Shriro (ASX:SHM) share price hits multi-year high today. Here's why

The Shriro Holdings (ASX: SHM) share price is rocketing higher today after the company released a positive trading update.

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The Shriro Holdings Ltd (ASX: SHM) share price is rocketing higher today. This comes after the company released a positive trading update and outlook for its full-year results.

During afternoon trade, the Shriro share price hit a multi-year high of $1.02. Although its shares have since retreated somewhat, the Shriro share price is up 15% to 92 cents in today's session. In comparison, the All Ordinaries Index (ASX: XAO) is 0.6% lower to 6,922 points.

Quick take on Shriro

Shriro is a leading kitchen appliances and consumer products group that markets and distributes throughout Australia and New Zealand. The company operates in an array of consumer goods sectors including electronics, BBQ's and outdoor products, kitchen appliances, musical instruments, and personal effects.

Shriro's company-owned brands include Omega and Robinhood kitchen appliances and it also distributes third-party brands such Blanco and Casio in Australia and New Zealand.

Trading update and outlook

Today's soaring Shriro share price is testament that investors are excited about the company's progress to date.

According to its release, Shriro is continuing to see strong demand in its household-related goods for the fourth quarter. This follows communication to shareholders in an October trading update that advised revenues had increased 14% on the prior corresponding period.

Based on the current projections, Shriro is forecasting full-year revenue to be in the range of $180 million to $185 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be between $29 million to $31 million. And, net profit after tax is forecast within the vicinity of $15 million to $17 million.

Management said the strong result has benefitted from a number of payments and cost-cutting measures due to COVID-19. These included government wage subsidies of $3.7 million, and a head office lease exit benefit of $2.3 million. In addition, decisions were made by the company to reduce spend on marketing activities and decrease staff hours and travel. Furthermore, Shriro delayed the move to its new head office, which won't be completed until 2021.

In total, Shriro reported that these initiatives saved the business approximately $4 million. This offset the fall in revenue in March and April as a result of the COVID-19 lockdowns.

Shriro moved against providing a forecast of earnings for FY21, given the uncertain economic climate.

About the Shriro share price

The Shriro share price hit a multi-year high today of $1.02, strongly rebounding from its lows of 39 cents reached in March. Although, the company's shares have retreated slightly from this high, the Shriro share price is still up 33% since the start of 2020.

Shriro has a market capitalisation of $85.5 million and a price-to-earnings (P/E) ratio of 10.2.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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