The GWA Group Ltd (ASX: GWA) share price is down slightly during lunchtime trading today. At the time of writing, the shares are 0.36% lower and changing hands for $2.74 a piece. The high-yield share price has enjoyed a rally over the past couple of months, climbing 23.4% since 24 June.
For context, the ASX All Ordinaries Index (ASX: XAO) is also in the red as of lunchtime trading, down 0.65%. Over the month, the index is 2.75% higher.
The Australian designer and bathroom fitting company also released its FY25 results yesterday. The business posted a 1.2% year-over-year rise in revenue, an 11.7% increase in tidal EBIT from ordinary activities and a 12.3% increase in total NPAT from ordinary activities.
The Group's strong result means it has been able to deliver higher returns to shareholders with improved earnings per share and a 3% increase in full-year dividends.
The board declared a fully franked final dividend of 8.0 cents per share, bringing the full-year dividend to 15.5 cents per share, up from 15.0 cents for the prior year.
The record date for entitlement to receive the final dividend is 22 August 2025, with the payment date of 5 September 2025.
The full-year dividend represents a payout ratio of normalised net profit of 88% and reported profit of 95%.
Separately, given the company's robust financial position and continued strong cash flow generation, the board also decided to implement an on-market share buyback of up to $30 million.
Here's what Macquarie Group Ltd (ASX: MQG) has to say about the stock following the results announcement.
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More upside to come from GWA Group
In a recent note to investors, the broker has confirmed its outperform rating on GWA Group shares. It also lowered its 12-month target price to $3.05, down from $3.15 earlier this year.
At the time of writing, the new target price represents a potential 11.3% upside for investors.
"Valuation: We lower our TP to $3.05 (from $3.15) on earnings changes, leaving multiples unchanged," Macquarie said in its note.
"Retain Outperform. The group is managing cost and cash generation well, given soft macro backdrop. Valuation looks attractive: GWA trades at 10.3x EV/NTM EBIT vs a five-year average of 10.7x and FY25E dividend yield of 5.6%."
The broker noted that GWA reported FY25 EBIT of $76.3 million, which is lower than the broker expected, as a result of a top-line miss.
"The market context is missed, but QWA is managing this well. Customer, cost and cash outcomes all remain good."
Going forward, Macquarie expects that monetary policy changes should continue to support the stock as a precursor for improving conditions, of which GWA will be a late-stage beneficiary.
The broker also commented that the group has not provided explicit guidance for its outlook, but repair and renovation markets are expected to remain subdued, commercial markets mixed, and new residential to inflect in late FY26.
