Nick Scali (ASX:NCK) share price lifts as CBA boosts holding

What's Nick Scali been up to that might be grabbing the market's attention?

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The Nick Scali Ltd (ASX: NCK) share price garnered some positive attention on Thursday, with shares finishing higher.

By the end of trade, shares in the household furniture retailer had gained 2.19%, rising to $15.87 a pop.

While there were no price-sensitive announcements from the company today, there was a snippet of information that might have influenced the markets.

According to an announcement, the Commonwealth Bank of Australia (ASX: CBA), and its related bodies, are now substantial shareholders in Nick Scali. In short, the bank's entities now hold more than 5% voting power in the furniture company.

This prompts a look into what Nick Scali has been up to lately.

A woman and two children in the air over a sofa.

Image source: Getty Images

No slouching on the couch for this company

Investors might have taken the position increase by CBA as an indicator to load up today. An above-average level of trading volume ensued, with approximately 315,000 shares being traded.

Although the bank could be increasing its position out of necessity due to holdings in super funds and the like, the Nick Scali share price has enjoyed a stretch of exceptional performance nonetheless. So, what has the company been doing to prompt such a run?

Taking a glance at the past month or so, one announcement that stands out is Nick Scali's acquisition of Plush-Think sofas. Originally the $103 million acquisition was revealed in a release on 4 October. On 1 November, the company followed up with news it had completed its integration of Plush.

Since then, a couple of analysts have shared a positive outlook on Nick Scali. For example, my colleague Tony previously covered the perspective of Thomas Wegner. The Marcus Today portfolio manager likes the company's prospects upon states reopening.

Additionally, analysts from Citi consider the Plush purchase a good one. As a result, the broker has maintained its buy rating on the furniture retailer.

Nick Scali share price snapshot

Not only has the last month been strong for the Nick Scali share price, but the entire past year has also rewarded shareholders for sticking with the company.

In the space of 12 months, Nick Scali has returned 89% to its investors. For comparison, the S&P/ASX 200 Index (ASX: XJO) is up around 13% over the same period.

The stronger share price has resulted in a more premium price-to-earnings (P/E) ratio. Currently, the company trades on a P/E of 14.9 times. Meanwhile, investors could pick up shares on an 8.5 times multiple back in June of last year.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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