Should I Buy Super Retail Group Shares, SUL Shares, SUL Share Price ASX

From COVID Lows of $2.99, SUL shares have rocketed back to 10-year heights and delivered massive returns of 327%. With cashed-up Australians looking to domestic tourism and leisure activities, Should I Buy Super Retail Group Shares?

SUL Share Price ASX

Despite a rocky period for brick-and-mortar retailers, Super Retail Group (SUL) has been pushing excellent returns off the back of the COVID Crash. YTD the stock price has returned 20.13%.

Investors lucky enough to pick up SUL shares at the bottom of the COVID crash would have entered in at around $2.99, prices not seen since 2009. These investors would be sitting on a massive gain of 327%.

Investing $10,000 in SUL at COVID Lows would now be worth over $42,700

SUL shares have rocketed higher on the 7th of October, being a major market mover with a share price increase of 7%. The instant gain follows UBS upgrading SUL shares to a BUY rating. With Australia looking to reopen and Australians cash-rich, Super Retail is well-placed to benefit from an increase in consumer spending.

SUL’s market capitalization is around $2.9 Billion, this prices the group similar to the likes of IOOF Holdings, National Storage REIT, and Pointsbet

Should I Buy Super Retail Group Shares: About

Super Retail Group owns and operates a number of key Australian Retail Brands including Supercheap Auto, Rebel, BCF, and Macpac. The group's focus is on outdoor consumer discretionary brands.

The group started in 1972 and has developed into the leader in retailing of auto, sport, and outdoor leisure products across Australia and New Zealand. 

SUL has annualised turnover in excess of $3.45 billion.

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX

Supercheap Auto and Rebel are the largest segments of the business accounting for around $2.5 Billion in sales, and $384 Million in EBIT. BCF is the third-largest revenue generator accounting for $797 Million in sales. The BCF camping segment also showed massive growth in 2021 with a revenue jump of 49.1%.

SUL Shares Dividend History

Super Retail Group has a solid history of growing its strong dividend. Their current yield of 10.33% has been very attractive for investors in the low-rate environment.

SUL typically announces a dividend with the release of its half-year results in February and full-year results in August as seen in their financial calendar. SUL Dividends are typically paid twice a year, in April (interim dividend) and October (final dividend).

SUL has paid a dividend every year since 2005. Including 2020 during the COVID-19 recessionary period. In 2020 we did see them pay only an Interim dividend. All dividends have been fully franked. They also offer a Dividend Reinvestment Plan (DRP).

Full SUL Dividend Report

SUL Shares Investor Sentiment

You may ask yourself, what do other investors think of Super Retail Group shares? After surveying 112 Investors about their current SUL shares sentiment: BUY-HOLD SELL, as well as their target price over the next 12-months here are the results;

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX

The results from this survey show there seems to be a strong bullish investor sentiment on SUL shares.

UBS has also raised its target price for SUL after believing that the group will continue to deliver strong EPS growth based on a strong post lockdown recovery.

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX

SUL Shares Fundamentals

Market Cap$2,883,804,405
Shares Issued225,826,500
ASX Rank149
PE9.57x
EPS$1.334
Volume 4W Avg859,400
VWAP$12.73
PEG-1.3x
NTA per Share$1.93
ROE24.5%
ROA11.5%
DebtDebt Free
Equity$1.227 Billion

Based on their current share price we can see SUL shares have a PE of 9.57x, which is well below the current inflated market average of 27.27x. A company with a low PE could be seen as undervalued or may have low investor sentiment.

We can see with a negative PEG, investors seem to be pricing in low growth for the company going forwards. However, UBS seems to disagree after upgrading its price forecast to $13.50 and recommended a Buy on the share with an increased expectation on EPS

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX
UBS Price Targets and Recommendations, Source

PE 1-14: The company is undervalued/has low investor sentiment regarding growth

The Ultimate Stock DD Checklist

SUL ASX Beta:

SUL currently has a beta of 1.14. Beta is a measure of a stock’s volatility in relation to the overall market. Higher Beta stocks are said to be riskier but provide better return potentials, Source: Investopedia.

SUL ASX Earnings, Debt, and NTA per Share:

We can see SUL shares currently have earnings per share of $1.334 , this gives it its undervalued PE of 9.57x. Another way of looking at this is 10.45% of their share price is backed by solid earnings.

Super Retail Group is debt-free. We like companies with low-to-no debt. Their Net Tangible Assets per share is $1.93, which represents 15.11% of the share price.

We can see SUL has managed to grow its EPS significantly in 2021, which has largely influenced its increased dividend and share price. EPS has also risen despite an increase in outstanding shares, following the June 2020 equity raising.

SUL Shares Financials

Super Retail Group released its FY21 reports in August, the group highlights:

  • Total Group sales up 22 per cent to $3.45 billion
  • Online sales up 43 per cent to $415.6 million
  • Segment earnings before interest and tax (EBIT) up 80 per cent to $476.8 million
  • Segment normalised profit before tax (PBT) up 108 per cent to $435.8 million
  • Basic EPS up 139 per cent to 133.4 cents

Super retail group managed to deliver record results this year and saw unprecedented consumer demand in its lifestyle and leisure brands.

With a massive rise in demand the group's investment in supply chain and focus on inventory management has allowed them to keep on top of sales and help scale their online retail components. This was largely supported by the 2020 equity raise.

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX

Supercheap Auto

The Supercheap Auto brand had a sales increased of 16.9 percent to $1.31 billion This was driven by both transaction growth and higher average transaction value. Online sales grew by 31 percent to $107 million, representing 8 percent of sales.

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX

In FY22 Supercheap Auto is targetting growth through opening 5 more stores and refurbishing a further 30. Refurbishment of stories has shown to provide a single-digit percentage increase in sales and payback in around five years. These projects average around $450k per store.

Rebel

Sales increased by 15.3 percent to $1.20 billion. Rebel's online sales grew by 36 percent to $193 million, representing 16 percent of sales. Like-for-like sales growth was achieved in all categories with performance sports delivering the strongest growth.

Football, basketball, licensed apparel, and kids’ apparel were the fastest-growing sub-categories. Fitness equipment and accessories also performed well as COVID-19 lockdowns lifted at-home fitness activity.

BCF

BCF was a standout amongst the brands with a total sales increased by 49.1 percent to $797.7 million.

Online sales grew by 90 percent to $86 million, representing 11 percent of sales.

The group's outdoor segments all grew strongly, reflecting elevated levels of domestic tourism and leisure activity.

Caravan, 4WD, camp shelter & bedding, barbeque, trailer, water sports, footwear, and apparel were among the fastest-growing sub-categories.

BCF opened three stores, resulting in 142 stores at period end.

MacPac

Sales increased by 16.3 percent to $153.4 million as a result of a 14.2 percent increase in like-for-like sales.

Online sales grew by 38 percent to $30 million, representing 21 percent of sales. Tents, sleeping bags, and camping accessories were the fastest-growing categories.

Super Retail Group Online Sales Growth

Super Retail Group has embraced a shift to online sales and capitalized well on the consumer shift. FY21 has been a record year for online sales, with $416 Million realized. The group has managed to grow online sales at 55% compounded annual growth rate for the last four years.

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX

Online sales now represent 12% of the total revenues for Super Retail Group. Online has been adapted well by the Macpac brand, while Supercheap Auto falls behind. This likely stems from the product nature of the businesses.

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX

SUL ASX Income Statement

Finishing 2021 SUL realized massive revenue growth of 22%, up to $3.45 Billion. Meanwhile, expenses have only grown at a more modest rate of 13.34%. Due to this SUL realized excellent profit margins in 2021.

Super retail group brought in a total of $304.5 Million, up from $109.7 Million in 2020. This represents a breathtaking climb of 177.57%.

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX

SUL ASX Balance Sheet

Super retail group has grown its balance sheet with total net assets of $1.226 Billion. The group currently has $242.3 Billion cash-on-hand and $696.4 Million in inventories.

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX

SUL ASX Cash Flow Statement

In 2021 SUL generated $41.4 Million from the issuance of shares, and paid out $118.5 Million in dividends.

Should I Buy Super Retail Group Shares, SUL shares, SUL Share Price ASX

Should I Buy Super Retail Group Shares: Technicals

The general consensus within the Technical Analysis community is currently bullish on SUL shares. The moving averages and Technical Indicators seem to indicate a Strong Buy.

Trading Central believes the downside prevails as long as $12.3 is resistance. However, in the case of an upside breakout of $12.3, investors should look for $12.9 and $13.3.

NameValueAction
RSI73.527Buy
STOCH86.916Overbought
STOCHRSI83.796Overbought
MACD0.230Buy
ADX41.683Buy
Williams %R-5.747Overbought
CCI112.6598Buy
ATR0.1786High Volatility
Highs/Lows0.1921Buy
Ultimate Oscillator60.224Buy
ROC11.140Buy
Bull/Bear Power0.5260Buy
Source: https://au.investing.com/equities/supa-cheap-technical

SUL Shares Insider Ownership and Trading

We can see that institutions and individual insiders own the majority of Super Retail Group shares. This is a relatively large portion of insider ownership

We generally like companies with large insider ownership. Skin in the game helps ensure the management’s motives are in line with ours. For large-cap companies’ insider ownership will be lower, 3-5% would be decent in this case. In comparison SUL's 30.8% is excellent.

Large insider ownership also leaves the group open for further equity raising possibilities without diluting ordinary shareholders.

Substantial SUL Shareholders

NameTotal SharesShares Held (%)
Reginald Allen Rowe65,890,43129.18
Challenger Limited16,421,5267.27
Alphinity Investment Management Pty Ltd13,924,1246.17
UBS Asset Management13,002,7715.76%

We can see the Super Retail Group founder Reginald Rowe is the major shareholder accounting for 29.18% of the company. Rowe remains on the board as a Non-Executive Director.

Insider SUL Transactions 2021

We can see there is a history of insiders purchasing SUL shares. Early September we saw Annabelle Sally Chaplain purchase 4000 shares totaling $49,400. Early this year we have also seen CEO Anthony Heraghty purchase $265,538 worth of shares. No individual insiders have sold shares this year.

Should I Buy Super Retail Group Shares: Prophet's Take

Using current fundamentals SUL seems massively undervalued at a PE 9.47x and NTA of $1.93. UBS seems to agree with this after recently upgrading SUL to a buy recommendation and upgrading its EPS and price targets.

Following on from a record year from SUL, further growth seems possible, catalyzed by the opening of domestic travel and the increase in Australians savings.

Super Retail Group has managed to evolve and embrace online sales. With a massive increase across all key metrics, Super Retail Group has delivered excellent returns to investors.

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