MENU

Why the Adairs Ltd share price is up again

2017 was a turbulent year for Adairs Ltd (ASX: ADH) shareholders.

The company’s share price plunged from above $1.50 at the start of the year to less than 60 cents in June.

But since then things have been looking much better for the retailer of bedroom, bathroom and homeware products.

The Adairs share price is now trading for about $2.10, gaining more than 550 per cent since June last year.

And shareholders enjoyed further gains on Wednesday with the company’s share price jumping 8.8 per cent amid a positive trading update.

Adairs announced that it now expects total sales for the first half of financial year (FY) 2018 to be $149 million, an increase of almost 20 per cent on the prior corresponding period.

The positive first half results prompted management to project sales for the full year to come in at between $300 million and $310 million.

Adairs had previously projected sales for FY 2018 of between $290 million and $305 million.

For FY 2017 Adairs reported sales of $265 million and a gross profit of $156 million.

The company also paid shareholders a dividend per share (fully franked) of 8 cents last year, factoring in the recent gains of the company’s share price that would result in a trailing yield of about 3.8 per cent.

Adairs shares are now changing hands for about 16 times earnings, still below the sector average of around 20 times earnings.

Another furniture retailer, Nick Scali Limited (ASX: NCK), sees its shares trade for about 15.5 times earnings, while Harvey Norman Holdings Limited (ASX: HVN) shares are going for about 11 times earnings.

While some analysts are not so enthusiastic about Harvey Norman, Adairs is living up to positive expectations.

Just a few weeks ago UBS analysts upgraded its price target on Adairs shares from $1.65 to $2.10.

Adairs is expected to release its audited half year results on 26 February 2018.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.