What happened to the Premier Investments share price?

At the time of writing, shares of Premier Investments Limited [ASX:PMV] were 4.25% higher on Monday. The share price is currently trading at $15.95.

Why did PMV shares do this?

PMV’s stock has risen 39% in the past 12 months. However, the stock has risen 23% since the start of March.

Why?

PMV shares have hummed along recently, hovering between $12–14 per share since the start of the year. But the share price rally this month came on the back of expectations the company would produce decent half-year financial results.

Premier Investments didn’t disappoint.

Net profit after tax (NPAT) grew a massive 25.9%, to $71.5 million. Total sales were up 15.1%, to $565 million.

Mostly important, though, were online sales. Web revenue grew a massive 47.7%. This is an important figure as it demonstrates that PMV is moving with the times, capturing the changing shopping habits of consumers.

Brands ‘Smiggle’ and ‘Peter Alexander’ continue to drive much of the sales growth for PMV.

PMV paid an interim dividend of 23 cents, up 2 cents from the previous corresponding period.

What now for PMV?

Premier Investments own many well-known brands in Australia. These include Just Jeans, Dotti, Jacqui E, Portmans, and Jay Jays. However, these chain stores have reached maturity, and there isn’t much further growth potential in Australia for these brands.

Over the past two years, Premier Investments has rolled out Smiggle stores in Singapore, New Zealand and the UK. Over the next five years, PMV plans to have at least 200 Smiggle stores in the UK alone.

It turns out parents are willing to spend big on flashy, shiny, and colourful stationary items for both the ‘tween’ and under-8 brackets.

Smiggle products are all of those things.

After the half-year results were announced, various price targets from research firms were raised.

Both Credit Suisse and Deutsche Bank have a price target for PMV of $14.42 and $14.25 respectively. UBS and Macquarie bumped their price target to above $16. However, Bell Potter reckons the stock should reach $17.40.

These price targets vary wildly.

However, history tells us that whenever PMV reaches a new peak, it sells off quickly as investors take profit. In saying that, the stock should find support around $14.40 now.

PMV has become a volatile stock since pushing past $10 per share in September 2014. In the last 12 months, this stock has traded between $11.35 and $15.95. You’ll find PMV rises and falls depending on consumer sentiment and Australian retail trading results.

The volatility of this stock would suit short term traders.

However, the stock’s future growth relies heavily on international expansion. Any puttering in retail sales overseas — particularly the UK — will hurt the company’s revenues.

Shae Russell,
Money Morning


Since starting out in the financial markets over a decade ago, Shae has extensive experience across various aspects of the industry. Shae cut her teeth in the derivatives industry, teaching clients basic trading techniques with technical analysis.

Joining Port Phillip Publishing eight years ago, Shae has worked across a number of publications, such as Australian Small-Cap Investigator, Gold Stock Trader and Microcap Trader. She’s spent the past two years however, honing her macro analysis skills alongside Jim Rickards, showing Australians how to invest and profit form global macro trends.

Drawing on her extensive experience, Shae is a contributor to Money Morning, and lead editor of sister-publication Markets & Money, where she looks at broad macro trends developing around the world, combining them with her distaste for central banks and irrational love of all things bullion.


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