Investment Analysis: Sports Direct vs. JJB Sports

Investment Analysis: Sports Direct vs. JJB Sports Essay example
Masters
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Finance & Accounting
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Running Head: Investment Analysis “Investment Analysis: Sports Direct vs. JJB Sports” Your Name University Date Sports Direct Investor Ratios for the FY 2010, 2011: Figure 1: Sports Direct Investors Ratios: Figure 1 above summarizes the investor’s performance in the company Sport Direct…

Introduction

Increase in taxes is another reason why the company’s performance in terms of EPS. P/E is also another very important measure to assess the company’s shares in terms of their earning potential. In the case of Sports Direct, 2010 P/E ratio could not be calculated because the historical market price was not available in the financial statements. In 2011, the company was able to earn the P/E ratio of 19.5. This means that investors are needed to invest €19.5 in the company for every €1 of earning. The ratio is quite high and looking at this measure it looks like that the stock is trading at a very high price and therefore investors should only invest in the shares of the company once the price of the stock comes down. The company paid out around 8.33% of its earning as dividend in the fiscal year 2010. However, the company did not pay any dividend in the FY 2011. This is in line with the company’s objective of growth. Since, the company wants to expand it needs more money and as a result it has cut down the dividends on shares in order to finance its expansion. As a result we see that Dividend per share ratio has also come down from around 6.94% to 0%. The company is cutting down on dividends in order to finance its growth. Another ratio that shows that the company is conservative in its approach of paying dividends is the dividend cover ratio. ...
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