One of the best performers on the S&P/ASX 200 index in 2019 has been Breville Group Ltd (ASX: BRG) share price.
Although the appliance manufacturer's shares have edged lower today, they have rocketed an incredible 65% since the start of the year.
This makes it the fifth-best performer on the index behind the likes of tech favourites Afterpay Touch Group Ltd (ASX: APT) and Appen Ltd (ASX: APX), iron ore producer Fortescue Metals Group Limited (ASX: FMG), and fund manager Magellan Financial Group Ltd (ASX: MFG).
Why is the Breville share price on fire?
Investors have been scrambling to get hold of Breville's shares thanks to the release of an impressive half year result in February.
For the six months ended December 31, Breville posted a 15.4% increase in revenue to $440.4 million and a 19.7% increase in net profit after tax to $43.5 million.
Management explained that this strong half was driven by its well controlled inventory, strong growth from both its Global Product and Distribution segments, and successful geographic expansion.
In respect to the latter, during the half the company entered the Germany and Austria markets. It intends to build on this in the second half by expanding into the neighbouring Belgium, the Netherlands, Luxembourg and Switzerland markets with its Sage brand.
In light of this, management advised that it expects EBIT growth to be higher than ~11% in the second half, setting the company up for a strong full year result.
Should you invest?
Whilst I'm a big fan of the company and expect its expansion to underpin further solid earnings growth in the coming years, at 33x estimated full year earnings its shares do look fully valued now. Which may explain why its shares have struggled to push higher with the market today.
As a result, I intend to sit tight and wait in hope of an entry point that provides a more compelling risk/reward.
In the meantime, I think Accent Group Ltd (ASX: AX1) and Super Retail Group Ltd (ASX: SUL) could be worth considering as alternatives.
