Earnings preview: Bellamy's Australia Ltd

The Bellamy's Australia Ltd (ASX:BAL) share price will be on watch on Thursday when it releases its half-year results. Here's what to expect…

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On Thursday the Bellamy's Australia Ltd (ASX: BAL) share price will be on watch when the infant formula company releases its highly anticipated half-year results.

Last month Bellamy's once again upgraded its full-year guidance following a sustained period of strong demand for its products.

Revenue growth guidance (excluding its Camperdown business) was lifted from between 15% and 20% to a revised target of 30 to 35% on FY 2017's result. It also revised upwards its EBITDA margin guidance from 17% and 20% up to between 20% and 23%.

Unsurprisingly, this sent its shares hurtling to an all-time high of $16.08. Although it has since given back a lot of these gains, there's still an awful lot of growth built into its shares right now. Which means that its shares could come under pressure if it fails to deliver on expectations on Thursday.

With that in mind, I thought I would take a look to see what Goldman Sachs expects Bellamy's to achieve during the first-half.

According to a note out of the investment bank, it expects Bellamy's to deliver sales of $171 million and earnings before interest and tax of $34 million. This represents growth of 44% and 80%, respectively, on the prior corresponding period.

Due to the seasonality of its sales, second-half sales are expected to come in lower than the first-half at $152.4 million, up 35% on the prior corresponding period.

This will take Bellamy's full-year sales to $323.2 million, representing year-on-year growth of 35% – the top end of its guidance range.

Furthermore, thanks to costs initiatives, Goldman has forecast a gross margin of 39.3% in the first-half, before rising to 42.9% in the second-half. It doesn't expect any changes to its most recent guidance.

Should you invest?

Although I expect Bellamy's to achieve what is expected of it, and perhaps even more, I wouldn't be in a rush to invest in its shares just yet. Instead, I think the prudent thing to do is wait for the results release and respond accordingly.

The same applies for industry peers A2 Milk Company Ltd (ASX: A2M) and Blackmores Limited (ASX: BKL) which also release their respective results this week.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »