We expect Beacon Lightong's 1H17 result will likely be impacted by the following headwinds. 1) Soft like-for-like (LFL) sales growth due to Masters' aggressive clearance activity as it exits the market in late November. 2) A lower Gross Margin in response to the lower AUD/hedge rate and an inflated pcp. 3) Lower operating cost leverage on a more subdued LFL sales outcome. Tailwinds from the Masters closure should persist into FY18, a year where the store rollout is also likely to accelerate. Beacon Lighting (BLX) continues to boast a strong balance sheet, high ROE (>25%), industry-leading margins and strong cash flow generation. Our EPS forecasts fall by 6.8% in FY17, 6% in FY18 and 5.7% in FY19 on the back of lower like-for-like sales, Gross Margin and operating leverage assumptions. See the analyst’s note and rating here: (VIEW LINK)
Morgans is Australia's largest national full-service retail stockbroking and wealth management firm, with more than 300,000 clients, 500 authorised representatives and 850 staff, operating from offices in all states and territories. As well as...
No areas of expertise