The McPhersons share price is going gangbusters on a full year profit beat

Is McPherson's Ltd (ASX: MCP) a turnaround story?

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The McPherson's Ltd (ASX: MCP) share price has rocketed 19% or 27 cents to $1.70 this morning after the health and beauty products group beat its own profit guidance with strong sales growth across its product range.

For the year ending June 30 2019 adjusted net profit before tax came in at $19 million, which the company reports represents 17% growth on the prior corresponding period when excluding discontinued business Coty Fine Fragrances.

Excluding discontinued operations full year earnings per share came in at 13 cents on sales revenue of $210.3 million, which represents growth of 33% and 7% respectively. 

The group expects to pay a final dividend of 6 cents per share to take full year dividends to 10 cents per share on 13 cents per share of earnings that equals a 77% payout ratio. Going forward the minimum dividend is expected to be a minimum of 60% of underlying profit. 

Net debt also fell 24% to $7.5 million in a result that suggests the company's core operating metrics are heading in the right direction. 

On first blush this looks a strong result, especially in the context of it being a consumer-facing company with many other retailers blaming stalling sales and profit downgrades on the weak economic environment in Australia, amidst an indebted consumer and feeble wages growth.

For the small-cap enthusiasts then McPhersons could be a turnaround story worth some more research. 

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

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 Scott Phillips.

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