GWA Share Price Rockets Up

GWA Group [ASX:GWA] is a household and commercial supplier of building fixtures and fittings.
The company has a market capital of around $770 million, and is the owner of a large range of brands and products in the marketplace.

The company’s stock price rocketed up to hit $3.08 earlier today, settling down to $2.94 at time of writing.

What happened to GWA share price?

Today the company posted its earnings report for the half year ending in 2017, highlighting an increase in net profit by 7% and dividend payments of 13%.

On all fronts GWA has seen growth, with sales revenue up 2% and EBITDA (earnings before interest, taxes, depreciation, and amortisation) up 5%, which shows costs are being better managed, as backed by an increase in gross profit margin from 39.8% to 41.1%.

Investors have reacted positively to a reiteration of the group’s strategy. GWA intends to divest its Door & Access Systems business and move focus towards Bathrooms & Kitchens where it claims it has significant growth opportunities.
This, in combination with the upcoming strategy briefing in April gives the impression that the company is focussed on sustainable growth while cutting its lagging operations.

GWA highlighted a reduced, yet still high level of activity in residential construction. With steady conditions across its largest segment of renovations and replacements, and a general 0.7% increase in activity across its key markets.

Ahead in 2018 for GWA

Managing Director Tim Salt justified GWA’s strategic shift stating:

That focus has resulted in the increase in net sales ahead of the market and also in an expansion of margin and returns on funds employed within the business.

Salt claimed the new stratergy is getting ‘back to basics’ to simplify business, improve the supply chain, and address the cost base which increase in gross profit margin gives evidence to.

The company aims to achieve a $13–15 million cost savings by FY19, with the savings to be reinvested in growth initiatives and margin resilience to offset the market cycle.

The company forecasts earnings, before interest and tax, in the second half of FY18 to be similar to the $4.1 million generated in the first half.


Ryan Dinse                                        

Editor, Money Morning     


Jack Cameron,

Junior Analyst, Money Morning

PS: After the market dip earlier this month, we’re all looking for steady growth opportunities to take us through 2018. That’s why we’ve written a new report titled ‘Three Best Investments 2018’.  To check it out, click here.

Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:

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