Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Dixons Carphone still good value to “more adventurous funds”, says City broker

Numis analyst Matthew Taylor notes that there are issues within the Carphone Warehouse business, but reckons the current value “more than discounts this”
currys pc world
People aren’t upgrading their phones as often as they once were

Dixons Carphone PLC (LON:DC) shares headed higher for the second day in a row after Numis upgraded the stock to ‘add’ from ‘hold’ on value grounds.

The Currys and PC World owner surged on Wednesday despite reporting a plunge in first-half profits, with investors encouraged by a more resilient tone and a solid outing from the electricals and white goods divisions.

READ: Investors dial in on Dixons as it holds divi steady and boasts about record Black Friday

The Carphone Warehouse business is still a concern though, as more and more consumers hold off from upgrading their handsets, while many are also moving onto less profitable SIM only contracts.

Dixons said it would restructure this business to make it simpler and less capital intensive in a bid to react to changing consumer habits.

Despite the planned overhaul, Numis analyst Matthew Taylor still expects “profit attrition” in the mobiles division as the FTSE 250 company has had to invest in margins in order to hit its volume targets.

Still has strong market position

That said, Taylor thinks this will have a “diminishing effect” from 2019 though, with profits set to be re-based by the end of this financial year.

On top of that, the analyst says Carphone Warehouse still has a “strong market position” with a 22% overall share.

Even with the various issues, Taylor still believes that the current valuation is cheap, or “at least for more adventurous funds”.

On top of the rating upgrade, he also reckons the stock is worth 210p – almost 10% ahead of the 184.3p where the shares find themselves on Thursday.

View full DC profile View Profile

Dixons Carphone Plc Timeline

Related Articles

H&T Pawnbrokers store
July 02 2018
Last year the company saw gross profits jump 45% thanks to a booming personal loan book and robust sales of luxury second-hand watches and jewellery.
Flying Brands
July 17 2018
“We look forward to the future with confidence and excitement," said Flying Brands boss Trevor Brown.

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use