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LEWIS GROUP LTD

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LEW trade ideas

Our opinion on the current state of LEWIS(LEW)Lewis (LEW) is a retailer specializing in furniture and electrical appliances, operating through 840 stores under the Lewis, Beares, Best Home, Bedzone, and United Furniture Outlets (UFO) brands. Of these, 138 stores are located in neighboring countries. The company conducts 59.9% of its business on credit, offering customers credit insurance and other financial services. The plan is to expand the UFO brand from its current 39 stores to 70 stores over the next few years. Despite the challenging economic conditions post-COVID-19, Lewis has maintained a debt-free balance sheet, which is remarkable among listed retailers. The stock is currently trading on a price-to-earnings (P:E) ratio of 7.95, and the share price remains significantly below its net asset value (NAV). The company has embarked on a share buy-back program, repurchasing 29.9 million shares at an average price of R34.20 per share, aiming to buy back 10% of its issued capital. This suggests that management believes the share is undervalued. In its financial results for the year ending 31st March 2024, the company reported merchandise sales growth of 4.7% and an increase in headline earnings per share (HEPS) of 7.1%. The company highlighted strong credit sales growth, up 15.8%, while cash sales declined by 11.8%. Credit sales have grown at a compound annual rate of 16.9% over the past three years, now accounting for 66.2% of total merchandise sales (up from 59.9% in the previous year). The company has maintained strict credit criteria, with a credit application decline rate of 35.1%. The results reflect the pressure on consumers due to high-interest rates; however, the anticipated end of loadshedding should provide some relief. In a trading update for the six months ending 30th September 2024, the company estimated that HEPS would increase by between 45% and 55%, driven by growth in other revenue streams and strong credit sales momentum. Lewis has been one of the best-performing retailers on the JSE, demonstrating prudent management and growth strategies despite economic headwinds. Management believes the share is undervalued by at least 30%, a view we find conservative given its performance. We added Lewis to our Winning Shares List (WSL) on 1st December 2023 at a price of 4150c, and since then, the share price has increased by 77% to 7350c. Technically, the share has broken through its long-term downward trendline and is now in a strong upward trend, suggesting further potential for appreciation as the economic environment stabilizes.
JSE:LEW
by PDSnetSA
Our opinion on the current state of LEWIS(LEW)Lewis (LEW) is a retailer of furniture and electrical appliances operating through 840 stores under the Lewis (492 stores), Beares (151 stores), Best Home (154 stores), and most recently, United Furniture Outlets (43 stores) brands. Of these, 134 are in neighboring countries. The company does 59.9% of its business on credit and offers customers credit insurance and other financial products. The plan is to increase the number of UFO stores from 39 to 70 over the next few years. At current levels, the share is trading on a P/E of just 6.16, and the share price is well below its net asset value (NAV). The company's balance sheet remains debt-free, which is extraordinary among listed retailers in this post-COVID-19 period. The company is in the process of buying back 10% of its issued share capital. We have always said that this share represents a bargain. It will benefit directly from any increase in consumer spending. It is an extremely tightly managed company with no debt and a huge store footprint. It has been growing both organically and by acquisition. Obviously, as a retailer of furniture and white goods, it is vulnerable to any economic downturn, but we see it as cheap right now and expect its share to rise as the economy improves. Certainly, it is one of the few retail outlets in South Africa which is doing reasonably well in the circumstances. The company is engaged in a share buy-back program in which it has so far bought back 29.9 million shares at an average price of R34.20 per share. In its results for the year to 31st March 2024, the company reported merchandise sales up 4.7% and headline earnings per share (HEPS) up 7.1%. The company said, "The strong credit sales growth trend continued, with credit sales increasing by 15.8% and cash sales declining by 11.8%. Credit sales have grown at a compound annual rate of 16.9% over the past three years and now account for 66.2% of total merchandise sales (2023: 59.9%). The group has maintained its prudent credit granting criteria in the constrained spending environment and the credit application decline rate increased to 35.1% (2023: 34.7%)." The modest results show that consumers are under pressure from high interest rates, but the end of loadshedding should be a benefit. This share remains one of the best-run businesses on the JSE at the moment. The company believes that it is under-valued on the JSE by 30% - and we think that is conservative. We added Lewis to the Winning Shares List (WSL) on 1st December 2023 at 4150c. It is now trading 38.5% higher at 5700c. Technically, the share has broken up through its downward trendline and is in a strong new upward trend.
JSE:LEW
by PDSnetSA
Our opinion on the current state of LEWIS(LEW)Lewis (LEW) is a retailer of furniture and electrical appliances operating through 807 stores under the Lewis (483 stores), Beares (137 stores), Best Home (144 stores), and most recently, United Furniture Outlets (43 stores) brands. Of these, 126 are in neighbouring countries. The company does 65.7% of its business on credit and offers customers credit insurance and other financial products. The company is exposed by the impact of COVID-19 because of its substantial debtors’ book which may be difficult to collect. The plan is to increase the number of UFO stores from 39 to 70 over the next few years. At current levels, the share is trading on a P:E of just 4.97 and the share price is well below its net asset value (NAV). The company's balance sheet remains debt-free, which is extraordinary among listed retailers in this post-COVID-19 period. The company is in the process of buying back 10% of its issued share capital. We have always said that this share represents a bargain. It will benefit directly from any increase in consumer spending. It is an extremely tightly managed company that has no debt and a huge store footprint. It has been growing both organically and by acquisition. Obviously, as a retailer of furniture and white goods, it is vulnerable to any economic downturn, but we see it as cheap right now and expect its share to rise as the economy improves. Certainly, it is one of the few retail outlets in South Africa that is doing reasonably well in the circumstances. The company is engaged in a share buy-back program in which it has so far bought back 29.9 million shares at an average price of R34.20 per share. In its results for the year to 31st March 2024, the company reported merchandise sales up 4.7% and headline earnings per share (HEPS) up 7.1%. The company said, "The strong credit sales growth trend continued, with credit sales increasing by 15.8% and cash sales declining by 11.8%. Credit sales have grown at a compound annual rate of 16.9% over the past three years and now account for 66.2% of total merchandise sales (2023: 59.9%). The group has maintained its prudent credit granting criteria in the constrained spending environment and the credit application decline rate increased to 35.1% (2023: 34.7%)." The modest results show that consumers are under pressure from high interest rates, but the end of load shedding should be a benefit. This share remains one of the best-run businesses on the JSE at the moment. The company believes that it is under-valued on the JSE by 30% - and we think that is conservative. Technically, the share has broken up through its downward trendline and is in a new upward trend.
JSE:LEW
by PDSnetSA
Our opinion on the current state of LEWLewis (LEW) is a retailer of furniture and electrical appliances operating through 807 stores under the Lewis (483 stores), Beares (137 stores), Best Home (144 stores), and most recently, United Furniture Outlets (43 stores) brands. Of these, 126 are in neighbouring countries. The company does 65,7% of its business on credit and offers customers credit insurance and other financial products. The company is exposed by the impact of COVID-19 because of its substantial debtors’ book which may be difficult to collect. The plan is to increase the number of UFO stores from 39 to 70 over the next few years. At current levels, the share is trading on a P:E of just 4,97 and the share price is well below its net asset value (NAV). The company's balance sheet remains debt-free which is extraordinary among listed retailers in this post-COVID-19 period. The company is in the process of buying back 10% of its issued share capital. We have always said that this share represents a bargain. It will benefit directly from any increase in consumer spending. It is an extremely tightly managed company which has no debt and a huge store footprint. It has been growing both organically and by acquisition. Obviously, as a retailer of furniture and white goods it is vulnerable to any economic downturn, but we see it as cheap right now and expect its share to rise as the economy improves. Certainly, it is one of the few retail outlets in South Africa which is doing reasonably well in the circumstances. The company is engaged in a share buy-back program in which it has so far bought back 29,9m shares at an average price of R34,20 per share. In its results for the six months to 30th September 2023 the company reported revenue up 8,3% and headline earnings per share (HEPS) down 6,6%. The company said, "The strong credit sales growth trend of the past two years continued, with credit sales increasing by 19.5% and cash sales declining by 14.4%. The contribution from credit sales increased to 64.4% of total merchandise sales from 56.5% in the previous half year." In a trading update on the nine months to 31st December 2023 the company reported total revenue up 8,7% with credit sales up 17,5% and cash sales down 14,4%. The company said, "Comparable store sales in the traditional brands grew by 3.2% for the nine month period and by 1.5% for the group." The modest results show that consumers are under pressure from high interest rates and loadshedding. This share remains one of the best-run businesses on the JSE at the moment. The company believes that it is under-valued on the JSE by 30% - and we think that is conservative. Technically, the share has broken up through its downward trendline and is in a new upward trend.
JSE:LEW
by PDSnetSA
Our opinion on the current state of LEWLewis (LEW) is a retailer of furniture and electrical appliances operating through 807 stores under the Lewis (483 stores), Beares (137 stores), Best Home (144 stores), and most recently, United Furniture Outlets (43 stores) brands. Of these, 126 are in neighbouring countries. The company does 65,7% of its business on credit and offers customers credit insurance and other financial products. The company is exposed by the impact of COVID-19 because of its substantial debtors’ book which may be difficult to collect. The plan is to increase the number of UFO stores from 39 to 70 over the next few years. At current levels, the share is trading on a P:E of just 4,84 and the share price is well below its net asset value (NAV). The company's balance sheet remains debt-free which is extraordinary among listed retailers in this post-COVID-19 period. The company is in the process of buying back 10% of its issued share capital. We have always said that this share represents a bargain. It will benefit directly from any increase in consumer spending. It is an extremely tightly managed company which has no debt and a huge store footprint. It has been growing both organically and by acquisition. Obviously, as a retailer of furniture and white goods it is vulnerable to any economic downturn, but we see it as cheap right now and expect its share to rise as the economy improves. Certainly, it is one of the few retail outlets in South Africa which is doing reasonably well in the circumstances. The company is engaged in a share buy-back program in which it has so far bought back 29,9m shares at an average price of R34,20 per share. In its results for the six months to 30th September 2023 the company reported revenue up 8,3% and headline earnings per share (HEPS) down 6,6%. The company said, "The strong credit sales growth trend of the past two years continued, with credit sales increasing by 19.5% and cash sales declining by 14.4%. The contribution from credit sales increased to 64.4% of total merchandise sales from 56.5% in the previous half year". This share remains one of the best-run businesses on the JSE at the moment. The company believes that it is under-valued on the JSE by 30% - and we think that is conservative. Technically, the share has been moving sideways - but has broken up on the back of the latest results.
JSE:LEW
by PDSnetSA
$JSELEW - Lewis Group: More For Fundamentalists, Not TechniciansLewis released a trading update for the nine months to December 2022 last Friday and the key takeaways were: 1.Widespread inflationary pressures, rising interest rates and record high unemployment levels curtailed consumer spending. 2.Retail trading patterns were significantly disrupted by electricity load shedding, particularly over the festive season. 3.Credit sales, which accounted for 58.3% (Dec 2021: 50.9%) of total sales, increased by 16.8%. 4.Cash sales declined by 13.5%, reflecting the mounting pressure on consumer disposable income. 5. For Q3'22: Credit sales for the three month period were 17.3% higher while cash sales reduced by 20.7%. 6.Collection rates strengthened to 82.7% for the third quarter (Q3 2021: 79.7%) and 82.0% for the nine months (Dec 2021: 79.1%). The market had a knee-jerk reaction to the update as the share plunged almost 14% intraday before closing the day down at under -3%. Technically there is nothing much to write about as this share does not have clear classic patterns or Elliott Wave count. The share has been trading in a consolidation prior the trading update, finding historical resistance 5000-5500 zac range. I see no clear technical signals so this one is more of a fundamental play.
JSE:LEW
by Loyiso_BlaqueSoros_Mpeta
Lewis Group Limited Lewis Group is a South African Furniture and electronic appliances retailer. They have declared a R1.95 dividend (R1.56 net) per share, which is to be paid on the 20th of July, 2021. From 21st of July they will be ex dividend, which could put pressure on the share price in the short term, however, the share has been falling since its last rally where we see that massive spike in price. So, there could be an opportunity here to purchase shares at a lower price 'cum' dividend. You need to manage risk and decide on your risk-reward ratio. Bad trade = loss of capital regardless of dividends. (stop loss) Good trade = Profit from dividends and sell out breakeven Excellent trade = Dividends + capital appreciation. Those willing to manage risk can benefit from a dividend payment and potentially capital appreciation too, however, you'd need to manage risk because their is a great chance of the share falling further and moving against your trade. Chasing the dividend payment, might be worth it because the companies fundamentals are sound and they are currently undervalued - IMO. I've entered 50% of my capital at a purchase price of R30.12, I'll be watching the trade over the following month, ready to deploy the next 50% if the price drops further. My stop loss is at R28 and my take profit will be at R34. Risk= 7% loss Reward = (dividends) + 12.8% in capital appreciation. For me the rewards outweighs the risks.
JSE:LEW
by TalkingCents