LONDON (ShareCast) - A 78% slump in full-year underlying profit has not been enough to deter Oriel Securities from singing the praises of consumer electricals group DSG International (LSE: DSGI.L
- news) , which it reckons is pulling ahead, albeit in difficult markets.
"The store renewal programme is continuing to perform well with uplifts in gross profits of 11% to 65%. Since the close of the period, when the company had 63 stores in the new format, a further 19 stores have been reformatted and a further 101 reformatted stores are due to be opened this year," Oriel notes.
As per its major UK rival, Comet (COTN.SW - news) stores owner Kesa Electricals (LSE: KESA.L - news) , DSG is expecting the current financial year to be a tough one, but Oriel believes Thursday's trading update from the PC World and Currys owner offered cause for optimism. The broker has reiterated its "buy" recommendation, despite the shares trading on a "punchy" multiple of 26.9 times projected April 2010 earnings.
Oriel believes the current financial year represent a trough in the earnings cycle and there is a possibility of earnings upgrade as the year progresses.
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