The share price of Baby Bunting Group Ltd [ASX:BBN] is up 6.98% to $3.37 at time of writing, on the back of a FY20 results update.
Here are the highlights from that announcement:
- Pro forma EBITDA up 22–25%, to between $33–34 million
- Pro forma NPAT up between 29–35% to between $18.5–$19.5 million
- Statutory NPAT of $9.5 million to $10.5 million
These are solid results given the tough trading conditions stemming from the pandemic.
It also shows the company is finding efficiencies as they grow their revenue.
BBN also pays a dividend which means it is an intriguing long-term proposition.
We take a quick look at what the future holds for BBN.
BBN share price chart
You can see the BBN share price bounced strongly from the March market lows:
It’s currently sitting just below potential resistance at the $3.60 mark.
Since a run-up in May it’s threatening to break out of a range which was established over the last two months of trading.
With a market cap of just over $400 million and total sales of $405 million, it’s trading at a price-to-sales ratio of about 1.
Not bad for a company that is growing market share.
The dividend yield stands at 2.92%.
In addition to solid growth and a decent dividend, BBN has no debt and $13 million of cash in the bank.
You can get Greg Canavan’s five favourite dividend stocks here by the way.
Outlook for BBN Shares
Although they are profitable, have a dividend and are growing revenue, they could be perceived as a bit light for cash relative to their market cap.
A capital raise is not out of the question for BBN in the coming quarters as they look to expand further.
Long term, the Aussie birth rate stands at about 1.7.
So there could be a potential cap on how much they can grow if they don’t expand to new markets.
That’s a long way down the track though.
For now, BBN investors are likely pleased with today’s results and curious as to how the company will go about expanding.
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