Spur Corporation Limited (JSE: SUR) has encountered a bumpy start to 2024, witnessing a decline in its share price of almost 7% year-to-date. Despite this rocky beginning, the past year has been a savoury journey for the casual dining group. Shareholders were treated to delightful returns, with the company’s stock soaring by over 30%. This surge was fuelled by Spur’s impressive performance, surpassing earnings expectations for the fiscal year ending 30 June 2023.
The numbers speak volumes: Spur reported a remarkable 27.4% increase in revenue, amounting to R3.045 billion for its 2023 financial year. This robust growth translated into an impressive 81.1% surge in headline earnings per share (HEPS), totalling 261.18 cents. Profit attributable to shareholders for the year soared to R212.2 million, marking a substantial increase from the previous year’s R121.2 million.
As we eagerly anticipate the upcoming interim earnings report scheduled for February, all eyes are on Spur. The burning question remains: Can Spur sustain its bullish momentum and deliver another impressive earnings beat?
Technical
On the daily chart, the longer-term trend remains bullish, with the formation of an ascending channel pattern. However, a breakdown has occurred, and the 25-SMA (green line) has fallen below the 50-SMA (blue line), signalling the potential for a prolonged pullback as the bears are fighting for the upper hand.
Support at the Fibonacci midpoint near R29.56 could be worth watching in the upcoming sessions to gauge whether the breakdown will be sustained. If the support holds, a retracement could take place to retest the resistance at R30.52, where the breakdown initially occurred. The level is backed by the 25-SMA and 50-SMA, marking a psychological level that could be difficult to clear. If the resistance does hold, the breakdown could be confirmed, opening a path for a downtrend to extend toward the 61.8% Fibonacci golden ratio within a psychological demand zone at R28.75.
Conversely, if the resistance at R30.52 fails to hold the potential retest, the price could return back to its prior trend within the channel. Resistance at R31.51 and R32.02 could become topical if the bulls maintain the upper hand, with a psychological resistance level established at R32.98 in the longer term.
Summary
Spur Corporation Limited is gearing up for its interim earnings report, which could drive directional price action in the upcoming sessions. Support at R29.56 and resistance at R30.52 could be worth watching in the upcoming session to gauge whether a bearish trend reversal is possible.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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