Is It The Right Time To Remain Positive About The Dixons Carphone Stock (DC)?

Company Overview

Dixons Carphone (DC.L) was formed in the year 2014, post-merger of Dixons Retail and Carphone Warehouse Group; headquartered at London, the United Kingdom. The company operates as an electrical and telecommunications retailer and service company. Its business operations spread across the UK & Ireland, Nordics and Greece. In the year 2018, Alex Baldock appointed as Group Chief Executive. The company’s business operations spread across the UK, Ireland and Europe. It is a part of the FTSE 100 Index and traded at London Stock Exchange. [optin-monster-shortcode id="wxhmli4jjedneglg1trq"]

(Source: Company Website)

Â

Key Brands:

• Carphone Warehouse and Currys PC World (UK and Ireland).
• Gigantti, Elgiganten, Elkjøp, Elkjøp Phone house, Elgiganten Phone House and Dixons Travel (Nordics).
• Kotsovolos (Greece).

Management team: Lord Livingston of Parkhead, Chairman; Tony DeNunzio CBE, Deputy Chairman and Senior Independent Director; Alex Baldock, Group Chief Executive; Jonny Mason, Chief Financial Officer.

Segment Revenue Reporting – 2018/19

(Source: Company Filings)

Â

Â

Segment Revenue Highlights

• Like-for-like (LFL) performance in the UK and Ireland electricals up by 2 per cent, due to an increase in all categories of online and instore.
• LFL performance declined in the UK & Ireland mobile by 7 per cent, due to a decrease in the two-year post pay market.
• LFL growth in an International market surged by 5 per cent, due to the revenue increase in all the regions.

Financial Performance – 1H FY2019 (in GBP million)     Â

   Â

(Source: Company Research)

Â

Financial Commentary – 1H FY19

• The company reported revenue of £4,893 million for H1 FY19, a surge of 0.5 per cent as compared to the last year.
• In H1 FY19, operating loss reported was £423 million as compared to £71 million reported last year.
• In H1 FY19, net loss reported for the period was £472 million as compared to £38 million reported last year.
• Shareholders equity reported in H1 FY19 reduced by £511 million to £2,598 million as compared to the last year data.
• Free cash flows reported in H1 FY19 were £116 million (2017/18: £174 million) and net debt increased by £68 million to £274 million.
• International business is in good shape, but the UK segment is not growing rapidly, due to Brexit uncertainty.
• Over the last three years, additional capital expenditure of £200 million was incurred for business transformational initiatives.

Â

Key Ratios

(Source: Thomson Reuters)

Ratios Commentary

• In FY18, the company’s key profitability margins declined marginally as compared to the last year.
• On the liquidity front, Dixon’s liquidity position was lower than the industry median. Both current and quick ratios declined in FY 18 as compared to the last year.
• On leverage front, the debt-equity ratio was significantly lower as compared to the industry median.

Key News

• In January 2019, the retailers and luxury carmaker has announced the plans between Dixons Carphone and Pets to shore up the supply in the event of chaos at the British ports.
• In H1 18/19, the company has reported a loss of £440m, on account of an unprofitable retailing brand in the mobile section

Stock Information

(Source: London Stock Exchange)

Stock Performance

• On 18th February 2019, Dixons share closed at GBp 132.00, surged by 1.15 per cent against its previous day closing price.
• Stock's 52 weeks High and Low is GBp 235.75/GBp 113.55. At the closing price, the share was trading 44.01 per cent lower than its 52w High and 16.25 per cent higher than its 52w low.
• From the previous three months, Dixons share price declined significantly by 18.29 per cent.
• Stock’s average traded volume for 5 days was 1,892,970.80; 30 days – 2,822,164.67 and 90 days – 2,688,412.47.
• Average traded volume for 5 days declined by 32.92 per cent when compared with average traded volume for 30 days.
• On the valuation front, the stock was trading at a trailing twelve months PE multiple of 6.2x as compared to the industry median of 10.7x.
• The company’s stock beta was 1.01, reflecting the same directional movement of stock and index.
• Total outstanding market capitalization was around £1.51 billion.