What Happened to the Reject Shop Share Price?
Shares of The Reject Shop Ltd [ASX:QBE] fell more than 12% on Tuesday, closing at the lowest level since 2006.
Why Did This Happen to the Reject Shop Share Price?
The company today announced that its year-end profit guidance will be between $14.5 million and $15.5 million. This is less than the previous estimate of $17–18 million.
What Now For The Reject Shop Ltd?
It has been a rough time for the retail sector. Lower consumer confidence figures have revealed that even record low interest rates haven’t been enough to get consumers to open their wallets.
Following today’s price fall and assuming The Reject Shop hits the low end of its profit forecast, the company is still trading on a PE ratio of nearly 16-times earnings. That’s roughly at the mid-point of the company’s long term average PE ratio.
Is that enough to encourage investors to buy the stock? It’s an interesting choice for investors. For instance Myer Holdings Ltd [ASX:MYR] currently trades on a PE ratio of 11.4-times earnings.
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Good contrarian investors could do well to begin ‘circling’ the Aussie retailers. At some point this sector will recover and today’s prices will look cheap.
Cheers,
Kris+
