Small-Cap

One Retail Stock Approaching the Overbought Zone - AX1

June 06, 2024 | Team Kalkine
One Retail Stock Approaching the Overbought Zone - AX1

AX1:ASX
Investment Type
Small-Cap
Risk Level
Action
Rec. Price (AU$)

This report is an updated version of the report published on 6 June 2024 at 4:16 PM AEST.

Accent Group Limited (ASX: AX1)  

Accent Group Limited is an Australia-based digitally integrated retailer and distributor of footwear. Its geographical segments include Australia and New Zealand.

Recommendation Rationale – SELL at AUD 1.985

  • Profit Booking: AX1’s share price surpassed Resistance 1 level recommended in the previous report released on 21 May 2024; and thus, offered a profit booking opportunity.
  • Sales Decline: During H1 FY24, like-for-like retail sales and wholesale sales declined by 0.6% and 25% YoY, respectively.
  • Lower Earnings: During H1 FY24, Statutory EBIT and Statutory NPAT declined by 20.6% and 27.6% YoY, respectively.
  • Overvalued Multiples: On a forward 12-month basis, key trading multiples (EV/Sales, Price/Earnings, and Price/Book) are higher than median of Specialty Retailers’ industry.
  • Key Risks: AX1’s performance is susceptible to supply chain snags, increasing living costs, cost inflation, global economic slowdown, among others.

 

 

AX1 Daily Chart

(Source: REFINITIV; Analysis by Kalkine Group) 

Valuation Methodology: Price/Earnings Approach (FY Jun'25E) (Illustrative)

The stock has crossed its resistance 1 level; hence, representing a profit booking opportunity. Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 1.985, at 3:30 PM AEST, as of 6 June 2024.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 6 June 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.



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