Dr. Martens PLC

Dr. Martens PLC (LON: DOCS) is an FTSE 250 listed UK-based leading footwear brand. The Company has a diverse range of product categories such as Originals, Fusion, Kids, Casual, and Accessories.

Investment Rationale – SELL at GBX 280.20

• Profit Booking: The company’s share price reflected a jump of ~31.34% in the past 1 month and presents a case of profit booking for the investors according to their risk appetite. The stock has shown a solid rally today (1 June 2022), following its FY22 results (for the year ending 31 March 2022) which reported that the Company has delivered a robust performance with profits rising by 422% to £181.2 million, compared to £34.7 million in FY21.
• Macro Risks: The current trading conditions have been very volatile with UK reporting inflation at 9% in April 2022. This coupled with hike in interest rates is expected to keep the equity markets under pressure in 2022.
• Leverage: The company posted debt to equity at 1.89x in H1FY22, compared to the industry median of 0.58x.
• Technical Indicator: The stock of the company has surpassed its upper Bollinger band with a 14-day high RSI level of ~74.33, indicating an overbought stance.

One Year Share Price Chart

 (Source: Refinitiv, Analysis conducted by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY23) (Illustrative)

* Peers: Few peers considered are Coats Group PLC, Dunelm Group PLC and Burberry Group PLC.

*All peers are LSE listed Companies from the Consumer sector.  

Conclusion

Based on the attractive notional gains in the short-term, macroeconomic instabilities, bearish technical indicators, coupled with the unfavourable Valuation conducted above, we have given a "SELL" recommendation on Dr. Martens PLC at the current market price of GBX 280.20 (as on 01 June 2022, at 10:03 AM GMT+1).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.

Note 3: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 4: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 5: Dividend Yield may vary as per the stock price movement.

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