The share price of Nick Scali Limited (ASX: NCK) could be set to jump higher this morning after the furniture retailer posted yet another impressive result.
Key highlights from the first-half include:
- Half-year revenues from ordinary activities up 15.5% on the prior corresponding period to $118.4 million.
- Half-year profit after tax up 44.7% to $20.5 million.
- Operating expenses decreased to 36.4% of sales, compared to 39.5% in the first-half of FY 2016.
- Earnings per share of 25.2 cents.
- Interim dividend of 14 cents per share fully franked.
- Three new stores opened during the half.
It's hard not to be impressed by this stunning result. In November the company provided guidance of half-year net profit after tax growth in the range of 30% to 35% on the prior corresponding period.
But it has absolutely smashed that guidance out of the park with its growth of 44.7% and I feel management should be commended.
Furthermore, the first metric I look for with retailers is same-store sales growth. Nick Scali has not disappointed on that front, posting same-store sales growth of 10.1% during the period.
Pleasingly the second-half looks like it could be even stronger. In the first four weeks of the new year the company has confirmed double-digit growth in both total sales orders and comparable stores sales orders.
Is it a buy?
At 16x trailing earnings I think Nick Scali's shares looks remarkably cheap considering it delivered profit growth of almost 45% during the half.
Whilst I have concerns over how a weakening Australian dollar may impact its imports in the future, at present the currency is being reasonably resilient.
Because of this I think Nick Scali is up there with Premier Investments Limited (ASX: PMV) and RCG Corporation Ltd (ASX: RCG) as retail shares to buy today.
But I would recommend investors keep a close eye on the state of the housing market and its margins if the Australian dollar sinks significantly lower.
