JD Sports Fashion PLC (LSE:JD.), the clothing retailer, is “so understated, it is almost unfair,” according to analysts at Shore Capital which believes several unique characteristics and a strong set of interim results are underpinning its ability to stand out against rivals.
Offering a diversified product range with a “superior” network of stores, the sports retailer is “substantially outperforming peers in a currently challenging market,” analysts at the investment broker said.
Profits during the company’s first year jumped by 26% year-on-year to reach £375 million and with sales also growing, analysts believe management is “well on track” to achieve full-year earnings guidance of £1.04 billion.
Seen to be “bucking the trend of underperformance among US peers,” JD is positioned for increased market share gains and significant shareholder returns due to its superior relations with suppliers and “robust online presence,” the London-based investment analysts added.
In addition, the British retailer has much stronger pricing power when compared to US rivals like Dick’s Sporting Goods and Foot Locker, and when combined with smart inventory management and international expansion plans, Shore Capital rates its prospects highly.
The broker, which calls JD Sports “materially undervalued” due to its operating on an EV/EBITDA ratio of 3.8x., rates the stock a ‘buy’.
JD Sports is trading flat on Tuesday, with shares having opened at a little over 144p.