HOPES that Dixons Group is experiencing a strong finish to its fourth quarter were given a boost by forecast-beating full-year figures from the rival Kesa Electricals.
Dixons, owner of Currys and PC World, is not due to update investors till the last week of April, when it is to release a fourth-quarter trading statement before entering its closed period ahead of prelims in late June. However, analysts took comfort from yesterday’s pre-tax profit figures from Kesa, the Comet and Darty chain spun off from Kingfisher last year, which at £179 million were more than 4 per cent above consensus expectations. Although there was little detail on current trading, Kesa provided further support by saying that the first two months of its new financial year had maintained the strength of the second half.
Nick Bubb, at Evolution Beeson Gregory, took Kesa’s prelims as his cue to advise clients to switch into Dixons, which enjoys a higher forecast dividend yield than its smaller rival. He also suggests Kesa is exposed to the “wrong countries” in continental Europe, and believes Dixons should trade at a premium to Kesa, assuming that it does not make a bid for Kesa, as is intermittently rumoured. Dixons closed 3½p higher at 154p, the best rise in the FTSE 100.
Extract from The Times Online