The market is reacting poorly to Endeavour’s financial year 2021 results.
The post Endeavour (ASX:EDV) share price slips despite $445 million profit appeared first on The Motley Fool Australia. –
Right now, the Endeavour share price is $6.61, 1.34% lower than its previous close.
Endeavour share price slumps despite seemingly strong FY21
Here’s the liquor retailer and hotel operator’s key performance metrics for FY21:
$11.6 billion of revenue, up 9.3% on that of FY20
After tax profit of $445 million
$899 million of earnings before interest and tax (EBIT) up 22% on that of the prior financial year
7 cent final dividend, representing a 71% payout ratio
The company’s retail EBIT increased 17.6% to $669 million. While its hotels business’ EBIT reached $261 million, a 49.1% increase on that of FY20. Of course, FY20 saw a relatively long period of COVID-19 closures.
Over the course of FY21, 8.4% of the group’s retail sales came from its online store.
Endeavour also reinvested more than $300 million into its business, opening 33 new Dan Murphy’s and BWS stores and upgrading 64 stores. It also acquired 5 hotels, renewed 26, and upgraded more than 500 electronic gaming machines across its network.
As of 28 June 2021, Endeavour has $1.7 billion in borrowings from Woolworths Group Ltd (ASX: WOW), net debt of $1.3 billion, $625 million of undrawn debt facilities, and $437 million of cash.
What happened in FY21 for Endeavour?
It has been a big year for Endeavour and its share price.
Perhaps the biggest news from the company was its demerger from Woolworths.
Endevaour demerged from Woolworths in June 2021 with a market capitalisation of $10.8 billion.
The company also achieved 35% growth from online sales and released around 530 new Pinnacle Drinks products in FY21.
The number of active monthly users of BWS and Dan Murphy’s apps also increased 86%.
The company saw its hotels closed for 169 days during FY21. Additionally, 83 of its stores were closed as COVID-19 exposure sites.
What did management say?
Endeavour’s managing director Steve Donohue, and chair and CEO Peter R. Hearl, issued a joint statement commenting on the financial year that’s been for Endeavour and its share price. They said:
The 2021 financial year has been an eventful year for the Group characterised by both a demerger and navigating the significant impacts of COVID-19…
While the demerger has not altered the fact that Endeavour is the leading retail drinks and hotels business in Australia, it has enabled us to refocus on where we want to head in the future.
What’s next for Endeavour?
Those interested in the Endeavour share price might want to keep an eye out for these happenings:
According to Endeavour, it will be chasing a “significant number” of value-investing opportunities in FY22.
These could include growing its digital engagement, new retail stores, acquiring and upgrading hotels, and focusing on its costs and capital management.
However, due to the ongoing COVID-19 outbreaks in Victoria and New South Wales, the company has declined to forecast how it will perform over FY22.
Endeavour share price snapshot
The Endeavour share price has performed well during its short time on the ASX.
Since it listed, it has gained 9.8%.
At its current share price, the company has a market capitalisation of around $11.8 billion.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.