A little while back, ( ) looked like a classic value share to me. It was selling for little more than a pound a share despite the company’s obvious strengths, ranging from a comfortable cash position on its to a well-known brand in multiple markets worldwide. Lately, the JD Sports share price has been moving upwards.
It is now around £1.32. But, despite the recent upwards momentum, the share price is just 8% higher than what it was five years ago despite the explosive growth the company has delivered during that period.
So, even though it may be less obvious than it was a couple of months ago when the price was lower, could this still be a value share for a like myself? Huge cash generation potential I think the answer is yes. That explains why I have been buying the share over the past year and have no plans to sell my holding. At first glance, JD Sports may not seem like much of a value share.
After all, its of 35 is not cheap. In fact, that looks high. It is much higher than I would normally consider paying for a share, even one in the with a track record like JD Sports has.
But that is where understanding comes in handy. Those earnings are profits after tax. Looking at the most recent full year’s accounts, those came in at £227m.
But looking higher up the profit and loss statement, operating earnings topped half a billion pounds. Tomorrow (31 May), the company will unveil its final results for last year. It has guided the City to expect profit before tax and adjuste.
