Saturday, March 30, 2024

PGG Wrightson earnings plough on

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PGG Wrightson has again lifted its earnings guidance for the 2022 financial year and the share market reaction was to reverse a steep fall in share price since February.
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PGG Wrightson has again lifted its earnings guidance for the 2022 financial year and the share market reaction was to reverse a steep fall in share price since February.

Chair Rodger Finlay said the guidance has been lifted from $62 million to $66m because of what he called impressive trading results.

“Our third quarter trading has exceeded expectations with retail, livestock, and real estate all experiencing solid demand,” Finlay said.

Livestock purchasing was up and wet and humid conditions through summer and autumn had supported robust sales in crop inputs and animal health products.

After the guidance increase, PGG Wrightson is on track to improve on the FY21 earnings by $10m and pay out at least 28c fully imputed dividend for the current year.

In the light of such good trading results, the share price pathway is curious.

“After the guidance increase, PGG Wrightson is on track to improve on the FY21 earnings by $10m and pay out at least 28c fully imputed dividend for the current year.”

Throughout last winter the price was steady around $3.40 and then after the announcement in August of a 33% increase in earnings for FY21, the price rose steadily to a peak of $5.72 on February 2.

The rural servicing company was clearly benefiting from high commodity prices and profitability for farmers, which investors recognised.

The interim results announcement for FY22 in February set new records and a 14c interim dividend was paid on April 1.

But the share price has fallen to below $4 during March and April, only to rally 30c after the latest earnings upgrade.

Investors now appear to be assessing earnings sustainability when primary commodity prices begin to fall but at present the expected yield of 7% tax paid is one of the best on the New Zealand share market.

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