WHS - Warehouse Group

[Ogg]

I thinking this maybe the last 10c div unless they can grow profit and margins or it could be 10c for the yr guess the well cemented trend is falling profits and falling dividends.

Im sure some people will try and catch falling knife for the div - not a sure fire way to wealth unless you get the shares real cheap today but what is real cheap? or a bargain

I'm gonna try and catch the falling knife when it goes ex-div

[Balance]

Hey Balance, you mentioned Warehouse Pharmacy of days gone by

Whether Nick actually said this or not I can't tell but they seem to be back on the agenda -

Chief executive Nick Grayston said e-commerce only makes up about 10 percent of the New Zealand market, much lower than in other developed countries. But Warehouse has to prepare for increased disruption and part of the response is to move away from a "transactional relationship" with customers where price is the only determinant, to "an engagement model" which could include walk-in health clinics, a return to pharmacies, financial advice and mobile services.

http://www.sharechat.co.nz/article/5...-services.html

Holy shoot, it gets worse! What engagement model? They are cutting back staff!

[winner69]

as I said the other lowest since last century

[Biscuit]

... But Warehouse has to prepare for increased disruption and part of the response is to move away from a "transactional relationship" ... to "an engagement model" which could include .....financial advice.....

LOL, hands up who wants financial advice at The Warehouse!

[Beagle]

Best comparison may be Briscoe?

Take out the $60m cash and BGR is trading on a historical PER of 15.7 times.

WHS compared to BGR should be trading on a discount of at least 25% to reflect i) earnings downtrend vs BGR's uptrend & ii) weak balance sheet vs BGR's cashed up overcapitalized financial position.

So WHS should trade on a PER of 11.8 times on EPS of say, 15.5c = sp of $1.83.

Your $2.00 is in the same ball park direction of what WHS is now worth! Scary!

Yes a very valid company for comparative PE analysis, probably the best in terms of product offer and distribution methodology but obviously they are chalk and cheese in terms of their track record but nonetheless makes for a very interesting point of comparison.

I think all on here would agree that with a huge vested interest because of the size of his shareholding Rod Duke has carved out for himself a very well defined position in the market with excellent execution of his business model.
I checked on 4 traders and yes 2018 forward average analyst PE, you are quite right is late 15's.

Over the last six years profit has increased by 27%, 11%, 10%, 17%, 20% and most recently as just announced 26% and they are cautiously optimistic about the year ahead.

In my book there should be a very large amount of daylight between a company like BGR and WHS in terms of PE. Really if BGR is 15.7 then maybe Percy is right and a PE of only 7.5 is warranted considering all the challenges WHS faces ?
Certainly no more than 10. Really BGR looks pretty good value to me considering their long term stellar track record.
Conclusion: WHS is still heavily overvalued on a comparative basis with what are vastly better business models with other retailers.

[percy]

I think Balance picked it correctly.
WHS have still not got a "workable" strategy after two or three different CEOs.
Like any turn around,they always take longer,and cost more than expected.
AND often they don't work.Think Postie Plus,Pumpkin Patch etc.
Is WHS latest stategy going to work,or be another failure.?
All the time other retailers are moving further ahead of WHS.

[Under Surveillance]

Holy shoot, it gets worse! What engagement model? They are cutting back staff!

Some customers might fall for an engagement model, but WHS shareholders would do best to disengage via a divorce model, i.e. sell out.

[whatsup]

and still the drop continues

[whatsup]

Yes a very valid company for comparative PE analysis, probably the best in terms of product offer and distribution methodology but obviously they are chalk and cheese in terms of their track record but nonetheless makes for a very interesting point of comparison.

I think all on here would agree that with a huge vested interest because of the size of his shareholding Rod Duke has carved out for himself a very well defined position in the market with excellent execution of his business model.
I checked on 4 traders and yes 2018 forward average analyst PE, you are quite right is late 15's.

Over the last six years profit has increased by 27%, 11%, 10%, 17%, 20% and most recently as just announced 26% and they are cautiously optimistic about the year ahead.

In my book there should be a very large amount of daylight between a company like BGR and WHS in terms of PE. Really if BGR is 15.7 then maybe Percy is right and a PE of only 7.5 is warranted considering all the challenges WHS faces ?
Certainly no more than 10. Really BGR looks pretty good value to me considering their long term stellar track record.
Conclusion: WHS is still heavily overvalued on a comparative basis with what are vastly better business models with other retailers.

so based on .10 eps the s p would be .75 that will make a lot on N Z retirement plans very very sick imo!

[Beagle]

According to 4traders the average analyst EPS for FY18 is 19 cps. Personally I think there is an AWFUL LOT of risk to that earnings estimate.
Choose whatever PE you think is appropriate. Percy's 7.5 for example gives $1.43. On the other hand BP might think a PE of 12 is appropriate giving fair value of $2.28 so trading at $2.36 cum a 10 cent dividend is "an opportunity".
Me - I will not buy stocks in a downtrend no exceptions ! This becomes a theoretical exercise of academic interest only but if someone put a gun to my head and forced me to pick what I think is a fair PE in the circumstances I would probably have to go with only 8.5-9 after seeing such a stellar performer as BGR trading on 15 point something.

Upon reflection I think 8.5 -9 x 19 = $1.61 -$1.71 is a fairer price range than the $2.00 I suggested the other day but the caveat to that is I would only invest at that price if I believed management had a viable plan to turn the company around and stem the losses in the finance unit.

Disc: I am currently considering investing in Briscoes. I think its an under appreciated stock considering its truly stellar growth record.