Can Ocado keep climbing towards its all-time highs following Tuesday’s full year results?
After frustrating investors for years by failing to sign any kind of international deal, Ocado has been pretty damn busy in the last couple of months, producing a pair of partnerships that have transformed its stock price.
For most of 2017, Ocado wasn’t going anywhere. It largely ranged between £2.50 and £3.10, struggling to consistently build on whatever momentum it managed to accrue at various moments throughout the year.
Yet that all changed on 28th November, as Ocado revealed a deal with Groupe Casino, with the online supermarket not only supplying the French giant with its delivery management software, but helping it to build an automated warehouse near Paris. Investors were, understandably, ecstatic, sending Ocado 38% higher in the 2 trading sessions that followed.
The company’s fourth quarter statement on 14th December was less enthusiastically received. Despite posting an 11.6% rise in retail revenue to £373.8 million, an 11.1% jump in average orders per week and a 0.3% increase in average order size, investors were a tad disappointed that those sales figures couldn’t match the 13.1% seen across Q3.
Still, those numbers were good enough to keep Ocado on the up and up, with the stock closing out 2017 at £3.93, 51% higher than were it opened the year. The first few weeks of 2018 then saw Ocado bounce between £4 and £4.25, only for the company to surprise everyone once again with another warehouse/online grocery business deal, this time with Sobeys, Canada’s second largest food retailer.
Investors flocked to the stock, with Ocado climbing 22% following the release to briefly hit a near 4 year high of £5.50. Ocado Group PLC now sits at a current trading price of £4.96 (Spreadex, 31/01/2018).
In terms of Tuesday’s annual results, investors will want to see some solid double digit sales growth, as well as a similar level of pre-tax profit growth revealed this time last year, when Ocado posted a near 22% increase to £14.5 million.
Ocado Group PLC (LON:OCDO) has a consensus rating of ‘Hold’ alongside an average target price of £3.93.
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