Support our sponsors:

NZX 50 Index	3326.74	2.10
S&P/ASX 200	4282.90	7.80
Dow Jones Industrials	12884.00	5.80

Twitter

Facebook

RSS

Daily ShareChat: Pumpkin Patch

By Jenny Ruth

Sunday 8th August 2010

Text too small?

The world has become a more uncertain place in the last few months but the underlying fundamentals relating to Pumpkin Patch are still positive, says Buffy Gill, an analyst at Goldman Sachs JB Were.

The children's clothing company's share price is attractive compared with its depressed peers and it has leverage to an Australian consumer recover and store roll-out, Gill says.

You also get for free any potential future growth options (not incorporated in our valuation) from the new brand roll-out, additional wholesale customers or further store roll-out in the UK/US.

Pumpkin Patch's second-half in Australia has been heavily impacted by the removal of fiscal stimulus which boosted its previous second half. Confidence is also being impacted by uncertainty around resource tax, the upcoming election, rising interest rates and risk of a China slowdown, Gill says. Nevertheless, her firm's economics team still has a positive view on consumption in the year ending July 2011.

Pumpkin Patch's second-half sales in New Zealand probably rebounded but much of this has been achieved at a cost to margins from continued discounting, she says.

Britain and the US are showing improving stability in sales but coming off cyclical lows.

In contrast, exports to its wholesale markets have rebounded in the past few months, implying an end to de-stocking and a recovery in 2011 sales, she says.

Recommendation: Buy.

Daily ShareChat articles report how the main experts in the market might view a certain share and we provide this commentary as a useful resource for investors. Content on this site does not in any way constitute a recommendation to buy, hold or sell any particular share. Investors should always seek professional advice before making any investment decisions.

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.