Metcash Limited (MTS) - Hardwearing
November 5, 2024
Metcash was founded in 1927 and operates as a wholesale distribution and marketing company in Australia, primarily in the Food, Liquor, and Hardware segments.
It operates under a range of familiar trading names, including IGA, Foodland, Mitre 10, Home Hardware, Total Tools, Cellarbrations, IGA Liquor, and the Bottle-O.
Metcash recently provided a trading update highlighting the impacts of the weak Australian housing cycle, with Hardware trade earnings significantly below expectations. The company faces considerable operating deleverage in this division, with cost-cutting measures insufficient to offset sales and margin declines. In contrast, trading in Food and Liquor remains stable.
These weak trading conditions led the company to lower its FY25operating profit forecasts. We’ve followed suit and downgraded our profit forecasts for the current year, as well as in FY26 and FY27. Our price target also dropped from $4.10 to $4.30. Given a deeply discounted valuation, we retain a positive recommendation but acknowledge there are few positive catalysts on the horizon.
Insights that count
Discover the best opportunities to outperform the market. Our research team dig deep into the market, company and stock data to bring you insights others might overlook.
Regis Healthcare (REG) - Short-changed by short-sighted policy
Regis Healthcare provides residential aged-care services in Australia, including ageing-in-place, respite care, specialist dementia care, and palliative care services through operation of aged care homes.
Universal Store Holdings (UNI) – Reinvesting for growth
Universal Store Holdings is a fashion and accessories retailer targeting the youth and young adult market, which operates through two divisions, Universal Store and Cheap Thrills Cycles.
SiteMinder (SDR) - Ducks lined up and ready to quack
SiteMinder provides online booking and management software for hotel operators and travel groups, with customers across Asia Pacific, Europe, the Middle East, Africa, and the Americas.
.jpg)