What Happened to Harvey Norman Holdings Ltd’s Share Price?
Shares in retail giant Harvey Norman Holdings Ltd [ASX:HVN] rose sharply today for the second trading session in a row. The shares gained 3.66%, which after Friday’s 8% rise leaves the stock close to a four-year high. This price action should thrill Harvey Norman shareholders: Since the start of last year, their company’s stock price has gone up by more than 93%.
Why Did This Happen to Harvey Norman Shares?
Friday morning’s annual result saw Harvey Norman post its first sales and earnings growth in three years. Net profit rose by nearly 49% to $211.7 million as Australia’s buoyant housing market spurred sales of furniture and appliances. This smashed analysts’ consensus forecast of around $203 million.
Investors got excited on Friday when they saw the uplift in HVN’s final dividend — 56% more than the previous full year — with the prospect of more yield growth to come. That’s what spiked the shares up on Friday, and the same sentiment has driven the shares further today.
What Now for Harvey Norman Holdings Ltd?
Harvey Norman is dominating the homemaker market. As long as Australian interest rates stay low and housing construction continues apace, this part of the business should continue to thrive.
But it’s important to stay disciplined on valuation when considering an investment in a stock like this. With the shares approaching a price-earnings ratio of 20x, it’s not hard to argue that this large-cap company is priced to perfection.
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We should commend chairman Gerry Harvey on his stewardship of this company through a tough time…but I think you can buy better value retail stocks on the Aussie market today than Harvey Norman.
Cheers, Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
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The post Why the Harvey Norman Holdings Ltd Share Price Took Off Today appeared first on Stock Market News, Finance and Investments | Money Morning Australia.
