B&M stock up 10% on upbeat outlook: JPMorgan sees further upside

on May 31, 2023
  • B&M reports weaker-than-expected profit for its fiscal 2023.
  • JPMorgan reiterated its "overweight" rating on the U.K. stock.
  • B&M stock is already trading up today on encouraging outlook.

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B&M European Value Retail S.A. (LON: BME) gained as much as 10% on Wednesday even though it reported weaker-than-expected profit for fiscal 2023.  

Why is B&M stock up today?

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In fiscal 2023, the multinational noted a 7.0% decline in its adjusted EBITDA to £573 million ($709.92 million).

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The U.K. stock is still trending up because the management expressed confidence that the aforementioned metric will improve in the new financial year.

Comparable sales in the United Kingdom, they also revealed, were up 8.3% on a year-over-year basis in the first nine weeks of fiscal 2024. The update was sufficient for JPMorgan to reiterate its “overweight” rating on B&M stock.

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The investment bank sees upside in the British firm to £5.45 a share that suggests another 5.0% gain from here.

B&M 2023 financial highlights

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  • Net profit printed at £348 million versus the year-ago £422 million
  • Revenue climbed from £4.67 billion to £4.98 billion in fiscal 2023
  • Consensus was £376.7 million and £4.97 billion, respectively
  • Ended the financial year with £724 million in net debt

On Wednesday, the board also declared 9.3 pence per share of final dividend. The full-year dividend was capped at 14.6 pence a share versus 16.5 pence a share last year. In the press release, CEO Alejandro Russo said:

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The long-term future looks very positive. B&M has many years of profitable growth ahead. B&M will generate cash and compound earnings growth for our shareholders . . . with a relentless focus on price and value.

Year-to-date, B&M stock is up more than 20% at writing.

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