At the moment (22 August) noticed the discharge of quarterly outcomes for JD Sports activities Trend (LSE:JD). The FTSE inventory is up virtually 9% in buying and selling up to now at the moment, displaying the constructive response to the information. But even with the transfer at the moment, the inventory remains to be down 6% over the previous 12 months. Right here’s the place I believe it may go over the approaching 12 months.

The outcomes

Let’s digest the information that got here out at the moment. The enterprise beat expectations in a number of areas, displaying a transparent bounce again in demand. That is large, because the earlier quarter’s outcomes from Could confirmed falling gross sales and a slightly gloomy outlook. Let’s additionally not neglect that again in January, the inventory fell by 28% in per week following a revenue warning.

Quick ahead to now and the image appears totally different. Like-for-like group gross sales elevated by 2.4%, with natural gross sales progress of 8.3% within the second quarter. The enterprise additionally opened 85 new shops in the course of the interval, with the acquisition of Hibbett lastly finished.

The affirmation of the finished deal offers an thrilling outlook for shareholders. The 1,179 shops within the US that JD Sports activities will now management offers an enormous growth potential and one that might ship some critical monetary advantages.

The truth that North America is in focus comes at a great time, as throughout the group it’s the perfect performing space. In truth, the regional 13.7% natural gross sales progress for the quarter helped to offset the marginally disappointing 1.2% progress from the UK market.

The course from right here

Regardless of the (virtually surprisingly) good monetary outcomes, there was some warning related to the information. The replace famous that “the global macro environment remains volatile and so we continue to be cautious on our outlook for the rest of the year”.

Actually, extra time is required to have the ability to see whether or not prospects are sustainably spending and if demand can stay excessive. But the expansion within the US offers extra diversified unfold of income for the group going ahead. Which means weak point from one a part of the world could be balanced out from the US or one other space.

The expectation for adjusted revenue earlier than tax is now £955m to £1,035m. Headline revenue earlier than tax from final 12 months was £991m. So it’s clear to me that the enterprise isn’t struggling as a lot as some painted it to be earlier this 12 months.

Due to the outcomes at the moment, I believe extra buyers will really feel snug in shopping for the inventory as a progress share for the longer term.

Optimism within the air

The chance is that this was only a blip, and that later this 12 months we’ll see gross sales slowing down. This might negatively affect the share price, however I don’t assume it’ll be extreme. In spite of everything, the price-to-earnings ratio is at present 10.58, which is what I’d name a good worth. The inventory isn’t buying and selling at a premium based mostly on lofty investor expectations.

Pulling this all collectively, I’m significantly contemplating including the inventory to my portfolio after the large information at the moment.