As you can see from the chart, Michael Hill International [MHI.NZ], the 200 plus store jewelry chain with stores in Australasia, Canada and most recently the United States, the share price is not looking great.
From a NZ$1.22 high over the last year down to a 59c closing price today, the company's shares are looking like a good buy.
What has kept the share price up consistently over many years was the regular increase in sales growth and profit that has historically just kept on coming.
Until now.
By no means is the slowdown due to anything else except recent rumblings over the global economic slump and various financial crises, so the negative impact on share price is nothing material about the viability of the business over the long-term but a macro economic factor that just cant be controlled by any business at the moment-sales and profit will be affected in the short to medium term.
This represents an opportunity rather than anything negative because once this economic slowdown is managed through Michael Hill should be back on its upwards trajectory again.
Now I am not saying go out and buy Michael Hill stock at current prices because the share price may well go further south before it goes north again but all financial indicators mark the company stock out as a screaming buy.
A current P/E ratio of 8.34 and a gross dividend payout of 8.68% alone make for attractive reading and historical financials should make any accountant leap for joy.
This is one of the stocks that I am looking at to add more of to the Share Investor Portfolio and will bide my time in current market conditions to hopefully get my fill at a lower price.
Related Share Investor reading
Michael Hill's profit shines
Michael Hill takes on the windy city
Why did you buy that stock? [Michael Hill International]
MHI has defined growth strategy
MHI profit sparkles
Essential Links:
Michael Hill Investor Information
From Amazon
Jewelry, Watches and Clocks Industry Report
Buy new: $23.95
Available for download now
c Share Investor 2008
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Darren
ReplyDeleteHave a look at the interactive DCF valuation of $MHI.NZ at:
http://www.valuecruncher.com/valuations/360848/edit
There is a link to the blog post that explains the assumptions in the comments.
We would love to see you put some numbers around your analysis.
Regards
Mark
mark.clare@valuecruncher.com
Hi Mark.
ReplyDeleteIn my opinion Michael Hill's current share price doesn't reflect their historical financial performance in that they have been positive for so long and have provided excellent returns for shareholders.
The share price also discounts future long-term performance and I believe that will be positive once the current financial crises abates.
The figures I will leave up to you.
Cheers, Darren