Metcash Shares (ASX: MTS) Hit New 52-Week High on Earnings Beat

Metcash shares (ASX: MTS) are riding high today, having gained 2.7% on the day, and hitting a new 52 week high of A$3.90 in the process. The Australian wholesale distribution and marketing giant has seen sentiment build in recent months, with it’s share price having gained 21.41% since the start of the year, reversing a trend that had seen holders suffer declines through 2024.

With the release of the company’s latest financials, the bulls can be further appeased by a beat on both EPS and revenue for the period. Earnings per share came in at $0.14, an upside surprise on the $0.13 expected; whilst revenue of A$9.4billion also positively outperformed the A$9.18billion handily. Growth, and upside earnings surprises can do wonders for sentiment, and the strength of the grocery business in particular has been well received by markets.

A 20.8% growth in sales from the unit over the year brought revenue to $8.8billion, whilst the liquor earnings showed a mild earnings decline of 1.8% in EBITDA terms.

Analysts are increasingly bullish on Metcash’s prospects. Jefferies had upgraded the shares leading into earnings from Hold to Buy, with the firm indicating more upside in P/E from the current 13.5 being seen at the time. Their MTS price target was also raised from $3.80 to A$4.20, as business fundamentals continue to hold strong.

Citi had called some of this early, when upgrading the stock from “neutral” to “buy,” at the end of last year, anticipating a significant earnings recovery in FY26, particularly in the hardware segment, driven by expected improvements in the construction industry and housing approvals. Despite challenges in the hardware division stemming from high building costs and elevated interest rates, Metcash has managed to increase its market share, positioning itself favorably for future upturns in activity levels.

The average price target on the street of A$4.03 continues to reflect positive upside from current price action, although the bear target of $3.35 does warrant a look.