JD Sports Fashion Share Price Forecast December 2021 – Time to Buy JD?
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Shares of British sports-fashion retail company JD Sports (LSE: JD) are in the red today, after closing at £222.90 as of December 1st (3:39 GMT). The company has been recently expanding its business which will become harder as the comparative numbers grow larger.
JD Sports Fashion – Technical Analysis
The financial statement of JD Sports indicates a market cap of £1.15 trillion with total assets worth £645.22 billion. Revenue for 2020 was at £616.73 billion with a profit margin of 3.64% compared to £611.08 billion in 2019.
Moving averages for JD Sports such as Exponential Moving Average (10)(972.65), Simple Moving Average (10)(1054.54), Exponential Moving Average (20)(1045.05), Simple Moving Average (20)(1094.62) and Exponential Moving Average (30)(1062.08) are indicating a sell action. Oscillators such as Relative Strength Index (14)(8.92), Stochastic %K (14, 3, 3)(28.25), Commodity Channel Index (20)(−657.90) and Average Directional Index (14)(24.81) are neutral.
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Recent Developments
Formed almost 4 decades ago, JD Sports Fashion started from a single shop in the northwest. It has since expanded to over 3300 shops worldwide. Apart from its flagship JD brand, the company also operates several other brands such as sports fashion brands such as Finish Line and Scotts to outdoors specialists like Millets and Tiso. The company has seen immense financial progress as well, with last year’s revenue coming in at £616.73 billion.
The company acquired Shoe Palace for $325 million, boosting the company’s shares 5% higher in December 2020, as well as acquiring Shoe Palace’s holdings in Nice Kicks, a website for sneakers. JD Sports also announced a joint venture with an Indonesia based company and is scheduled to open its first store in the country in 2022. Along with Leicester City Football club, JD Sports is still under investigation by the Competition and Markets Authority (CMA) due to alleged breaches in competition law since September this year.
JD Sports Fashion thus has a 10-year compound annual growth rate (CAGR) of 19.3%, with its pre-tax profits being 17% during the same periods. Such revenue growth and pre-tax profits are unheard of for any retailer among its peers. In the case of JD Sports, the company has maintained that level of growth every year for the past decade. The company’s half-year results were the most profitable ever.
Should You Buy JD Shares?
JD Sports Fashion produces a dividend yield of just 0.3% for this fiscal period, but the shares’ mega-low price-to-earnings growth (PEG) ratio of 0.4 more than makes up for this. Some of the risks include the decrease of demand for JD’s leisurewear if consumer spending comes under pressure due to deteriorating economic conditions. But this risk is offset by the potential of the company’s athleisure segment and demand for comfortable sportswear looks set to keep growing strongly.
The company also has certain things going for it, including tie-ups with some of the world’s biggest brands. For instance, its special relationships with leading brands like Nike and Adidas should allow JD Sports to tackle increasing competition. Customer demand for clothing and footwear will likely remain high for decades and JD Sports have shown the characteristics of a cash generation machine. Despite falling profit margins, the company has generated a gross profit margin last year of 48%, while pre-tax profit came in at £324 million. Based on the strong long-term prospects, JD shares are suitable for investors who want to hold it fr the long term.
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