X5 Retail — Is it interesting to invest in this business?

The retail sector was very popular during a pandemic period. In connection with the abolition of many events, the only entertainment for many people began to go to the store and eating food for watching the series. Moreover, the population was frightened and purchased by various products of the future. Also, the threat of infection in a crowded place gave acceleration to the development of online delivery services, which allowed the consumer to spend money without leaving the house.

Yesterday a report was released for the first half of the X5 Retail Group, which we will consider:

Group revenue, increased by 9.5% to 1053.7 billion rubles, mainly due to the increase in prices — overclocking consumer inflation. Additional EBITDA has grown 8.1% to 80.9 billion, but operating profit remained at the same level of 42.2 billion rubles (-0.5% y / y). Net profit reached 25.2 billion (+ 3.5% y / y). 2.4% sales profitability

Forecast for revenues The company leaving in force. It is predicted to increase the indicator, more than 10% in 2021. According to analysts in the next 12 months, cumulative dividends from the company will amount to 185 rubles per share. At a price of 2450, the payment corresponds to 7.5% per annum.

Is it interesting to invest in this business from current levels?

X5 Retail is no longer a growth company and even the transition to online, significantly expand the business, probably will not be able. So it is necessary to proceed from the evaluation by the dividend method. Compared to market analogues, 7.5% for the protective sector sounds medium, maybe even little. Given the level of inflation, it can be assumed that the indicators will grow due to price increases by 7-9% per year, and at the current price can be calculated on dividends at 7.5%. The full profithing place for the shareholder is at the level of ~ 15% per annum in the long run.

If you are satisfied with this level of profitability in rubles, it is worth paying attention to the shares of X5. However, still it would be interesting to add stocks into a portfolio with levels that have a lower drop potential. One of these levels is a zone of 2000-2100 rubles per share.

Always analyze the paper and buy and sell only in accordance with your strategy.

You have no strategy yet? Then write to us on