Morgan BellBillabong Surfs the Sharemarket
January 11th 2007 11:08
Billabong is probably one of the most inspired and profitable maker of surf and beach wear and its Australian by origin. Now its share price is falling. If you feel yourself getting greedy, read along.
The news today, 11 January 2007, is that “shares in skate and surf wear retailer Billabong have fallen more than 7 per cent in the past four trading days following poor sales in the key US market.”
“After rallying throughout December, the stock hit a low of $16.14 yesterday before recovering to finish down 40c, or more than 2 per cent, at $16.20.”
“The dip comes after US sports retailers targeting the teen and early adult market revealed disappointing December sales.”
“Billabong's largest US customer, Pacific Sunwear, recorded weaker sales for its eighth consecutive month in December.”
“The rapidly expanding company has 1100 stores in 50 US states under the names PacSun, PacSun Outlet, and d.e.m.o.”
“It reported sales of $US1.3 billion ($1.7 billion) in the past financial year.”
“Youth store Hot Topic followed the trend, attributing a missed forecast to weaker than expected December sales.”
“ABN Amro last week noted the share price of the 33-year-old Billabong had increased 28 per cent since its fiscal 2005-06 result, reflecting confidence in the growth of its offshore operations.”
“It reported a net profit in the past financial year of $146 million and said it expected 15 per cent growth in earnings in 2006-07, largely due to US and European markets, which provide about 75 per cent of revenue.”
“Late last year it announced plans to buy Amazon, New Zealand's biggest surf retail chain, which has 19 shops.”
This news was published in the online version of The Sydney Morning Herald under the title “Sales wipe-out in US cuts Billabong’s share price” and was written by Vanda Carson.
Billabong International (ASX: BBG) is a most profitable company which started trading in 1973. Its core business is surf and sports wear and accessories for the surf, skate and snowboard markets.
Billabong is based in Queensland and its managing director is Derek O’Neil. Billabong’s website is www.billabongcorporate.com.
BBG’s Sales per share grew from $1.94 in 2001 to $4.96 in 2006 which equates to a compound annual growth rate of 20.7 per cent, an enviable figure.
BBG’s Earnings per Share are also great, being 21.1 cents in 2001 and 70.5 cents in 2006. This results in a compound annual growth rate of 27.3 per cent. I wonder how many companies are there that can post such growth figures.
BBG’s current Net Profit After Tax is $145.9 million on a margin of 14.2 per cent. It paid a dividend of 44 cents.
Return on Equity for Billabong is 20.5 per cent, which is great.
Billabong’s Long Term Debt stands at $257.353 million, comprising 27 per cent of capital, and Interest is $9.069 million. Cash Assets are of $67.855 million. BBG’s is Cash Flow positive at 52 cents per share.
BBG’s price is $16.25 and its P/E is 23.1 times, much above of the sector 13 times figure. Its P/B is also high, being 4.7 times when the sector rates 2 times.
End
The news today, 11 January 2007, is that “shares in skate and surf wear retailer Billabong have fallen more than 7 per cent in the past four trading days following poor sales in the key US market.”
“After rallying throughout December, the stock hit a low of $16.14 yesterday before recovering to finish down 40c, or more than 2 per cent, at $16.20.”
“The dip comes after US sports retailers targeting the teen and early adult market revealed disappointing December sales.”
“Billabong's largest US customer, Pacific Sunwear, recorded weaker sales for its eighth consecutive month in December.”
“The rapidly expanding company has 1100 stores in 50 US states under the names PacSun, PacSun Outlet, and d.e.m.o.”
“It reported sales of $US1.3 billion ($1.7 billion) in the past financial year.”
“Youth store Hot Topic followed the trend, attributing a missed forecast to weaker than expected December sales.”
“ABN Amro last week noted the share price of the 33-year-old Billabong had increased 28 per cent since its fiscal 2005-06 result, reflecting confidence in the growth of its offshore operations.”
“It reported a net profit in the past financial year of $146 million and said it expected 15 per cent growth in earnings in 2006-07, largely due to US and European markets, which provide about 75 per cent of revenue.”
“Late last year it announced plans to buy Amazon, New Zealand's biggest surf retail chain, which has 19 shops.”
This news was published in the online version of The Sydney Morning Herald under the title “Sales wipe-out in US cuts Billabong’s share price” and was written by Vanda Carson.
Billabong International (ASX: BBG) is a most profitable company which started trading in 1973. Its core business is surf and sports wear and accessories for the surf, skate and snowboard markets.
Billabong is based in Queensland and its managing director is Derek O’Neil. Billabong’s website is www.billabongcorporate.com.
BBG’s Sales per share grew from $1.94 in 2001 to $4.96 in 2006 which equates to a compound annual growth rate of 20.7 per cent, an enviable figure.
BBG’s Earnings per Share are also great, being 21.1 cents in 2001 and 70.5 cents in 2006. This results in a compound annual growth rate of 27.3 per cent. I wonder how many companies are there that can post such growth figures.
BBG’s current Net Profit After Tax is $145.9 million on a margin of 14.2 per cent. It paid a dividend of 44 cents.
Return on Equity for Billabong is 20.5 per cent, which is great.
Billabong’s Long Term Debt stands at $257.353 million, comprising 27 per cent of capital, and Interest is $9.069 million. Cash Assets are of $67.855 million. BBG’s is Cash Flow positive at 52 cents per share.
BBG’s price is $16.25 and its P/E is 23.1 times, much above of the sector 13 times figure. Its P/B is also high, being 4.7 times when the sector rates 2 times.
End
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