Needs to keep results going
Clicks posted great results with return on equity (RoE) at an eye-watering 53.1%; and the company is very cash generative. That said, I would have liked to see a lot more segmental information between the retail and United Pharmaceutical Distributors indicating the different margins. The challenge Clicks has is that this is not a cheap share with the price-to-earnings multiple (P/E) sitting around 24 times. Now, any quality stock on the JSE is expensive and has been for a while now, but diluted HEPS growth of 15.1% with a 24 times P/E is light. It means Clicks needs to continue delivering great results to justify the share price. Any slip in earnings will see the price under serious pressure. This is not a reason to sell as the management team has consistently proven itself, but it does add some extra risk.