Capitalcube gives Nick Scali Ltd. a score of 88.
Our analysis is based on comparing Nick Scali Ltd. with the following peers – Otsuka Kagu, Ltd., Independence Group NL and Celestial Asia Securities Holdings Ltd. (8186-JP, IGO-AU and 1049-HK).
Nick Scali Ltd. has a fundamental score of 88 and has a relative valuation of UNDERVALUED.
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- With respect to peers, relative outperformance over the last year is in contrast to the more recent underperformance.
- It currently trades at a Price/Book ratio of (7.25).
- We classify NCK-AU as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
- NCK-AU has a successful operating model with relatively high net profit margins and asset turns.
- The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
- NCK-AU‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
- The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
- While NCK-AU‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
- The company’s level of capital investment seems appropriate to support the company’s growth.
- NCK-AU has the financial and operating capacity to borrow quickly.
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Leverage & Liquidity
NCK-AU has the financial and operating capacity to borrow quickly.
- With debt at a relatively low 4.46% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 7.17%), and a well-cushioned interest coverage level of 84.40x, NCK-AU can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
- Of the 3 chosen peers for the company, only 2 of the stocks have an outstanding debt balance. Companies with no debt include 8186-JP.
NCK-AU has maintained its Quick & Able profile from the prior year-end.
- NCK-AU‘s interest coverage has declined 1.76 points from last year’s high but remains above its four-year average interest coverage of 68.18.
- The decrease in its interest coverage to 84.40x from 86.16x (in 2016) was also accompanied by a decrease in its peer median during this period to 4.72x from 44.61x.
- Interest coverage rose 38.13 points relative to peers.
- NCK-AU‘s debt-EV has declined 1.00 percentage points from last year’s high and is now close to its four-year average debt-EV.
- While its debt-EV decreased to 4.46% from 5.46% (in 2016), its peer median increased during this period to 7.17% from 2.73%.
- Relative to peers, debt-EV fell 5.44 percentage points (and is now lower than its peer median).
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Key Liquidity Items
|Company||Debt/Enterprise Value (%)||Current Ratio||Interest Coverage (x)||Cash Flow To Total Debt (%)|
|Otsuka Kagu, Ltd.||0||3.05||0||999|
|Independence Group NL||9.88||1.8||4.72||54.16|
|Celestial Asia Securities Holdings Ltd.||78.05||N/A||-6.87||-2.92|
|Nick Scali Limited||4.46||1.54||84.4||193.04|
|Best In Class||4.46||3.05||84.4||999|
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Nick Scali Ltd. engages in the retail and importation of household furniture and related accessories. Its products include lounges; occasional and dining chairs; dining and coffee tables; buffets and cabinets; rugs; and television & entertainment units. The company was founded by Nicodemo Domenico Scali in 1962 and is headquartered in Lidcombe, Australia.
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