Insights

GWA share price in the spotlight after it released its FY21 profit results

GWA’s profits have fallen despite the building boom, but the more important question is how much of the bad news is already in its share price?
The post GWA share price in the spotlight after it released its FY21 profit results appeared first on The Motley Fool Australia. –

The GWA Group Ltd (ASX: GWA) share price will be on watch as it delivered a profit result that showed it’s yet to capitalise on the building boom.

The water products and systems supplier posted a 4.7% drop in adjusted group earnings before interest and tax (EBIT) to $68.5 million for FY21.

This is despite a 1.8% increase in group revenue to $405.7 million thanks to the strong residential construction market.

Management also said that strong growth in its New Zealand and UK businesses helped support the top line. The ongoing decline in its Australian commercial operations detracted from the results.

The adjusted EBIT does not include costs associated with the consolidation of New Zealand warehouses. It also doesn’t count the sale of its China plant, Methven integration costs, and Enterprise Resource Planning (ERP)/Customer Relationship Management (CRM) systems’ project costs.

GWA profit results lagging peers

GWA’s latest profit results confirmed what many investors have suspected. The group isn’t making as much hay as its peers on a sunny day.

Its subdued outlook could prove to be another drag. Management is anticipating a flat to slightly positive year for renovation and replacement activity in the residential and commercial segments.

Multi-dwelling construction is also tipped to be soft due to lack of migrants and border closures. On top of this, lockdowns in Sydney and Melbourne could impact on its business.

GWA share price underperforming its peers

“While GWA’s Commercial order bank remains strong and 14 per cent above the prior year, completions are expected to remain subdued in FY22,” said GWA.

“Growth in education and health is expected to be offset by declines in offices and retail.  As confidence and activity increases in the Commercial segment, GWA remains well placed to capitalise on this improvement.”

Fellow building products suppliers like James Hardie Industries plc (ASX: JHX), BlueScope Steel Limited (ASX: BSL) and CSR Limited (ASX: CSR) have all posted strong growth or positive updates.

Bad news already priced into the GWA’s share price?

But GWA is trying to put a positive spin on its latest results. Management pointed out that its performance in the second half exceeded that of the first. It’s confident that this provides positive momentum into the current financial year.

Group EBIT in 2HFY21 gained 13.4% and EBIT margin improved 120 basis points to 17.5% over the first half.

Foolish takeaway

GWA also declared a final dividend of 6.5 cents a share to take its full year payment to 12.5 cents. This is a 9% increase over the previous year and puts the GWA share price on a yield of 6.8% (including franking).

Shareholders can also get some comfort from the fact that the GWA share price has been underperforming. Some if not all of the bad news in the GWA profit results is probably reflected in the share price already.

The post GWA share price in the spotlight after it released its FY21 profit results appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

BlueScope (ASX:BSL) share price on watch after FY21 results
5 things to watch on the ASX 200 on Monday

How did the BlueScope (ASX:BSL) share price respond last earnings season?
Why the BlueScope Steel (ASX:BSL) share price hit a 52-week high today
CBA, James Hardie and Challenger profit in the spotlight. Scott Phillips on Nine’s Late News

Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited, CSR Limited, GWA Group Limited, and James Hardie Industries plc. 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.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!