Halfords Group Share Price Forecast December 2021 – Time to Buy HFD?

Shares of UK’s leading retailer of car parts, bikes and accessories Halfords Group (LSE: HFD) are in the green today, closing on £ 320.4 as of December 1^st (17:51 GMT). Earlier in the month, the company released its interim results for 2022 which caused a surge in share price. While the shares are up 20% over the year, it is still quite volatile. For instance, the share price fell by over 40% from July to November.

Halfords Group – Technical Analysis

According to the financial statement released by Halfords Group, the market cap of the company is at £60.508 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 for Halfords Group such as Exponential Moving Average (30)(315.9),  Simple Moving Average (30)(306.5),  Exponential Moving Average (50)(315.1) and Simple Moving Average (50)(301.4) are indicating a buy action. Oscillators such as Relative Strength Index (14)(52.0),  Stochastic %K (14, 3, 3)(26.5),  Commodity Channel Index (20)(−6.3),  Average Directional Index (14)(33.1) and Awesome Oscillator(20.1) are neutral.

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Recent Developments

As the UK’s leading retailer of car parts, bikes and accessories, Halfords Group operates almost 500 stores around the country, providing employment to over 11,000 people. The company provides auto servicing and maintenance and sells huge volumes of car accessories. It is also known as the biggest seller of cycle and bicycle parts in the UK. As revealed by its interim results Halfords Group achieved revenue growth of 19.2% against the equivalent period pre-Covid and its market share is increasing in the retail motoring and auto centres divisions. The positive metrics could be found in the outlook statement as well where underlying profit before tax has been upgraded to between £80 million and £90 million from £75 million previously.

While the company has been a major player in retailing in the past and is also known for its cycling and motoring services, recent results show that Halfords Group has made progress in the electric mobility market as well.  Sales of e-bikes, e-scooters, and accessories increased by 140%. The interim results also showed that the company’s EV sales have also increased by 124%. In an effort to maintain a market-leading position, the company has confirmed that it will double the number of trained electric technicians.

Should You Buy HFD Shares?

Investors interested in HFD shares should consider some risks which aren’t evident in its interim results. For example, the global supply chain disruption could impact the company with freight costs remaining elevated. Inflationary pressures from sectors such as the labour market and rising energy prices could also negatively impact Halfords Group. While these cost pressures are known to the company, an increase could decrease margins in the following year.

The global supply chain problem could seriously impede the company’s growth. While most bicycle parts are made in East Asia due to the low cost of labour and steel, both of these are in danger due to lockdowns although things are improving. It has warned investors previously about acute shortages over the next two quarters. To overcome this, Halfords may be required to increase the cost of its bikes which could negatively impact its image as an affordable retailer. However, any share price decline won’t be so drastic as these issues will equally impact all the companies in the sector. While at present price levels the shares aren’t exactly worth buying, investors should add these shares to their watchlist.

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