Why Premier Retail Ltd Shares Soared Today

What happen to Premier Retail’s share price?

Shares of Premier Retail Ltd [ASX:PMV] opened up more than 11.90% today, at $14.01 per share. The stock is still down 2.84% for the year. But will there be more spikes to come?

Why did Premier’s share price rises?

This morning Premier released a market update to investors. The subject matter related to sales and earnings for the first half of financial year 2017. And as you could probably tell from the share price jump, figures were great.

Total sales for the half are expected to total $588.6 million, up 7.1%. The company expects underlying earnings before interest and tax (EBIT) between $92–93 million for the half. If achieved it will represent a 9.4–10.6% jump on FY16 figures.

The company will provide further details on their FY17 figures on 21 March, 2017.

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What happens now?

If you even own one Premier share, good news, you’re $1.49 richer. But what happens now?

Will Premier’s share price continue to climb? Will it dip? Or will it just track sideways for a while?

Like everyone else, I don’t know for certain.  But investors will now be focused on that EBIT figure of $92–93 million. Shares have now priced in that earnings figure. No prizes for guessing what will happen if they underperform from here until 21 March, 2017.

The share price might trend down slightly until then. But if Premiers is going to have another double digit percentage jump in share price, they’ll need to report an EBIT of more than $93 million. Crazier things have happened. The company might just be able to do it. But we won’t know for sure for another 41 days.

Regards,

Harje Ronngard,

Junior Analyst, Money Morning


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