Next Investors logo grey

Baby Bunting a little underweight

Published 17-FEB-2017 10:48 A.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Distributor of newborn/infant products (prams, car seats etc), Baby Bunting Group (ASX: BBN) delivered a first half pro-forma net profit of $5.7 million, slightly shy of Morgans CIMB’s forecast of $5.9 million.

Sales of circa $135 million, representing year-on-year growth of 18.1% were in line with Morgans’ expectations. The broker is attracted to the stock given it is a dominant player in a defensive sector with the potential to more than double the existing store footprint.

Furthermore, more than 40% of established stores are less than three years old, leaving scope for further organic growth in those businesses.

Adding further interest to the group’s growth prospects is the fact that a key competitor in My Baby Warehouse has fallen by the wayside, effectively providing BBN with a greater market share and arguably better pricing power.

From an operational perspective the result appeared sound with same-store sales growth tracking at 8.2%, above historical levels of circa 5%.

Chief Executive Matt Spencer noted he was happy with the performance of the new store rollout program in saying, “We have continued to expand the network by four stores in the half, including two stores in Sydney which is our largest market opportunity in Australia”.

Spencer also said that the group’s online sales growth had expanded at a ‘rapid rate’.

The group reaffirmed previous full year EBITDA guidance of between $21.5 million and $24.5 million, representing growth of between 15% and 31%. Three new store openings have been flagged in the six months to June 30, 2017.

It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.