On the face of it now would seem an odd time for the board to put the company up for sale. Full-year results announced in early March showed a 14.5% year-on-year rise in revenue and 42.6% leap in operating profits as the company opened new stores.

However, if we dig a bit deeper into the company’s financial results we see all is not going so smoothly. Stripping out the effects of the weak pound sends year-on-year sales growth plummeting to a downright low 1.6%. And if we take out the positive effects of new store openings, like-for-like sales actually fell by 0.8% during the period.

A precipitous 13% drop in constant currency sales in the Americas, where the company is struggling to regain the luxury cachet it once held, drove much of this decline. The company is making headway in growing the brand in Asia, but sales from the region outside Japan are still only half of its American sales.

At the end of the day luxury brands are highly cyclical, subject to rapid changes in consumer preference and require an intense focus on valuation should investors want to reap large returns. Unfortunately Jimmy Choo does not look sanely valued to me at 20.4 times forward earnings given lacklustre sales growth and a very challenging global luxury market.

A white knight bidder may emerge willing to pay a significant premium to today’s share price but that is not a given. Investors need to ask themselves whether this is a stock they would want to own regardless of outside interest, and the answer for me is ‘no’.

Is there safety in size? 

A more reliable long-term holding in the industry has long been classic British brand Burberry (LSE: BRBY). The company has a long history of re-inventing itself as new trends come about while still maintaining its luxury appeal with core consumers.

This is still true today even though the company’s share price has been on a tumultuous journey over the past two years. Much of this was caused by a rapid decline in sales in Hong Kong, but this was due entirely to an anti-corruption drive in China that caused previously big spending mainlanders to curtail their conspicuous consumption.

There are now signs this anti-graft campaign is over and Burberry has seen solid sales growth in Mainland China for several quarters, although Hong Kong continues to be a drag on overall sales. On the plus side, sales in the UK were “exceptional” during the latest period and drove European sales up by double-digits due to big spending tourists taking advantage of the weak pound.

Sadly, while Burberry is a well-run company with high margins, a healthy balance sheet and a strong creative team I would be leery about buying its shares today. This is due to slowing growth and a lofty valuation of 20.8 times forward earnings. Burberry is a great company but I would wait for its valuation to come back down to earth before I started a position.

The post Is Jimmy Choo plc a bargain as it goes up for sale? appeared first on The Twelfth Magpie.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK has recommended Burberry. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Build to last

For a group the size of Balfour Beatty a pre-tax profit of £60m may not sound like a lot, but add to that a £300m uplift in underlying revenues, and I think the group’s transformation programme may be beginning to bear fruit. Management embarked on its ‘Build to Last’ transformation programme at the start of 2015 to address issues with all its stakeholders, including customers, suppliers, employees, and subcontractors.

By its own admission, the group had become overly complex after more than a decade of acquisition-led forced growth. I think it’s refreshing to see a company finally admitting its own failings and embarking on a mission to turn things around. Having simplified the group, Balfour is now focused on its core markets in the UK and US, where governments are more committed to large-scale expenditure on infrastructure.

Healthy order book

Things certainly seem to be moving in the right direction, with the UK construction business returning to profitability in the second half of 2016, and a much healthier order book up 15% at £12.7bn. City forecasters also seem to be optimistic about the company’s prospects, with consensus estimates suggesting a £419m jump in revenues to £7.35bn for the current year, and a massive surge in pre-tax profits to £127m.

With revenues and profits expected to climb even higher in 2018, I think Balfour’s turnaround has well and truly begun. And with the forward P/E ratio dropping to 12 by the end of next year, I believe there’s plenty of growth left in the share price too.

Landmark year

Meanwhile, another London-listed company celebrating a successful 2016 is Jimmy Choo (LSE: CHOO). The London-based luxury fashion brand may be best known for its designer shoes, but it also specialises in high-end handbags, accessories and fragrances.

According to its CEO Pierre Denis, 2016 was a landmark year for the firm, as it celebrated 20 years in business with record levels of revenue and profitability. Total revenues grew 14.5% to £364m for the year, thanks mainly to the weaker pound, with adjusted earnings (before interest, tax, depreciation and amortisation) up 15.7% to £59m.

I believe the outlook is positive for Jimmy Choo as it continues to deliver its long-term growth strategy with sustained expansion of its distribution network, particularly in areas such as Asia where it remains under-penetrated. Asia has been a key target for luxury accessories brands. But while many have over-extended themselves and had to scale back in recent years in markets like China, for Jimmy Choo there is still lots of potential to grow.

I think the shares offer good value too, with the P/E ratio dropping to 17 next year, much lower than its three-year average of 26.

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ITV saw net advertising revenue sink 3% in 2016, to £1.67bn, and warned that it expects sales to fall 6% over the first four months of the present period “against the backdrop of current economic uncertainty.”

However, last week’s release was not all doom and gloom, with revenues at ITV Studios shooting 13% higher, to £1.4bn, and sales at its Online, Pay & Interactive arm rising by almost a quarter, to £231m.

Now don’t get me wrong, these ad market pressures are expected to put paid to ITV’s enviable record of earnings growth, and a 5% fall is predicted for the present year. However, this is expected to be a temporary setback and a 5% recovery is expected in 2018.

And in spite of ITV’s recent share price charge, the firm still provides plenty of bang for investors’ buck, with P/E ratios of 12.8 times for 2017 and 12.3 times for 2018 situated below the benchmark of 15 that is widely considered attractive value.

But ITV isn’t only a great ISA bet for growth chasers, in my opinion, its role as a dependable dividend raiser providing an extra reason for your attention. Indeed, last year’s 7.2p per share dividend is expected to rise to 8p this year and 9.3p in 2018, figures that yield 3.9% and 4.5% respectively.

Soaring star

Corporate jet servicer BBA Aviation (LSE: BBA) has also rocketed in recent sessions, the stock hitting 21-month highs earlier this month after positive trading news.

The flying ace advised that revenues barged 25% higher in 2016, to £2.15bn, a result that propelled underlying total operating profit to $330.1m, up 63% year-on-year.

And the Square Mile expects BBA Aviation to keep the pace up, printing a 19% earnings advance in 2017 and to follow this up with an extra 10% bump in 2018.

An average P/E ratios of 16.5 times for this year slips to 15 times for 2018, and as business jet traffic Stateside picks up, BBA Aviation is in the box seat to enjoy stellar growth, helped by shrewd acquisitions like that of fellow fixed-base operator Landmark Aviation in 2015.

Shuffling higher

Shoe specialist Jimmy Choo (LSE: CHOO) has also gained traction in recent sessions following positive trading numbers of its own.

The stock has moved to all-time peaks after advising last week that “improving retail momentum” during the second half of 2016 shoved full-year revenues 14.5% higher to £364m.

Favourable currency movements played a huge part, but one cannot underestimate the impact of Jimmy Choo’s foray into the menswear market, not to mention the terrific growth potential thrown up by its global expansion drive.

Analysts expect these measures to push Jimmy Choo’s earnings 30% and 13% higher in 2017 and 2018. I reckon the company’s exceptional brand power should keep delivering excellent bottom-line expansion, and that investors should shrug off slightly-toppy P/E ratios of 19.3 times and 17 times for this year and next and take a closer look.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. The Motley Fool UK has recommended ITV. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

While hindsight is a wonderful thing, Burberry’s relentless rise over the last eight months is yet another example of how buying solid companies when other investors are selling has the potential to make a noticeable difference to your wealth once sentiment recovers.

That said, the questions investors in the £7.5bn cap must now ask themselves is whether this kind of performance can continue and if not, are there better opportunities elsewhere? 

Time to sell?

Trading on 23 times earnings for 2017, Burberry’s shares certainly give the impression of being fully valued at the current time, particularly as earnings have been patchy over the last couple of years.

In its defence, the blue chip’s stock has rarely been on a cheap valuation and with good reason. The company has generated consistently high returns on capital over recent years and is also hugely cash-generative. Assuming it can achieve the 8% earnings per share growth pencilled-in for 2018, the price-to-earnings (P/E) ratio also reduces to 21 in 2018. That’s still expensive, albeit not ludicrously so.

Nevertheless, if you’re on the hunt for growth, one of Burberry’s peers may be more to your liking.

Walking tall

Thanks to a series of positive updates, shares in luxury shoe specialist Jimmy Choo (LSE: CHOO) now change hands for 66% more than last June’s pre-referendum low of 96p. Despite the market’s rather muted reaction, I can see further upside in 2017 based on today’s full-year results from the company.

In the 12 months to the end of December, revenue climbed 14.5% to £364m thanks to decent retail performance in the second half and sterling’s recent weakness. Adjusted EBITDA rose 15.7% to £59m, driven — according to the company — by “strong sales growth, margin improvement and lower growth in overheads“. While like-for-like sales dipped by 0.8% over 2016, operating profits rose a healthy 42.6% to £42.5m.

Building on its January update, Choo has continued to see strong progress in markets such as Asia, Europe and Japan, with its respectable retail performance in the US offset by the company’s “planned reduction” in wholesale. Its men’s division continues to grow rapidly and now accounts for 9% of revenue. Assuming this momentum can be sustained, I wouldn’t bet against Choo’s share price continuing to climb.

On the downside, stock in Choo — like that of Burberry — isn’t exactly cheap. Although earnings per share are expected to rise by 23% in the coming year, a P/E ratio of 19 doesn’t scream value. The not-insignificant amount of debt on its balance sheet and lack of dividends are also in sharp contrast to Burberry’s vast net cash position and 2.2% yield for the current year.   

Bottom line?

While higher estimated earnings growth at Jimmy Choo would imply that it’s the better buy for those investors motivated by the prospect of capital gains, Burberry’s scale and history of generating above average returns on capital may suit those whose investing style is more risk-averse.

Regardless of which appeals most, anyone considering stocks in the luxury goods sector must also be sensitive to the fact that sentiment can quickly diminish if macroeconomic or political events conspire to make markets anxious.

The post Should you kick Burberry Group plc into touch and buy growth-focused Jimmy Choo plc? appeared first on The Twelfth Magpie.

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Since it’s arguably best to leave a party when you’re having the most fun, should investors quit while they’re ahead? Or should they buy more in expectation that shares in both businesses will continue their ascent?

High riser

Thanks to a series of positive updates, shares in Jimmy Choo now change hands for 63% more than last June’s pre-referendum low of 96p.  

Last month, the company reported strong growth in Asia, with solid performance in Europe and Japan also helping to mitigate a reduction in wholesale revenue from the US.

Unsurprisingly, the main driver of sales at Jimmy Choo remains its shoes. What’s more surprising is that its men’s range (which also includes accessories) is now the £602m cap’s fastest growing category — accounting for roughly 9% of revenue.

With a new sunglasses and eyewear range due for launch next year, this figure looks set to rise further. Assuming the company can also continue to push its online offering — now accounting for only 6% of revenue — management’s belief that it can deliver on “strong current growth expectations” doesn’t appear misplaced.

On the downside, Choo’s recent performance has left it trading on a rather expensive valuation. A price-to-earnings (P/E) ratio of 19 may be too dear for some, particularly as it’s not hard to imagine a situation in which demand for luxury items falls following a macroeconomic event beyond the company’s control. A lack of dividends coupled with a not-insignificant amount of debt on its balance sheet may also be black marks for some investors.

It’s a buy from me, albeit a cautious one.

Get in the queue

While high heels and queueing may not go together, shares in Accesso Technology — like those of Jimmy Choo — have also performed strongly over the last year, rising 72% since last February.

Earlier this month, the ticketing solutions business announced that profits would likely be ahead of expectations for the full year. That’s despite the recent decision to increase investment in its products and infrastructure to exploit opportunities outside its traditional core markets.

The company’s new wearable device — introduced back in November — also received further investment. Designed specifically for the attractions environment, Prism offers functions like virtual queuing, cashless payments, ride photography tagging and proximity-based marketing. Innovations like this should allow Accesso to stay one step ahead of the competition for some time to come.

With all business lines “reporting good momentum” and any impact from Brexit expected to be “minimal“, it looks like 2017 should be another good year for the Reading-based firm. Indeed, should the aforementioned investment deliver, the 15% rise in earnings per share pencilled-in for this year could quickly become the norm.

A P/E of 36 for 2017 may appear eye-wateringly high but a price-to-earnings growth (PEG) ratio of just 1.5 suggests that investors may still be getting a fair deal given management’s plans for the future.

With its market leading status, I remain attracted to the growth story at Accesso. I suspect the shares will climb higher both before and after results arrive.

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The key reason for increased investor positivity is the ambitious expansion plan that saw the group open nine new directly owned stores in 2016 as well as convert 16 older stores into its new concept store layout. Compared to larger rivals such as Burberry, Jimmy Choo still has plenty of room to continue growing its footprint as it only had 150 directly owned stores at the end of December.

The company also has a few other interesting growth levers available to it as online sales only represented 6% of total sales at year-end and men’s product was less than 10% of revenue in H1. Furthermore, developing Asian markets are still largely untapped with only 15% of H1 sales coming from non-Japanese countries in the region.

While Chinese luxury sales have been negatively affected by the government’s anti-corruption drive in the short term, this huge and increasingly wealthy market should be a tempting target for Jimmy Choo in the long term.

The downside for potential investors is that the company’s shares currently trade at 23 times forward earnings, which suggests the valuation has already taken account of significant future growth. Another issue to keep an eye on is the fact that like-for-like sales reversed 1% in 2016 due to challenges in the US and the temporary closure of several flagship stores for refurbishment. While these are hopefully short-term issues, interested investors should keep a close eye out for a return to organic growth in the coming quarters.

Driving shareholder returns higher

Global car distributor and dealership group Inchcape (LSE: INCH) represents luxury brands from Rolls-Royce to Porsche and Jaguar. A new CEO coming on board with ambitious expansion plans has helped send shares of the company up over 9% in the past year to their current 739p price.

Despite five straight years of earnings growth, shares of the company currently trade at a sedate 13 times forward earnings, which is reasonable considering the cyclical nature of the luxury auto market.

However Inchcape is less cyclical than many pureplay car dealerships as 78% of the group’s trading profits last year came from its distribution business. This segment imports and exports vehicles, takes care of the distribution and works with OEM partners to source after-care parts. The 9.9% profit margins the distribution business posted last year are also much higher than the 1.9% margins from the retail network.

The company’s healthy balance sheet also means it can take advantage of any downturn to make strategic acquisitions at attractive prices. We’re already seeing this in action as weak trading in Latin America allowed Inchcape to purchase the leading distributor of Subaru and Hino vehicles in December for a relatively cheap £234m, or 8.6 times full-year EBITDA.

Inchcape certainly isn’t immune from any downturn in the global auto market but its high-margin distribution business, a healthy balance sheet and well-covered 2.8% yielding dividend still make it an interesting stock I’ll be keeping a close eye on.

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The stock closed within a whisker of fresh 14-month peaks after advising that strong shopper demand drove revenues to a record £364m during 2016, up 15% year-on-year. And Jimmy Choo was a strong beneficiary of currency tailwinds last year, too — sales rose by a more modest 2% at constant exchange rates.

Unsurprisingly, Jimmy Choo is upbeat about its prospects for the new year, advising that “we see improving trends across all regions and are well positioned to take advantage of a stronger marketplace.”

And the company is quite right to be confident. Jimmy Choo is investing huge sums to spruce up its store network and expand its global footprint, and opened another nine directly-owned outlets last year alone. On top of this, the designer’s recent entry into the ‘menswear’ category is also delivering the goods, and is the designer’s fastest-growing segment.

The City certainly believes the footwear giant has what it takes to keep delivering stunning bottom-line growth, and has chalked in expansion of 22% and 11% for 2017 and 2018 respectively.

Whilst slightly ‘toppy’ on paper, I reckon Jimmy Choo’s P/E ratios of 18.7 times and 16.8 times for this year and next represent very-decent value given the company’s white-hot growth outlook.

Great returns to go

I also believe the growing takeaway craze in the UK and abroad makes Domino’s Pizza Group (LSE: DOM) one to watch for growth chasers.

Domino’s announced plans in November to expand the number of outlets it operates in the UK to 1,600, up from its previous target of 1,200. And the fast-food colossus is aiming to unveil 300 new outlets it operates overseas, taking the total to 400.

These ambitious steps come as no surprise as sales surge by double-digit rates. Domino’s saw revenues tick 11.5% higher during the 13 weeks to September 25, to £237m.

Square Mile analysts anticipate earnings growth of 14% and 11% at Domino’s in 2017 and 2018 alone, creating P/E ratios of 23.9 times and 21.4 times. Like Jimmy Choo, I reckon the pizza powerhouse merits such premiums.

Mask mammoth

Growth-seekers looking for immediate fireworks should probably steer clear of Avon Rubber (LSE: AVON), however.

Indeed, the number crunchers expect Avon Rubber’s stellar record of earnings growth to grind to a halt in the year to September 2017 with a 15% earnings slip.

But I believe long-term investors could reap the rewards of growing demand for the company’s high-tech masks from the US Department of Defense, police service and security industry. And my faith is underpinned by the election of President Donald Trump, a factor that could really light a fire under Avon Rubber’ sales given his pledge to boost the country’s arms spending.

My bullish view is shared by the City, and Avon Rubber’s bottom line is expected to crank back into life from next year with a 7% advance.

With the defence darling trading on P/E ratings of just 15.8 times for this year and 14.8 times for 2018, I reckon investors seeking great growth stocks on a tight budget could do worse than check out Avon Rubber.

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4Imprint saw sales of its branded T-shirts, pens and other nick-nacks shoot 17% higher during January-June, to $270.2m. Total like-for-like trading was 15% ahead of the corresponding period in 2015. And in a promising update last month, the firm announced that “further organic revenue growth has been achieved” since the beginning of August.

The marketing giant generates 96% of total sales from North America, making it relatively immune to any adverse Brexit-related troubles in the months and years ahead.

City analysts certainly expect earnings at 4Imprint Group to keep shooting higher, and expect earnings growth of 23% and 11% for 2016 and 2017. While these readings create slightly-heady P/E multiples of 21.3 times and 19.2 times, I believe this is a snip considering 4Imprint’s exceptional revenues momentum.

Building beauty

But for those seeking hot growth at bargain-basement prices, I reckon building products provider Tyman (LSE: TYMN) more than fits the bill.

A sleepy US residential market is showing signs of finally cranking into gear, with construction spending hitting seven-month tops in October and driven by a 1.6% rise in residential-related expenditure. And Tyman is banking on recent acquisitions, new product lalunches and organisational improvements to keep driving the top line, even if macroeconomic turbulence troubles its other regions.

Tyman’s broad geographic diversification has already made it a reliable deliverer of sizeable earnings growth year after year, and the City expects this to continue with bottom-line expansion of 12% in 2016 and 13% next year.

Not only do such projections create modest P/E ratios of 11.6 times and 10.2 times — well below the benchmark of 15 times widely considered attractive value — but this year’s PEG rating is bang on the value yardstick of one. And this slips to an even-better 0.8 for 2017.

A shoe in

I’m convinced that electric demand for Jimmy Choo’s (LSE: CHOO) fashionable footwear should also underpin stunning earnings growth in the years ahead.

The company continue to face up to the difficulties enveloping the global luxury market, and commented last month that “Jimmy Choo is seeing revenue growth driven both by new store openings and by improving retail trading in all regions.” And the label is looking to capitalise on huge pent-up demand in Asia by aggressively expanding its shop network there — regional sales of its shoes (excluding Japan) climbed by almost a quarter during January-June.

The number crunchers share my optimistic view of Jimmy Choo’s bottom line, and have pencilled-in a 33% earnings rise in 2016. And an extra 24% bump is predicted for next year.

These projections  push a P/E multiples of 20.3 times for the current year to 16.4 times in 2017. Meanwhile, PEG ratios of 0.6 and 0.7 for 2016 and 2017 suggest that Jimmy Choo is great value at current prices.

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Jimmy Choo’s revenue growth in the period since 30 June has largely been driven by new store openings and improved retail trading across all of its regions. It has benefitted in particular from continued strength in China, with the brand continuing to attract new customers as well as develop improved customer loyalty with existing customers.

During the period, Jimmy Choo has opened four new stores, one in each of the regions in which it operates. Three stores were converted into its new store concept, while its like-for-like (LFL) sales in the second half of the year have moved back into positive territory despite the closure for refurbishment of its flagship store in Milan.

Jimmy Choo’s operating changes are set to improve its overall financial performance. Its anticipated delivery of cost reductions means that margins are set to increase for the full year, with Jimmy Choo’s underlying cash generation also set to rise and contribute towards a deleveraging of the business. And with weaker sterling having a positive impact on its bottom line and set to continue to do so over the coming months, the outlook for Jimmy Choo is upbeat.

Earnings surge?

In fact, it’s expected to deliver a rise in its earnings of 28% in the current year, followed by further growth of 27% next year. This is an impressive outlook for the company – especially when the challenging operating environment is taken into account. It shows that Jimmy Choo has a high degree of customer loyalty, as well as the right strategy through which to diversify and broaden its product offering.

Despite such strong growth, it trades on a price-to-earnings growth (PEG) ratio of only 0.6. This indicates that it has a sufficiently wide margin of safety to merit purchase. Its appeal is greater than that of sector peer Burberry (LSE: BRBY) in terms of valuation and growth potential. Burberry is expected to record a rise in its bottom line of 7% this year and 8% next year. Alongside its PEG ratio of 2.2, this means that Jimmy Choo could outperform Burberry over the medium term.

Of course, Burberry remains a logical buy for the long term. Its high degree of customer loyalty, sound strategy and diversity mean that it’s likely to deliver impressive capital gains. However, with Jimmy Choo having a wider margin of safety and superior growth forecasts, it’s the better buy at the present time. While both stocks could suffer from further volatility within the global luxury fashion market, now could be an opportune moment for Foolish investors to buy.

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From computers and refrigerators through to automobiles, Trifast’s products can be found across a wide range of applications, providing the firm with terrific earnings visibility as it doesn’t suffer from moderating activity in one or two segments.

And the East Sussex company’s broad geographical presence — Trifast operates in 17 countries across Europe, North American and Asia — provides the bottom line with an extra layer of security. Indeed, Trifast’s growth model involves tracking key global OEMs around the globe and setting up operating centres to build strong client relationships and provide a very personalised service.

And the bolt builder remains busy on the organic expansion front, as well as making acquisitions like that of Germany’s Kuhlmann last year, to boost its global presence even further. Just this month Trifast opened a new distribution and technical hub in Barcelona to service the important auto industry in Spain.

City experts expect earnings at Trifast to slow from the double-digit earnings rises of recent years, with advances of 4% and 3% pencilled-in for the periods to March 2017 and 2018 respectively.

These figures result in P/E ratios of 16.2 times and 15.8 times, just above a bellwether reading of 15 times generally considered attractive value by stock investors. But I believe Trifast’s rising presence in developed and emerging economies alike makes the manufacturer one to watch.

Try this on for size

The stellar brand power of Jimmy Choo (LSE: CHOO) makes the shoe designer a splendid stock for those seeking explosive earnings expansion in the near term and beyond.

The City expects earnings to soar 28% in 2016, although this still results in a lofty P/E ratio of 21 times. However, this reading slips to 16.8 times for 2017 thanks to an anticipated 17% bottom-line bounce. And I expect the bottom line to keep soaring as Jimmy Choo’s expansion scheme clicks through the gears.

Jimmy Choo saw revenues shoot 9.2% higher during January-June, to £173.1m, led by further strong progress in Asia where sales — excluding Japan — shot 22.1% higher. And the shoemaker believes it remains “underpenetrated” in the continent, and plans to open further stores in the region. In total Jimmy Choo plans to have 200 directly-owned stores up and running worldwide, up from 147 at present.

The fashion star is also steadily building its network of franchise outlets, with new stores opened in Australia, Japan, Kazakhstan, Qatar, Chile, Macau and South Korea in the first half.

On top of this, Jimmy Choo is also ramping up its presence in the men’s footwear segment. The company noted in August that this is its quickest-growing segment, and Jimy Choo expects that the division “will come to represent a proportion of our revenue well into double-digits,” up from 8% at present.

Like Trifast, I reckon there are plenty of catalysts to drive earnings at Jimmy Choo to the stars.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.