Rhigos
12 Jan 2018
Analysis by Phil Oakley In his weekly roundup Phil Oakley, a well respected analyst now working for Ionic who platform ShareScope and SharePad, includes analysis of Next on pages 9 through 13 of pdf file in following link:[link] points out affect of interest payments boosting profit margins and estimates profit margin if interest payments removed. I remember some years ago reading an article that pointed out amount of profits made on Next's credit card and that this was under threat as customers switched to credit cards with lower interest rates.
Hardboy
03 Jan 2018
Beaufort Securities' View "This morning Next published a good Christmas trading update. In November the board guided Christmas sales to be down -0.3%. However, Christmas period sales were up 1.5%. This resulted in a small increase to FY18 (to Jan) PBT guidance from £717m to £725m. Note the shares trade ex-div of a 45p dividend tomorrow.The shares were up strongly on this news, mainly due to the better than expected sales growth but probably also due to a mini short squeeze (Next is one of the most shorted stocks 6.8%). But the outlook statement is less positive, highlighting the pressures on high street retailers and the UK consumer, and guiding FY19 profit of £705m (down 3% on FY18’s £725m guidance).This theme is likely to sustain and although Next’s significant on-line business is growing, as a group the top line is declining. We prefer to avoid negative growth companies. Long term we expect the shares to underperform and change our recommendation from HOLD to SELL""Full article: [link]
Jack_Walsh
03 Jan 2018
Re: Upgrades Profit Forecast The cynic in me feels that the decision to revert to share buybacks was in order to ensure that EPS growth will be in positive territory next year - assuming their prediction of £705m profit is correct.Notwithstanding, a forward PE of around 11 doesn't look too challenging for me; although, I agree with Bill that there's probably not oodles of upside at the moment.
Bill1703
03 Jan 2018
Re: Upgrades Profit Forecast "I suspect that the above opinion was gained from looking at linear share price charts... as an investor the important thing is percentage change over a period... The 10 year trend for NXT is 25.0% pa. Going further back, charting SP with a log price scale back to Jan 1996 gives a trend line of 12.8% pa..."Yes, Rhigos, a fair challenge - I was really just musing aloud. But the thing is, all of that is backward-looking - the world is changing rapidly for NXT, and they no longer enjoy the relative advantages they once did. I suspect past SP performance really is no guide to future... etc, with this one, and it's now harder than ever to know what was the truer and fairer reflection of intrinsic value... £80, £37 or somewhere in between. As I've surmised before, the valuation metrics can certainly support £50 or so, but maybe not a whole lot more on top."I am not generally a fan of share buy-backs but NXT management do it well and I like the capital gain it brings better than special dividends. They do not buy-back if they consider SP above fair value for company. "I AM generally a fan of buy-backs - wherever conditions are conducive - but I know that opinions are mixed here, particularly among private investors (not that I think buy-backs are at all well understood in this community). But I would commute your statement to "NXT management DID it well, UP TO A POINT..." Yes, Wolfson's policy is (or at least was) transparent and disciplined, certainly compared to many, but it still means they were buying-back quite a lot of shares at a substantial premium to the current SP in the relatively recent past. Okay, perhaps they have the excuse of being overtaken by unpredictable external events - but this cannot excuse the decision to replace buy-backs with specials, right at the bottom, a major misstep by Wolfson IMHO (and I said as much at the time, on these pages). Maybe this move to switch it back to buy-backs will come to be seen as a timely correction... or maybe the wrong way around, once again? Either way, Wolfson's reputation as Master Capital Allocator has taken a knock, and still to recover...
Bill1703
03 Jan 2018
Morgan Stanley on NXT trading update Edited highlights below - they are negative on the shares. All in all, market forecasts will go up c.1% for FY18 and FY19 - with questions over the allocation of surplus cash:"... the more important newsflow today is not the group's performance over Christmas, but its financial guidance for FY 2018/19. This is the first time that management has provided guidance for the new financial year, and at this early stage the range of outcomes is understandably wide... No profit guidance range has been given, but the company makes clear that at the mid point (ie sales growth of +1%) it would expect to deliver profits of around £705m. The current consensus average is £696m, so this is also consistent with a c1% upgrade to consensus...We also think it worth noting that the company has indicated today that it intends to return c£300m to shareholders via share buybacks in FY 2018/19. Whilst Next has been returning excess capital to shareholders for many years, and the quantum indicated today is unlikely to surprise anyone much, we think the fact that the company is intending to use buybacks rather than special dividends (as it did last year) is noteworthy. The bulls will argue that this will enhance EPS by c4% and that it is a sign of management's long-term confidence in the business. The bears will argue that, without special dividends (180p per share last year), the yield comes down to less than 4% and that buying back shares in a company where profits are declining (as management guidance implies) is, in the long term, likely to be value destructive."
Rhigos
03 Jan 2018
Re: Upgrades Profit Forecast Bill1703, " lest we forget, NXT has spent most of the last 30 years down below £20, and the period (£60-£80) between early 2014 and early 2016 (a blink of an eye, really) could eventually prove the anomalous exception rather than a reasonable rule... "I suspect that the above opinion was gained from looking at linear share price charts. These tend to make it look as if all the big movement in SP occurred over a short period of time, which in absolute price terms they would have but as an investor the important thing is percentage change over a period (perhaps months or years). The 10 year trend for NXT is 25.0% pa. Going further back, charting SP with a log price scale back to Jan 1996 gives a trend line of 12.8% pa. Up to May 2007 SP did not fluctuate that much from 12.8% trend line line then fell sharply during recession. From Oct 2008 SP rose a lot faster than 12.8% pa. From Nov 2015 high of £80.15 following profit warnings it fell to a Jul 2017 low of £37.66.I am not generally a fan of share buy-backs but NXT management do it well and I like the capital gain it brings better than special dividends. They do not buy-back if they consider SP above fair value for company.
treeks
03 Jan 2018
short sellers Looks like the hedge fund short sellers are about to take a big hit. got it so wrong on next they must be very worried as they were holding the biggest short positions for ages
Bill1703
03 Jan 2018
Re: Upgrades Profit Forecast "... always had confidence in NXT management and believed that SP would tend to revert to mean trend. To get back to 10 year trend line SP would have to rise to £83. That looks unlikely but £70 within a couple of years may happen..."I think the market likewise retains its confidence (rightly or wrongly?) in management - hence once again the "exuberant" +8% reaction to a c.1% increase in profit forecast. The long term track record demands respect, of course - but offers no guarantees going forward. And they are still looking at another down year for profits in FY19, on Wolfson's current central case.Interesting comment on headwinds easing into the new year, with specific detail on cost price inflation levelling off - we knew this already of course, as widely discussed on other retail stock boards, but now Wolfson has said it, it becomes a real "thing". "All those special divs in the meantime are a nice bonus!"Interesting that they are committing to buy-backs rather than further specials for the surplus cash (forecast £300m) in the year ahead - this won't go down well with everyone, though again could be construed as reflective of Wolfson's confidence.£50 doesn't look too demanding at all here, but beyond that? Harder to know... lest we forget, NXT has spent most of the last 30 years down below £20, and the period (£60-£80) between early 2014 and early 2016 (a blink of an eye, really) could eventually prove the anomalous exception rather than a reasonable rule...
gamesinvestor
03 Jan 2018
Re: Upgrades Profit Forecast certainly seems to have stabilised the ship a tad.Profits still expected to fall, but it looks like they are growing the online stuff pretty well.Will they cull more of the footfall space I wonder?All those special divs in the meantime are a nice bonus!Games
Rhigos
03 Jan 2018
Re: Upgrades Profit Forecast "Games - how will the market react" SP +9% so I would say exuberantly!Glad I bought more a year ago after profit warning but sorry I took profits on that purchase by selling 25% of my NXT shares in May. I have always had confidence in NXT management and believed that SP would tend to revert to mean trend. To get back to 10 year trend line SP would have to rise to £83. That looks unlikely but £70 within a couple of years may happen.NXT is 2.9% of my share portfolio of 45 shares.
gamesinvestor
03 Jan 2018
Upgrades Profit Forecast [link] clothing retailer Next upgraded its full-year profit forecast after it beat guidance for sales in the run-up to Christmas, as colder weather helped sales of winter clothes.Next said total full price sales rose 1.5 percent in the period from Nov. 1 to Dec. That was ahead of company guidance for a fall of 0.3 percent and follows third quarter growth of 1.3 percent.The retailer upgraded its central pretax profit guidance for the full 2017-18 year, forecasting 725 million pounds, up from previous guidance of 717 million pounds but below the 790.2 million pounds made in 2016-17.Next forecast full price sales growth of about 1 percent in the 2018-19 year and another fall in profit to 705 million pounds, with costs growing faster than sales. Games - how will the market react?
II Editor
08 Dec 2017
NEW ARTICLE: 15 stocks in the 'buy zone' "Prompted by a commission to pick my top six stocks for Money Observer's forthcoming 'Wealth Creation Guide', a supplement that goes out in the January edition of the magazine, I've reassessed every share ranked by the Decision Engine.I won't ..."[link]
lastminute-world
29 Nov 2017
OCDO Wow got this one OCDO correct today shorters burnt to toast today.[link] did they get it so wrong number two most shorted stock.They lost 23.98% in a day...
lastminute-world
25 Nov 2017
The Short and Distort [link] Short-sellers bet £1 Billion on high street decline as they target M&S, Next and Debenhams Shorts have created a bear market supermarket sweep. The Short and Distort: Stock Manipulation in a Bear Market.[link] The Net Effect When the short and distort maneuver succeeds, investors who initially bought stock at higher prices sell at low prices because of their mistaken belief that the stock is worthless, caused by an effective distortion campaign. At the same time, the S&Ds cover at low prices and lock in their gains. Right after prominent bankruptcies such as Enron in 2001 or Nortel in 2009, investors could be more susceptible to this type of manipulation than during prosperous periods such as the 1990s in the U.S. During downturns, the first appearance of impropriety could cause investors to run for the hills much easier. As a result, many innocent, legitimate and growing companies could get burned, and investors along with them. (To learn about how you can profit when everyone else is heading for cover, read Profit From Panic Selling.) How to Identify and Prevent S&D 1.Do not believe everything you read - verify the facts. 2.Do your own due diligence and discuss it with your broker. 3.Hypothecate your stock - take it out of its street name to prevent the short sellers from borrowing and selling it. (Learn more about doing your own due diligence in our related article, Due Diligence In 10 Easy Steps The best way to protect yourself is to do your own research. Many stocks with great potential are ignored by Wall Street. doing your own homework you should feel much more secure in your decisions. And, even if the S&Ds attack your stock, you will be better able to detect their distortions and be less likely to fall prey to them by selling the stock at a loss. Please do your own research.
gamesinvestor
13 Nov 2017
Director Buys 09-Nov-17 Next NXT Roney,Michael J 405 @ 43.13p £17,469.6709-Nov-17 Next NXT Roney,Michael J 4,613 @ 43.14p £198,985.90Non exec chairGames
