Greek Toy Retailer Has Been Outpacing the Greek Economy

GuruFocus.com
0

- By Holmes Osborne, CFA

Jumbo SA (JUMSF, JUMSY) is a Greek retailer focusing on toys and other products. Sales and earnings growth have been fantastic, and the stock is reasonably priced.

Jumbo has 136 million shares and trades at a market cap of a1.6 billion ($1.77 billion). It takes $1.11 to buy one euro. Earnings per share were a0.7705 and the price-to-earnings ratio is 15.5. The dividend was a0.18, and the dividend yield 1.53%. These numbers are based on last yearas fiscal end which was June 30, 2015.


The company earned a583 million ($647 million) in sales in 2015, up 7.5% over 2014. EBITDA was a whopping a159 million ($176 million). Thatas an EBITDA margin of 27%! Return on equity is a respectable 13.6%. Bloomberg has a sales estimate of a631.4 million ($700 million) in fiscal year 2016 and an EPS estimate of a0.856. Great growth! First half profit rose 15.7%.

The balance sheet is solid with a300 million ($333 million) in cash and a15 million ($15.5 million) in accounts receivable. This is to only a51.4 million ($57 million) in accounts payable and a147 million ($163 million) in debt. Free cash flow was a70 million ($77 million) so the free cash flow yield was 4.8%.

Jumbo has 40% of the toy market in Greece. The company has a presence in Greece (55 stores), Cyprus (five), Bulgaria (eight) and Romania (six); 45% of sales are baby products, and the rest are seasonal and home products.

People were up in arms about a commercial Jumbo put out right before the Greek Easter (Greeks celebrate Easter on a different date than most other Christians). Something about ahit like a mana offended people, and they had to take it off the air. It sounds like theyare very sensitive in Greece. To be quite honest, there is not a lot of information out there on the company. Looking at Google News and Bloomberg doesnat turn up a whole lot of information.

Tanosirian SA owns 26.72% of shares which Jumbo will absorb through a merger. Fidelity Low Priced Stock Fund owns 8.19%. I found out about Jumbo by looking at First Eagleas holdings.

Needless to say, the Greek economy is in no great shape. The EU recently agreed to take Greek government bonds as collateral for EU loans. Many reforms have been put in place, but the economy still did poorly in 2015. The U.S. is all for debt restructuring.

So is Jumbo a buy? I donat know. Based purely upon numbers it is. Iave never been in Greece and never been in a Jumbo store so Iam leery. The company seems to chug along despite the economy. The ADR is up from $8 last year and reached $14, before coming back down into the $11 range. Iam going to follow Jumbo. The time to invest in a retailer is in its growth phase. The only way to get outstanding growth in a retailer is when the company is expanding into new stores. Jumbo is definitely doing this.

Start a free seven-day trial of Premium Membership to GuruFocus.

This article first appeared on GuruFocus.


Advertisement

Recommended Stories