Halfords Share Price Forecast December 2021 – Time to Buy HFD?
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Shares of UK’s largest retailer of motoring and cycling products and services Halfords (LSE: HFD) are in the red today, after closing at 345.8p as of December 13th (17:57 GMT). The company announced a major acquisition last week which investors believe will boost its performance, growth and profile in the short and long term.
Halfords – Technical Analysis
The financial statement of Halfords indicates that the market cap is at £75.139 billion with total assets worth £112.71 billion. Revenue for 2020 was at £129.23 billion with a profit margin of 4.12% compared to £115.51 billion in 2019.
Moving averages such as Exponential Moving Average (20)(339.4), Simple Moving Average (20)(341.7), Exponential Moving Average (30)(332.0), Simple Moving Average (30)(327.7) and Exponential Moving Average (50)(325.9) are indicating a buy action. Oscillators such as Relative Strength Index (14)(55.9), Stochastic %K (14, 3, 3)(72.8), Commodity Channel Index (20)(25.4), Average Directional Index (14)(30.5) and Awesome Oscillator(40.6)are neutral.
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Recent Developments
As it stands, Halfords is the country’s leading retailer of automotive products as well as cycling products. With more than 750 locations throughout the country, it employs over 10000 people. According to the company, you can find a Halfords shop or auto centre within 20 minutes of where you stay in the UK. While the current share price is over 300p, they were trading for just 260p a year ago. This indicates a 35% return over the last 12 month period. In December, the shares are up 10% due to positive interim results and the acquisition deal.
Halfords signed a sale and purchase agreement to purchase Axle Group Holdings Ltd for £62 million on December 1st. Axle Group owns the Tyre Shopper brands, National Tyres and Autocare and Viking Wholesale Tyres. The partnership is a great move as the company already owns auto centres where it offers MOTs and services for motorists. As a result of this deal, Halfords will have 604 garages, 234 consumer vans, and 190 commercial vans, which will surpass its target of 550 garages. As Halfords places great emphasis on motoring revenue, it can hope to grow its revenue stream via the National Tyres and Auto Care centres.
Halfords also released positive interim results for the financial year 2022 in November. Compared to 2021 levels, revenue, profit, sales growth, and cash generation have increased. While other FTSE stocks suffered due to issues with the supply chain, Halford was able to tackle this problem by leveraging its competitive advantage and huge profile.
Should You Buy HFD Shares?
Investors interested in HFD shares should consider some risks, especially the current global supply chain crisis. Like other businesses, Halfords has also struggled to fulfil the demand for some of their products in their cycling department. The company’s performance can be affected by rising costs and inflation. They can lose customers if these costs are passed on to them, which will in turn affect investor returns as well.
However, both the positive results and the recent acquisition are welcome news for investors as it can bolster its growth upwards. In addition, Halfords has done quite well in the past as well. While past performance is not always a guarantee of future performance, it can still shed some insight into the nature of the business and its ability to tackle certain problems. At the current price-to-earnings ratio of 12, the shares are reasonably priced. Thus at current levels, Halfords can be a good buy for any investor.
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