Talk of a new acquisition is putting investors at the head of the table.
The post Why the Nick Scali (ASX:NCK) share price is going gangbusters appeared first on The Motley Fool Australia. –
The Nick Scali Limited (ASX: NCK) share price is the spot of green amongst the sea of red today.
At the time of writing, shares in the household furniture retailer are selling for $11.52 – up 4.39%. The All Ordinaries Index (ASX: XAO), meanwhile, is down 0.95%.
Let’s take a closer look at today’s news.
Nick Scali wants a new Plush Sofa
In a statement to the ASX, Nick Scali confirmed it was in “non-exclusive discussions” with Greenlit Brands to acquire the Plush Sofas brand.
The Australian newspaper reported before the trading pause that the furniture company would spend up to $100 million on the purchase. Plush generates around $20 million in annual turnover, according to the report.
In its statement, Nick Scali Limited stressed the lack of certainty around the ongoing discussions and said no binding agreement has yet been reached.
It also said if any transaction should proceed, the company would pay for it “with a combination of cash on hand and debt”.
Investors clearly believe the deal would be of value to the company, judging by the Nick Scali share price.
Nick Scali share price snapshot
Over the past 12 months, the Nick Scali share price has increased 75%.
In its half-year financial report, the company declared revenue of $171 million – a record for the company and an increase of 24.4% on the prior corresponding period (pcp).
Earnings before interest, tax, depreciation and amortisation (EBITDA) rocketed 94.2% on the pcp to $60.2 million and underlying net profit after tax (NPAT) was up almost 90% to $40.5 million.
The company paid back half the amount of JobKeeper payments it received on the back of sustained public pressure. The federal government’s wage subsidy program was intended to help businesses that would suffer financially because of the novel coronavirus.
Nick Scali Limited has a market capitalisation of $933 million.
Should you invest $1,000 in Nick Scali right now?
Before you consider Nick Scali, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Nick Scali wasn’t one of them.
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*Returns as of May 24th 2021
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.