Swot Analysis Of Next Plc
Introduction & Purpose
Thank you for contacting MegaBank PLC with your investment analysis request. This report will be analysing the medium/long term investment suitability of Next PLC, a publicly traded (LSE: NXT), British fashion and homewares limited company.
Background
Next plc was originally founded in 1864 by Joseph Hepworth as Joseph Hepworth & Son, Gentleman’s Tailors; however, the current Next fashion brand evolved in 1981 when the company purchased the chain of Kendalls rainware shops as a means of launching stylish and affordable womenswear stores under the name Next. The first store opened in February of 1982, and by the end of the same year, a total of 70 UK stores had been opened. Within the next five years, Next branched …show more content…
From the graph, it can be observed that Next easily outstrips its competitors in both the earnings per share ratio and the average annual EPS growth rate percent. The P/E of Next is also highest among the listed competitors, being just ahead of MKS, but falls below the general retailers sector average of 21.6 (FTSE Actuaries Share Indices – 8 Aug, 2015), which could indicate either undervaluing of the stock or underperformance. Other possibly negative factors in Next’s financials include the dividend yield being the lowest of the three (and also below the sector average of 2), and its P/B being enormous compared to its competitors’. While a high P/B normally would point to overvaluing of the stock (and thus from the larger sector average P/E detailed previously –underperformance), this effect is negated by the ratio of the P/E to the EPS growth rate (PEG) being nearly equal to 1 – an indication of a fair market appraisal relative to expected growth. MKS and DEB both have PEG ratios greater than 1, P/E ratios below the sector average, and low P/B figures which suggest these stocks are underperforming in the market and may also be overvalued in comparison to
Thank you for contacting MegaBank PLC with your investment analysis request. This report will be analysing the medium/long term investment suitability of Next PLC, a publicly traded (LSE: NXT), British fashion and homewares limited company.
Background
Next plc was originally founded in 1864 by Joseph Hepworth as Joseph Hepworth & Son, Gentleman’s Tailors; however, the current Next fashion brand evolved in 1981 when the company purchased the chain of Kendalls rainware shops as a means of launching stylish and affordable womenswear stores under the name Next. The first store opened in February of 1982, and by the end of the same year, a total of 70 UK stores had been opened. Within the next five years, Next branched …show more content…
From the graph, it can be observed that Next easily outstrips its competitors in both the earnings per share ratio and the average annual EPS growth rate percent. The P/E of Next is also highest among the listed competitors, being just ahead of MKS, but falls below the general retailers sector average of 21.6 (FTSE Actuaries Share Indices – 8 Aug, 2015), which could indicate either undervaluing of the stock or underperformance. Other possibly negative factors in Next’s financials include the dividend yield being the lowest of the three (and also below the sector average of 2), and its P/B being enormous compared to its competitors’. While a high P/B normally would point to overvaluing of the stock (and thus from the larger sector average P/E detailed previously –underperformance), this effect is negated by the ratio of the P/E to the EPS growth rate (PEG) being nearly equal to 1 – an indication of a fair market appraisal relative to expected growth. MKS and DEB both have PEG ratios greater than 1, P/E ratios below the sector average, and low P/B figures which suggest these stocks are underperforming in the market and may also be overvalued in comparison to