Same-store sales fell 5.1% due to health restrictions in Ontario (Photo: 123rf)
What to do with the securities of Dollarama, Bombardier and Enbridge? Here are some recommendations from analysts likely to move prices in the near future. Note: the author may have a totally different opinion from that expressed.
Dollarama (DOL, $ 57.50): a better quarter than expected under the circumstances
In a preliminary note, Irene Nattel of RBC Capital Markets is pleased with the retailer’s second quarter results given the health restrictions imposed in Ontario, where 40% of stores are located.
The analyst had forecast a decline of 1.6% in total revenues as they rose 1.6% to just over $ 1 billion.
Earnings per share of $ 0.48, up 4.3%, also beat expectations (by $ 0.46), although the consensus was $ 0.49 per share.
The 43.4% gross margin on the other hand slightly missed its target because Dollarama sold fewer more profitable seasonal and gardening items due to Ontario’s ban on selling non-essential items for the first five and a half weeks. of the quarter.
The decline in operating expenses partially offset this shortfall, so that the operating margin of 28.5% met expectations. The direct costs related to COVID-19 have indeed fallen from $ 33 million to $ 11 million. The 5.7% improvement in operating profit is higher than the 2.6% increase it had expected.
Irene Nattel also reports that consumption habits are returning to normal as the average bill fell by 8.7% compared to large pandemic purchases a year earlier while the number of transactions increased by 3.9%. After the Ontario restructions were lifted, same-store sales rebounded 5.1%.
The analyst would like to learn more about the outlook for gross margins in the second half of the year and 2023, the ability of the retailer to pass on to customers rising procurement and transportation costs and the addition of more expensive items to her assortment, but she may have to wait.
Dollarama is limiting itself to two forecasts for 2022, namely the opening of 60 to 70 new stores and capital spending of $ 160 to 170 million, due to the lingering uncertainty caused by the pandemic.
While waiting for the conference call, Irene Nattel maintains her buy recommendation and target price of $ 68.
Bombardier (BBD.B, $ 1.91): potential for recovery offers acceptable risk-return ratio
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