Yahoo Finance Should You Invest In The Retail Sector And Green Cross Health Limited (NZSE:GXH)?
Green Cross Health Limited (NZSE:GXH), a NZ$199.5m small-cap, operates in the retail industry impacted by the digital transformation for all retail channels. Expectations for personalization are growing rapidly. Companies like Uber and Amazon have prompted the desire for convenience, recognition, and efficiency at every touch point. Retail analysts are forecasting for the entire industry, a strong double-digit growth of 11.7% in the upcoming year , and a massive growth of 37.4% over the next couple of years. This rate is larger than the growth rate of the NZ stock market as a whole. I’ll take you through the retail sector growth expectations, as well as evaluate whether Green Cross Health is lagging or leading its competitors.
Check out our latest analysis for Green Cross Health
What’s the catalyst for Green Cross Health’s sector growth?
E-commerce continues to be the fastest growing sales platform for consumer goods, changing the landscape for retailers. A large number of store closures and bankruptcies illustrates the shift in consumer preferences and increasing online competition. In the past year, the industry delivered growth in the teens, beating the NZ market growth of 2.2%. Green Cross Health lags the pack with its negative growth rate of -14.6% over the past year, which indicates the company has been growing at a slower pace than its food retail peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 21.4% in the upcoming year. This future growth may make Green Cross Health a more expensive stock relative to its peers.
Is Green Cross Health and the sector relatively cheap?
The food retail sector’s PE is currently hovering around 19.27x, in-line with the NZ stock market PE of 16.5x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. Furthermore, the industry returned a similar 10.8% on equities compared to the market’s 10.9%. On the stock-level, Green Cross Health is trading at a lower PE ratio of 12.04x, making it cheaper than the average food retail stock. In terms of returns, Green Cross Health generated 16.6% in the past year, which is 5.8% over the food retail sector.
Next Steps:
Green Cross Health’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. In addition to this, its PE is below its food retail peers, suggesting it is also trading at a relatively cheaper price. Perhaps the market hasn’t fully accounted for the growth, meaning now may be the right time to accumulate more of, or enter into, the stock. However, before you make a decision on the stock, I suggest you look at Green Cross Health’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has GXH’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Green Cross Health? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
