B&M Shares (LON: BME) Cut in Half, Bounce off Lows

B&M European Value Retail shares (LON: BME) have given holders little to smile about in recent times, as the FTSE 250 listed retailer has seen it's value halve over the last year. The recent bounce off 52-week lows however now extends to 5% over the past 5 days, potentially putting in a low that might be able to hold.

Taking a look at the 1 year chart below and it is hard to see the bounce, such has been the rate of decline over the period. Zooming in however gives you a slightly different picture, with the gains from the 4th March low more than 7.4% giving bulls something to build on.

This longer term share price pressure seems at odds with the company's most recently reported full-year operational results. For the fiscal period ending in late 2023 or early 2024, B&M delivered solid growth, posting revenue of £5.48 billion – a healthy 10.05% increase year-over-year.

Profitability also showed strength, with reported earnings climbing approximately 5.5% to £367 million. This translated into a solid Earnings Per Share (EPS) figure ranging from £0.32 for the trailing twelve months, showcasing the appeal of its discount model during that period.

Looking forward however and the company issued a downwards forecast on profits for the year ahead. As covered late February, B&M expects FY25 Group adjusted EBITDA to range between £605 million and £625 million, down from its previous forecast of £620 million to £660 million. 

The company said the move reflects the current trading performance of the business, alongside economic uncertainty and exchange rate volatility. The shift in CEO also caused some uncertainty that seems to be sticky.

With the next financial update not due for a month or so, price is likely to be largely being driven by sentiment in the meantime.

Looking to analysts, and the consensus rating leans towards a “Moderate Buy.”, with an average price target at 444p. The range of forecasts is wide, spanning from approximately 299p to as high as 640p, reflecting the differing views on the timing and magnitude of a potential recovery, as well as broader macroeconomic assumptions.

For the time being at least, bulls can look to the recent bounce as a potential new bottom being found, with fundamentals likely needing to improve in order to sustain momentum.