The DuluxGroup Limited (ASX: DLX) share price hit a record high of $7.10 this morning after the group posted its results for the six-month period ending 31 March 2017.
Below is a summary of the result with comparisons to the prior corresponding period.
- Net profit after tax of $72.7 million, up 14.2%
- Sales of $881.2 million, up 3.5%
- Earnings before interest and tax of $106 million, up 7.8%
- Operating cash flow increased by 76.2% over the prior corresponding period
- Net debt to EBITDA at 1.5x
- Interim dividend of 13 cents per share, up 13%
- Forecast for full year net profit to be higher than 2016 equivalent of $130.4 million
This is another impressive first-half result from one of the S&P/ASX 200's (Index: ^AJXO) (ASX: XJO) best growth and income businesses.
In fact thanks to its dominant market position, brand power, and the ongoing reliability of underlying demand for its paint products the company has been able to deliver profit and dividend growth every half since 2010. Supporting the success story over this period has been the tailwinds of low interest rates, high house prices, and modest GDP Growth.
Since 2010 the company's debt has expanded a little, but remains reasonable at 1.5x EBITDA and demand for its high-quality paint is likely to remain resilient into the future.
Should you buy?
Overall, the company's balance sheet, track record, and long term outlook paint a decent picture for investors. The shares now trade on around 19x annualised earnings with a full year (fully franked) yield likely to be in the region of 3.5%. This looks reasonable value to me and if the stock got much cheaper I think it would be well in the buy zone.
Others worth a look that are still benefiting from rising Australian household wealth over the last five years include the likes of furniture business Nick Scali Limited (ASX: NCK) or electronic and white goods supplier JB Hi-Fi Limited (ASX: JBH).
