Dixons Carphone: uncertain times ahead

As Dixons Carphone updates the market Helal Miah, investment research analyst at The Share Centre, explains what it means for investors.

Dixons Carphone: uncertain times ahead

In its interim trading statement reported today Dixons Carphone said that “while it still hasn’t seen any effect on consumer demand as a consequence of Brexit, it’s planning for the possibility of uncertain times ahead”. As a result, the company is looking to minimise the impact on consumers due to currency movements.

Nevertheless, investors should appreciate that It reported solid earnings growth of 13% and revenue growth of 11% for the first half. Furthermore, the group raised the interim dividend by 8% to 3.5 pence per share.

Dixons Carphone also announced today that it had increased its market share during the period and is optimistic that it can continue to grow its market share further in the future. In the run-up to the crucial Christmas period, it experienced a very good Black Friday and interested investors should acknowledge that trading so far remains encouraging.

The 2018 PE of 12.0 is relatively low for the sector, while the prospective dividend yield of 2.9% is also relatively good compared to peers.

We continue to recommend Dixons Carphone as a ‘buy’ recommendation due to the strong management and benefits of scale provided by the merger. However, investors should appreciate that the risk level is now medium to high as the full impact of the Brexit vote on the UK economy and consumer spending has not yet been seen.

 

Please remember, no news or research item is a recommendation or advice to buy. Every Investor is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment for your circumstances please contact an adviser. All investments can fall as well as rise in value so you could get back less than you invest. 

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