02.26
RONA Inc. (RON): $15.72 – There Is Light: Q4/09 Better Than Expected
Sector Perform, Average Risk, Price Target: $18.00
RONA reported Q4/09 EPS of $0.24 (-4%), above RBC CM’s forecast of $0.19 and consensus $0.20. Most notably, however, same store sales were positive in the quarter, a marginal +0.7% with trends building through the quarter and continuing into January/February of this year. While overall 2010 is looking to be a far better year than 2009, RBC CM remains somewhat cautious as consumer surveys, including an RBC-Ipsos Reid study done last fall, suggest that consumers moved forward longer term renovation plans to 2009 in order to take advantage of the tax credit, and that renovation intentions for 2010 were lower than in prior years. Subsequent to yesterday’s release RBC CM revised upward its forecasts on RONA to reflect the turnaround in same store sales; on average our 2010/11 forecasts increased by 5% to $1.30 and $1.42.
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