ABS ... you ask, "any ideas ?" Well, when you look at Retail Food & Drug stocks like ABS you may want to consider the following ratio from their Income Statements, viz. EBITDA/Turnover, which gives Operating Margin. In ABS’s case it’s a low 5.9% for the last 12 months. This is typical of companies in this sector as they have to keep prices low in order to compete, and leaves very little margin for error, with the end result that ABS’s Bottom Line is a minimal 1.16% !
So here you have a company that Turned Over $41,209mil. for 12 months and all that it could show for that effort was $479mil. !
Therefore, for retailers such as ABS to dazzle the Market with appreciable increases in their Bottom Line earnings, they really have to INCREASE TURNOVER.
So how likely is ABS going to increase its 12 monthly Turnover by, say, 30% to $40% ($12,500mil. to $16,500mil.) in order to really impress the Market with its increased earnings ?!
IMO I’d be surprised if they managed more than about 10% to 12%, considering that their Annual Turnover over the last 5 years ranged between a low of $35,626mil. and a high of $39,897mil. Their last 5 Quarterlies didn’t do much better by ranging between $9950mil. and $11078mil. Their sideways moving chart doesn’t reflect much in the way of demand either.
Of course, their price plunged in the last 2 days from $24 to about $21. Maybe there’s something there for the short term players, as they study "Resistance Levels" etc.. etc..
But you still have to ask why informed investors would want to buy a stock that’s unlikely to dramatically increase shareholder value. |
