6th Apr 2016 09:39
LONDON (Alliance News) - Investec reiterated its Buy rating on Card Factory saying it believes the card and gifts retailer will continue to deliver steady growth after reporting higher-than-expected results in its recently-ended financial year.
On Tuesday, Card Factory said pretax profit in the year ended January 31 almost doubled to GBP83.7 million from GBP42.7 million the year before, as revenue rose by 8% to GBP381.6 million from GBP353.3 million.
Profit beat Investec's forecast of GBP80.3 million and the consensus estimate of GBP81.0 million.
Investec said this was "another consistent performance" from Card Factory and that it expects the retailer to continue delivering steady growth and strong cash generation, despite headwinds from the National Living Wage and foreign exchange rates, which Card Factory said would squeeze margins.
Investec predicts a three-year earnings per share compound annual growth rate of 6.5% and cash generation of around GBP40 million a year, increasing the possibility of another capital return estimated at GBP51 million in the second half of the year.
Investec reiterated its Buy rating and 410 pence price target on the stock. Shares in Card Factory were trading up 1.5% at 348.50p on Wednesday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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