Buhu (LSE: BOO) releases first-half figures for September 30 and the share price falls. As a shareholder, I am not the happiest. Or, again, if I don’t sell today, does it matter? Okay, I’m seeing a Boohoo share price crash of about 20% in a few days, and that instinctively hits.
What went wrong? It all depends on the profit. Adjusted pre-tax profits fell 20%, earnings per share fell 15%. This is mainly due to Covid-1 to, as the company says: “Covid-1 – related distribution costs increased by about £ 26 million in the first half. ”
As a result, Boohoo has returned to its full-year guidance. The firm now expects a consolidated EBITDA margin of 9% -9.5%. This is down from 9.5% -10% from the previous guideline. I don’t think it’s that bad, although Boohoo suggests a share price response that many disagree with.
I think there is something to unpack here. First, revenue growth seems to be on the rise. The company reported 20 976 million in revenue growth of 20% in the six months to August 2020. Increased lockdown for home shopping has reduced revenue? I don’t see it.
In addition, revenue increased%% in the same period in 2011 revenue. And compared to two years ago, tax-inclusive marginal profits grew 23% despite coronavirus-deficient margins, and EPS rose 32%.
What should I do?
So what about my purchase, and what do I do now? At first, I was a little down, so my time was bad. But I always remember the old Warren Buffett proverb that market time beats market time. If nothing else, this is a convenient blanket for those whose timing is often smelly like mine.
As the initial lockdown effect such as Boohoo share price got a big wards upward kick, I expected it to be reversed once the epidemic was over. Sure enough, it has, and it amazes me. When people were shopping at the peak of the summer of 2020, weren’t they really expecting big price increases to slow down? You know, the way they almost always do?
Yet, it is now clear that much more was to come after the epidemic, and I could have done better if I had waited a little longer. But when I buy a stock, I really go over one thing. And my idea of evaluating it at the time. If I think it’s worth it, it’s a buy, otherwise it’s not. As simple as that.
Boohoo share price valuation
Evaluate now? The company says, “Experienced short-term headwinds in the first half are expected to continue at H2“. So I’m not expecting a reversal in the profit slip between now and the end of the year. Assuming a full year earnings decline of 20%, I think it will give a P / E of about 28 of our current Boohoo share price. I think Boohoo’s Good value for a company with growth potential.
Certainly, it has its downsides. The biggest I think is that I suspect that Boohoo share prices will remain weak for the rest of the year. And there could be more tapping in the image and sending it further down.
But on the current assessment, I believe I see a top-up opportunity here.
Alan Oscroft owns shares in the Buhu Group. Motley Flower UK is recommended by Buhu Group. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.