Rona beats expectations for its best quarter in three years

The second quarter—when home buying and renovation are at their height—has traditionally been Rona’s strongest

 

 

Rona building centre exterior with contractor carrying purchase
(Nathan Denette/CP)

Home-improvement and construction-supply chain Rona reported its second-quarter financial results today. Here’s what you need to know.

What happened:

This quarter was Rona’s best result in more than three years. The company earned nearly $40 million on sales of $1.26 billion, or $0.46 per share, just above analyst predictions (see below). Significantly, the company announced it would raise its dividend from 14¢ to 16¢ per year and reorganize the payment schedule, going from biannual to the standard quarterly payout. Same store-sales grew particularly strongly, at 5.4%, which suggests that the company’s turnaround plan, focused on streamlining its product offerings and improving the retail experience in its stores, is starting to take hold.

PREVIOUSLY: Home-improvement giant Rona is finally ready to build again

The analysts said:

Consensus prediction, earnings per share: $0.45
Consensus target price: $16.44
Closing price yesterday: $15.00
What they advise: Buy: 2; Hold: 6; Sell: 1

Good news recently:

Rona announced it would buy 20 of its franchise locations in a bid to further simplify its supply chain and reduce costs.

Bad news recently:

Competitor (and thwarted acquirer) Lowes recently announced it would expand into 12 former Target locations, so competition in the category is only intensifying.

Trailing 12-month stock performance:

Trailing 12-month stock chart for Rona Inc.

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