Why the GUD share price is storming 6% higher today

The GUD Holdings Limited (ASX:GUD) share price is storming higher on Friday after the release of its half year results…

| More on:
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

The GUD Holdings Limited (ASX: GUD) share price is on course to end the week on a positive note.

In afternoon trade the diversified products company's shares are up 6% to $11.87.

This makes it the third-best performer on the ASX 200 index behind Avita Medical Ltd (ASX: AVH) and Link Administration Holdings Ltd (ASX: LNK).

Why is the GUD share price storming higher?

Investors have been buying GUD's shares following the release of its first half result.

According to the release, during the first half the company's modest organic growth and business fitness initiatives combined to offset Automotive currency headwinds.

This led to GUD delivering an underlying EBIT (pre AASB 16) 0.1% ahead of the prior corresponding period at $44 million. This was in line with management's expectations and means the company is tracking to its FY 2020 guidance.

On the bottom line, the company reported an underlying NPAT (pre AASB 16) down 2.4% to $29 million.

Despite this slight decline in underlying NPAT, the GUD board has held firm with its dividend. It has declared a fully franked 25 cents per share interim dividend.

Segment performance.

During the half the company's Automotive segment delivered a 4% increase in revenue to $173.6 million and a 3% decline in underlying EBIT (pre AASB 16) to $43.1 million.

Whereas the Davey segment only grew revenue by 2% to $53.5 million but managed to deliver a 7% increase in underlying EBIT (pre AASB 16) to $4.4 million.

Management commentary.

Managing Director, Graeme Whickman, was pleased with the half given the challenging trading conditions.

He said: "The result is both in line with management expectations and consistent with our Investor Day remarks in October. We knew the first half would be challenging for the Automotive businesses with the impact of a weaker $AUD and domestic cost inflation balanced against the quantum and timing of our initial price increases."

Mr Whickman advised that the Davey business continues to improve. This has been driven by a combination of sales growth, business fitness, and product initiatives consistent with the mid‐term strategy.

The managing director appears confident on the company's prospects in the second half.

He said: "I am pleased to note that we achieved the desired improvement in Net Working Capital across the Group and remain confident in the team's efforts on cost management.  In addition, the market's acceptance of a second round of Automotive price increases leaves us well positioned for the second half of the financial year."

In addition to this, the company advised that it remains on the lookout for further acquisitions. This includes both logical bolt‐on acquisitions and substantial acquisitions focused on the Automotive segment.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. 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 Scott Phillips.

More on Share Gainers

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Dimerix, Newmont, Regal Partners, and Titomic shares are storming higher

These shares are having a good finish to the week. Let's see why.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why Fortescue, Lynas, PEXA, and Regis Healthcare shares are charging higher

These shares are having a strong session on Thursday. But why?

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Gainers

Why Capricorn Metals, Insignia, Perseus Mining, and Qoria shares are storming higher

These shares are having a strong session on Tuesday. But why?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Amaero, AMP, Block, and South32 shares are racing higher today

These shares are starting the week on a positive note. But why?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another momentous session for ASX shares this Friday.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why BHP, Catalyst Metals, Mesoblast, and Pilbara Minerals shares are shooting higher

These shares are ending the week with a bang. But why?

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

The Mesoblast share price just rocketed 38%! Here's why

ASX investors just sent the Mesoblast share price up 38%. But why?

Read more »