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What to expect when Premier Investments releases its full year results

Next week the Premier Investments Limited (ASX: PMV) share price will be on watch when it releases its full year results.

Ahead of its results release on September 20, I thought I would take a look to see what the market is expecting from the popular retailer. Here is a summary of what to look for:

According to a note out of Goldman Sachs, its analysts are expecting Premier Investments to deliver total sales of $1,257.4 million in FY 2019. This will be an increase of 6.4% on FY 2018’s result, but slightly lower than the market consensus estimate of $1,261 million.

Goldman expects this to be driven largely by Premier Investments’ key Just Jeans, Peter Alexander, and Smiggle brands.

The broker has pencilled in a 9.5% increase in sales for Just Jeans to $233 million, a 13.2% increase in Peter Alexander sales to $247.6 million, and a 6.2% lift in Smiggle sales to $311.2 million. The latter is expected to have been driven by strong growth in Asia.

On the bottom line Goldman has forecast net profit after tax of $127.9 million and earnings per share of 80.5 cents, which will be a 17.8% increase on the prior corresponding period. The market is a touch more bullish and expects net profit after tax of $129 million and earnings per share of 81 cents, which will be a 18.8% lift on FY 2018’s profit result.

Finally, Goldman expects a final dividend of 35 cents per share, bringing its full year dividend to 68 cents per share. This will be an increase of almost 10% year on year.

Should you invest?

Based on Goldman’s estimates, Premier Investments’ shares are changing hands at 19.5x full year earnings and offer a fully franked 4.35% dividend yield.

I think this makes its shares about fair value at the current level and worth considering. Though, it may be prudent to wait for the release of its results before making a move, just in case it falls short of expectations.

Incidentally, Goldman has a neutral rating and $16.40 price target on its shares at present.

In the meantime, retail shares such as Accent Group Ltd (ASX: AX1) and Super Retail Group Ltd (ASX: SUL) could be great alternatives along with these cheap buy-rated growth shares.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of Super Retail Group Limited. The Motley Fool Australia has recommended Accent Group. 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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