Reject Shop Limited (TRS) AI Stock Analysis

• Market Cap: €247.36M
• Dividend Yield: 1.81%
• Average Volume (3M): 308.28K
• Price to Earnings (P/E): 40.0
• Beta (1Y): 0.28
• Revenue Growth: 3.37%
• EPS Growth: -25.24%
• Country: AU
• Employees: 4,000
• Sector: Consumer Cyclical
• Sector Strength: 60
• Industry: Discount Stores
• EPS (TTM): 0.17
• Shares Outstanding: 37,365,917
• 10 Day Avg. Volume: 132,404
• 30 Day Avg. Volume: 308,284
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €5.94
• Price Target Upside: -9.34% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

Reject Shop Limited's overall stock score reflects a robust financial foundation characterized by revenue growth and efficient cash flow management. However, the high P/E ratio points to potential overvaluation, and profitability metrics require improvement. A strong technical position supports confidence in the stock's upward trajectory.

Reject Shop Limited Business Overview & Revenue Model

Company Description

Reject Shop Limited (TRS) is an Australian discount variety retailer offering a diverse range of general merchandise products, including homewares, cosmetics, toiletries, snacks, and seasonal items. With a focus on affordability, TRS operates in the retail sector, primarily catering to cost-conscious consumers seeking value for money on everyday essentials and unique finds.

How the Company Makes Money

Reject Shop Limited generates revenue primarily through the sale of a wide range of low-cost merchandise across its network of retail stores in Australia. The company leverages high-volume sales of discounted products to drive revenue. Key revenue streams include sales from categories such as homewares, personal care items, and consumables. TRS's earnings are significantly influenced by its ability to manage supply chain costs and negotiate favorable terms with suppliers, enabling it to offer competitive pricing. Additionally, strategic store locations and seasonal promotions contribute to its revenue generation, attracting both regular and new customers.

Reject Shop Limited Financial Statement Overview

Summary

Reject Shop Limited displays a solid financial performance with strengths in revenue growth and cash flow generation. While profitability metrics and leverage levels require attention, the company's stable equity ratio and cash conversion efficiency contribute to its resilience.

Income Statement

The Reject Shop Limited has shown a consistent increase in total revenue over recent years with a revenue growth rate of 4.1% from 2023 to 2024. Gross profit margin is healthy at 27.9%, and the net profit margin, though modest at 0.6%, indicates profitability. EBIT and EBITDA margins are 2.0% and 14.7%, respectively, suggesting operational efficiency, but there's room for improvement in net income growth.

Balance Sheet

The company's debt-to-equity ratio stands at 1.39, reflecting moderate leverage that might pose a risk if not managed carefully. The return on equity of 2.8% indicates limited profitability on shareholder investment. However, an equity ratio of 34.7% provides a cushion against liabilities, showing a stable financial structure but highlighting the need for enhanced profitability.

Cash Flow

Reject Shop Limited maintains strong cash flow generation with a free cash flow of AUD 86.4 million in 2024, though it decreased from the previous year. The operating cash flow to net income ratio is robust at 21.7, indicating strong cash conversion efficiency. The free cash flow to net income ratio of 18.3 suggests that the company effectively converts profits into cash, supporting operations and investment activities well.

Breakdown
Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
852.74M	819.34M	788.24M	778.69M	820.64M
	Gross Profit
341.07M	224.11M	218.37M	211.14M	229.10M
	EBIT
17.25M	18.11M	22.98M	19.56M	10.64M
	EBITDA
125.44M	129.64M	125.67M	128.53M	122.69M
	Net Income Common Stockholders
4.71M	10.31M	7.90M	8.32M	1.12M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
49.88M	77.33M	77.47M	73.05M	92.49M
	Total Assets
490.74M	502.39M	483.73M	401.81M	424.13M
	Total Debt
236.22M	228.43M	217.66M	167.13M	193.72M
	Net Debt
186.34M	151.09M	140.20M	94.08M	101.23M
	Total Liabilities
320.65M	320.45M	306.92M	245.08M	281.06M
	Stockholders Equity
170.08M	181.94M	176.80M	156.73M	143.06M
Cash Flow		Free Cash Flow
86.37M	98.89M	99.69M	76.32M	156.70M
	Operating Cash Flow
102.11M	111.02M	116.14M	87.09M	167.38M
	Investing Cash Flow
-15.74M	-12.13M	-16.45M	-10.78M	-10.68M
	Financing Cash Flow
-113.82M	-99.03M	-95.27M	-95.76M	-90.52M

Reject Shop Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6.55
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:TRS, the sentiment is Positive. The current price of 6.55 is above the 20-day moving average (MA) of 6.49, above the 50-day MA of 5.03, and above the 200-day MA of 3.49, indicating a bullish trend. The MACD of 0.39 indicates Positive momentum. The RSI at 76.51 is Negative, neither overbought nor oversold. The STOCH value of 71.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:TRS.

Reject Shop Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PMV	76 Outperform	AU$3.37B	17.00	14.01%	6.30%	-27.48%	-27.96%
TRS	73 Outperform	€247.36M	39.98	3.33%	1.81%	3.37%	-25.24%
SUL	73 Outperform	AU$2.99B	13.13	17.52%	5.21%	2.56%	-13.62%
HVN	71 Outperform	$6.63B	15.35	9.58%	4.66%	1.77%	15.57%
MYR	66 Neutral	AU$1.28B	26.52	8.55%	5.18%	-2.43%	-49.64%
Sector *	61 Neutral	$6.66B	11.77	3.06%	3.96%	2.60%	-21.54%

Reject Shop Limited Corporate Events

Harvest Lane Asset Management Acquires Substantial Stake in Reject Shop Limited

Harvest Lane Asset Management Pty Ltd has become a substantial holder in Reject Shop Limited, acquiring a 5.01% voting power through ordinary fully paid shares. This acquisition positions Harvest Lane Asset Management as a significant stakeholder, potentially influencing the company’s strategic decisions and impacting its market dynamics.

The Reject Shop Issues New Shares to Key Management

The Reject Shop Limited has issued 75,000 new fully paid ordinary shares to its Key Management Personnel without disclosure under Part 6D.2 of the Corporations Act. This move, authorized by the Board, aligns with compliance requirements and indicates a strategic decision to potentially incentivize or reward its management team, which could impact the company’s operational dynamics and stakeholder interests.

The Reject Shop Limited Announces Quotation of New Securities

The Reject Shop Limited has announced the application for quotation of 75,000 ordinary fully paid securities on the Australian Securities Exchange (ASX). This move, involving securities issued under an employee incentive scheme, could potentially enhance the company’s market presence and provide additional value to its stakeholders.

Dollarama to Acquire The Reject Shop in Strategic Expansion Move

The Reject Shop Limited has entered into a binding Scheme Implementation Agreement with Dollarama Inc., under which Dollarama will acquire all outstanding shares of The Reject Shop at A$6.68 per share, a significant premium over recent trading prices. This acquisition, recommended by The Reject Shop’s Board and supported by its largest shareholder, Kin Group, is expected to enhance shareholder value and align with Dollarama’s strategic expansion into new markets, leveraging its expertise in value retailing to drive growth in Australia.

The Reject Shop Reinforces Market Position with Value-Driven Strategy

The Reject Shop’s latest announcement highlights its continued commitment to providing value through low prices and unique product offerings. This strategy reinforces its position in the competitive retail market, potentially impacting its growth and market share while benefiting stakeholders by enhancing customer savings.

The Reject Shop Limited Reports Strong Half-Year Financial Results and Store Expansion

The Reject Shop Limited reported strong financial results for the first half of FY25, with a 2.9% increase in sales to $471.7 million and a 13.7% rise in EBIT post AASB 16. The company has successfully managed inflationary cost pressures and improved gross profit margins, driven by growth in both general merchandise and consumables. Additionally, the company continues its expansion strategy, having opened nine new stores and planning further openings, while maintaining a strong balance sheet with no drawn debt and $75 million in cash.

The Reject Shop Reports Revenue and Profit Growth with Interim Dividend Announcement

The Reject Shop Limited reported a 2.9% increase in revenue to $471.7 million for the 26-week period ending December 29, 2024, with net profit rising by 10.1% to $15.9 million. The company also announced a fully franked interim dividend of 12.0 cents per share, reflecting its robust performance during the peak trading period in November and December, which traditionally boosts its financial results.