NBL (ASX) - Middle-aged women’s fashion

5 Sep 2017

 

 

Noni B is a leading Australia fashion retailer that differentiates itself by focusing on superior service, style and fit. The dedicated team is passionate about providing women with an in-store experience where personal style advice is the basis of great customer service.

 

 

 

REASONS FOR INVESTMENT

 

1. In the Bill Miller Contrarian Value Screen  

 

Miller wrote: "We are value investors because we are persuaded of the logic of buying shares of businesses when others want to sell them, and we understand that lower prices today mean higher future rates of return, and high prices today mean lower future rates of return."

 

This screen uses the following criteria:

Rank ( P/FCF ) > 80%

FCF > FCF 1y Ago

PEG < 1.5

Sales 5y CAGR % > 0

Rank ( Mkt Cap £m ) > 25%

Debt To Assets < Industry GroupMedian

Is Primary Listing == 1

 

2. Saw it in the Filter List from Stock Doctor, with highest 1 year Revenue Growth (189.85%)

 

 

 

 

 

 

 

2. High Intrinsic Value  

  • ValueFrog (WB) @ $13.65 and

  • SimplyWall @ $10.63

  • Extremely low PEG ratio of 0.2x: when including its growth in our analysis Noni B’s stock can be considered a very good value

 

 

 

 

 

3. Multi-year Highs

 

4. Relatively Amazon-proof 

 

Through W Lane, Table 8, BeMe, and its eponymous Noni B brand, this retail company operates in the middle-aged women’s fashion clothing market. Not only is its target demographic less likely to shop online with Amazon compared to younger demographics, but is a fast-growing demographic thanks to Australia’s ageing population.

 

5. Strong Up Trend

 

6. Illiquidity

 

7. FY17 Results

 

Noni B Group $NBL

FY17 Revenue $316.8M +187%

Like for Like Sales +2.4%

Underlying EBITDA $22.9m +275%

Gross Margin 71.6%

2H Div $0.04

 

8. Institution

 

 

RISKS

 

Debt-to-equity ratio is 47.74%, which means, while the company’s debt could pose a problem for its earnings stability, it is not at an alarmingly high level yet.

 

 

TRADE PLAN

 

  • Risk = 0.5%

  • ATR Multiple = 3

  • ATR (8 weeks) = 0.15

  • Recommended Quantity = 2,000 shares

  • Purchase Price (Initial) = 2,000 @ $2.25

    • Average Down #1: 2,000 @ $2.07

    • Average Down #1: 480 @ $1.85

 

 

 

 

 

 

 

 

 

 

 

NEWS

 

  • (Fool, Nov 9, 2017 @ SP = 2.01

Millers, Lowes and Noni-B lead for customer satisfactionshares

 

    • (Fool, Nov 2, 2017 @ SP = 2.04

    Forget Myer Holdings Ltd and buy these 3 retail

    • (Simply Wall St, Oct 29, 2017 @ SP = 2.04

    Best ASX Growth Stocks

     

    • (Simply Wall St, Oct 12, 2017 @ SP = 2.02

    When Should You Sell Noni B Limited (ASX:NBL)?

     

    • (Fool, Oct 12, 2017 @ SP = 2.02 

    Why I think these retail shares are in the buy zone

    Since NBL’s P/E of 45.4x is higher than its industry peers (14.6x), it means that investors are paying more than they should for each dollar of NBL’s earnings. As such, our analysis shows that NBL represents an over-priced stock. NBL’s P/E would be higher since investors would also reward NBL’s higher growth with a higher price. NBL’s P/E may be higher than its peers because its peers are actually undervalued by investors.

     

    • (Simply Wall St, Sep 15, 2017 @ SP = 2.05

    Is September the month to buy Noni B Limited (ASX:NBL) for your growth portfolio?

    Noni B Limited (ASX:NBL) is a stock well positioned for future growth, but many investors are wondering whether its last closing price of $2.06 is based on unrealistic expectations. 

     

    Shareholders of NBL enjoy a level of certainty over what level of profits to expect from the company. Analysts are forecasting an insignificant movement in earnings from the last 2 July 2017 update, with the company pocketing $0.05 per share over the next three years. Although relatively unexciting news, a flat growth could indicate complacency on the one hand, or outperformance on the other, if the industry as a whole has been facing negative headwinds. In the same period revenue is expected to grow from $311 Million to $385 Million in 2020 and net income is predicted to catapult from $3 Million to $16 Million in 2020, roughly growing 5x. At the current levels of revenue and profit, margins are certainly underwhelming. 

     

    We understand NBL seems to be overvalued based on current earnings when we compare it to its industry peers. But seeing as Noni B is thought of as a high growth stock, to properly value it we must also account for its earnings growth by using calculation called PEG ratio. Noni B’s PE ratio of 44.7x and estimated 269% growth in earnings next year give it an extremely low PEG ratio of 0.2x. This tells us that when including its growth in our analysis Noni B’s stock can be considered a very good value based on fundamental analysis.

     

     

    • (Wilson Asset Management, Sep 1, 2017 @ SP = 2.30- Today SP = 2.02 (Oct 13, 2017)

     Noni B we rate A+. 
    On Monday, fashion retailer Noni B (ASX: NBL) announced its full year results, reporting a 275% increase in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) driven by a turnaround in the Noni B business and the acquisition of the Pretty Girl fashion chain announced in August 2016. We believe Noni B was one of the standout results during reporting season. Shares in Noni B closed up 15% for the week. We own Noni B as a research-driven investment in WAM Capital, WAM Research and WAM Microcap. 
     

     

    • (Motley Fool, Aug 28, 2017 @ SP = 2.10)

    The Noni B Limited (ASX: NBL) share price climbed 5% to a multi-year high of $2.10 after the retailer posted a 187% increase in full-year revenue to $316.8 million. This strong top line result came courtesy of a ten-month contribution from the Pretty Girl business and continued strong growth in the rest of the Noni B business. Like-for-like sales grew 2.4% in FY 2017 thanks largely to a particularly strong performance in the second-half. Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) came in at $22.9 million. This came in ahead of the earnings guidance of $20.9 million that management issued when it acquired the Pretty Girl business. Pleasingly, despite the competitive environment, management expects the company to generate a substantially higher financial result in FY 2018. In light of this, I continue to believe Noni B is one of the best investment options in the retail industry right now. 

    • (Motley Fool, Aug 2, 2017SP = 1.99)

    The Noni B Limited (ASX: NBL) share price has climbed to a multi-year high of $1.95 this morning despite there being no news out of the retailer. But as I mentioned yesterday, I believe Noni B is one of the best retail shares on the ASX at the moment thanks to being relatively Amazon-proof. This is because through its W Lane, Table 8, BeMe, and eponymous Noni B brand, the company targets the middle-aged women’s fashion clothing market. I believe this fast-growing and wealthy demographic is less likely to shop online, putting Noni B in a strong position to profit. 

     

     

    • (Motley Fool, Mar 14, 2017 @ SP = 1.66

     The Noni B Limited (ASX: NBL) share price may be up 51% in the last 12 months, but I don’t think it is too late to snap up this retailer’s shares. As well as the Noni B brand, the company recently bolstered its retail presence with the acquisition of Pretty Girl. Not only did this strengthen its offering in the lucrative middle-aged woman market, but the acquisition helped Noni B deliver a 142% jump in half-year revenue to $143 million and a 149% increase in underlying pre-tax profit to $10.1 million. This good form means the company will be included in the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) from March 20. 



     

     

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