Everybody's buying Debenhams
Chief executive Michael Sharp bought 100,000 shares earlier today as Debenhams published its full-year results. The company has been buying back shares, it plans to buy back more, and investors are buying too. The share price rose nearly 9% today. Everybody's buying!
I'm not not sure why. Debenhams looks expensive according to my spreadsheet. I've slung it together to better understand the business and decide whether it merits further investigation, rather than make a definitive attempt at valuation:
Earnings per share were buoyed by the share buy back and lower taxes, but the company's underlying performance was flat (2011 was a 53 week year so turnover and operating profit are slightly overstated in the spreadsheet, making this year look worse).
Debenhams has growth ambitions. It plans to finish modernising its UK stores soon, and add 17 more over the next five years. Like many high street retailers, internet sales are growing but they're a modest 11% of the total. Abroad, Debenhams is growing too, with 85 international stores and a nascent cyber-expansion heralded by the launch of Irish and German websites.
Investors are probably feeling confident about the future because Debenhams has been a rock throughout the recession. The price, though, may be getting ahead of the facts.
About the author
Richard is companies editor of Interactive Investor and a columnist at Money Observer magazine. A keen private investor through his Self Invested Personal Pension, he manages two virtual portfolios. The Share Sleuth portfolio is a hand-picked collection of mostly small-cap value shares, while the Nifty Thrifty is a mechanical portfolio designed to pick large, successful companies at cheap prices.
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|Bid / Ask||93.35 / 93.45|
|Day Range||91.991 / 95.2|
|52Week Range||73.65 / 124.80|
|Last Update: 16:35:01 (24/05/13)|