Lovisa Share Price Up 66% in a Year. Is Now the Time to Buy? (ASX:LOV)

ASX LOV - Lovisa Stocks on ASX

Dear Reader,

Did you manage to make a 66% gain from this fashion retailer?

It’s okay if you didn’t. I mean, who would have thought this was likely during a retail crunch?

Well, as it turns out, the items Lovisa Holding Ltd [ASX:LOV] sells aren’t just popular, but also profitable.

Today, this fashion retailer has a market cap of $1.17 billion.

Lovisa saw a 15.3% increase in revenue in FY19.

You may be wondering if this trend is going to continue and are perhaps considering an investment.

Well let’s take a look. But first…

Who is Lovisa Holding Ltd [ASX:LOV]?

Lovisa sells fashion jewellery and accessories.

They operate in Australia and internationally.

The company began in 2010. Today they have over 400 stores around the world.

The company targets women aged 25 to 45 with products that the company develops, designs, and sources.

Lovisa is due to report earnings on 18 February.

Before they do that, let’s take a look at their 2019 results.

The company saw revenues grow by $250.3 million. This was an increase of 15.3%.

It also had an increase in net profit after tax (NPAT) of 3%.

Here is a graph of the company’s sales since 2015. It’s been gradually increasing.

Lovisa Share Price - Earnings Chart

Source: Lovisa

[Click to open in a new window]

Despite the growing sales revenue, Lovisa did mention in the 2019 report the following:

We did not see the same strong fashion trends through the first half of the year that we saw in prior years, the effect of which continued in the second half.’

What do investors think about the upcoming earnings announcement for the first half of FY20?

Let’s turn our attention to the company chart to get an idea of this.

Take a look at it below:

What’s next for the Lovisa share price?

Lovisa Share Price Chart

Source: Trading View

[Click to open in a new window]

What you’re looking at above is the daily share price chart of Lovisa.

I placed three black arrows on the chart to help show the trend.

Lovisa was previously in a long-term uptrend. This trend took a breather last October.

From October 2019 to 3 February 2020, investors sold off Lovisa.

Yet, today the Lovisa share price is up around 8% from yesterday’s close at the time of writing.

This indicates a positive assessment of the company’s upcoming earnings announcement.

Or investors are excited to hear that the company’s key competitor, Colette, has filed for administration.

I’ll be watching this announcement to see evidence that Lovisa can demonstrate the high growth that, say, Temple and Webster has recently seen.

Until then, I’d say it’s too speculative to be confident.

Then we can track the price action following this news. That will inform us of the market’s judgement for the near term in regards to this stock.

As always, this is not a recommendation to buy or sell LOV. It is an update only. I hope you found it useful.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch

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