The Accent Group Ltd (ASX: AX1) share price has been well and truly out of form in 2022.
Since the start of the year, the footwear-focused retailer's shares have fallen 46% to $1.32.
Is the Accent share price good value now?
The good news for investors is that one leading broker believes the weakness in the Accent share price has dragged it down to a very attractive level.
According to a note out of Bell Potter, the broker has reiterated its buy rating and $2.20 price target on the company's shares.
Based on the current Accent share price, this implies potential upside of 67% for investors.
But it gets even better as Accent traditionally shares a good portion of its profits with shareholders. Bell Potter doesn't expect this to change and is forecasting payout ratios of ~80% for FY 2022 and FY 2023.
This is expected to lead to fully franked dividends per share of 5.8 cents in FY 2022 and then 10.7 cents in FY 2023. This implies potential yields of 4.4% and 8.1%.
Why does Bell Potter rate it as a buy?
Bell Potter notes that Accent's shares are trading at a lowly 9.8x estimated FY 2023 earnings. It believes this is too cheap considering the company's dominant market position in the Australian footwear market (~30% market share) and its significant opportunity in athleisure. It explained:
AX1 is currently trading on 9.8x FY23e P/E (BPe) which we think looks conservative given its dominant market share in the Australian footwear retailing industry and growth outlook in the youth focused sports apparel vertical.
We think AX1 has a long runway ahead in terms of the athleisure market opportunity and is well placed to gain share given its accelerated vertical sales strategy. We sit ~6% ahead of consensus NPAT expectations for FY24e primarily driven by higher store based revenues & vertical sales assisted by the Glue Store roll out which in our view should see overall margin expansion through the medium term.
