ltd (ASX: MYR) and JB Hi-Fi Limited (ASX: JBH).
