Up another 4% on this update, Ocado continues to defy the doubters, writes our head of markets.
The fire at the Andover centre appears to have done little to quell Ocado's (LSE:OCDO) rampant growth.
It is estimated to have taken the equivalent of 1.2% of sales in the quarter, but given that revenues rose 11%, the effect has been contained.
Repairs to the centre will of course be a diversion, but the site was fully insured and it is with some irony that the company will be able to build an improved replacement which is fully state of the art.
This is synonymous with Ocado's future ambitions and also underlines the importance of contingency planning, as the Customer Fulfilment Centre (CFC) in Erith is being ramped up alongside a temporary site in Andover.
Source: TradingView (*) Past performance is not a guide to future performance
Meanwhile, the scale and speed of Ocado's growth hitherto has set the bar high in terms of market expectations and, as such, the recently announced Marks & Spencer (LSE:MKS) joint venture came at an opportune time.
Quite apart from the transformative Kroger deal in the United States, the group has been busy in selling its wares internationally, with additional tie-ups having been announced in Canada, Sweden and France.
Ocado's cutting edge technology platform is clearly catching the eye of retailers everywhere, leaving the potential for many more deals to come – and at good margins, given the automation involved at its current and future CFCs.
Less positively, there is an element of execution risk as each deal progresses, whilst there remains the possibility of another giant edging into Ocado's space, with the likes of Amazon (NASDAQ:AMZN) being an obvious potential threat.
In addition, the group has decided to continue as a pure growth company, although the lack of a dividend thus far and perhaps into the foreseeable future has been more than offset by a meteoric price rise for investors.
Indeed, the share price has risen 96% over the last year, as compared to a 3.6% gain for the wider FTSE 100 index, and over the last two years the price hike runs to an eye-watering 355%.
It is perhaps for this reason that the current market consensus for the shares comes in at a 'hold', suggesting that investors believe that the share price is up with events. Even so, there is little reason to believe at this point that Ocado has hit its pinnacle.
*Horizontal lines on charts represent levels of previous technical support and resistance.
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