How Far can the Bulls go, Invest or Ignore?

Howden Joinery Group Plc (LON: HWDN) facilitates the sale of kitchen products alongside joinery products to local builders and trade professionals. The company recently announced that the dividend will increase to £0.048 per share on November 17th. However, the investors don’t seem very energetic even after this announcement. The HWDN share price has been falling since the start of October.

Financial Brief

Now, looking at the fundamentals, the Sales figures were £2.32 billion as last year’s annual report states. The firm kept 61% of the total sales as its gross revenue while the operating margins were 12.6%. The shareholders were left with a net income of £84.6 million, which was a year-on-year decrease of 25%. The company is fairly liquid as the current ratio is 1.76. Along with that, the Debt to equity ratio of 0.81. It states that the firm is low on debt as compared to its retained earnings or reserves.

Technical Analysis and Prediction of HWDN Share Price

In December of last year, the HWDN share price experienced a bearish trend, dropping to £555. However, this red sky was short-lived as it soon turned bullish. The bulls broke a significant resistance level of £649 in the middle of January. Confirming the bullish trend, investors later broke another resistance level of £693 in August of this year.

The Bullish Rally is Coming

At the press time, the HWDN share price is trading at the level of £636, with the current support level at £627 and the immediate resistance level of £689. The bulls are taking support after falling from £745 during the October start. The 50-day exponential moving average (EMA) price is £688 while the 150-day EMA is looking to make a bearish crossover with it, at £679.

The Relative Strength Index is currently at its oversold level of 35. However, since some bullish strength is already seen, the bulls are reclaiming the support. It indicates that the RSI is likely to make a bullish change with its Simple moving average line (SMA).

The prediction for the HWDN share price is bullish as per the reasons we have discussed above. A good trade can be made now so the trader can squeeze a significant profit till the stock reaches its resistance level.

Conclusion

Howden Joinery Group Plc (LON: HWDN) posted a sluggish growth in its revenue and a negative growth in its profit. However, the company’s balance sheet seems strong with low debt and optimum liquidity. The current price is on a support and the prediction is bullish.

Technical Levels

Support: £627 and £582
Resistance: £702, and £744

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks comes with a risk of financial loss.