Currys – worth over £1.2bn, now valued at £910m, trading on 9 times current year and just 7.8 times prospective earnings, ahead of its Interims, its shares at 80p are rated as a Buy, TP 135p

11.12.2024

With its shares currently trading at around the 80p level, Currys (LON:CURY) is valued at some £910m.

However, sector analysts at Panmure Liberum consider that the retailer is trading significantly below its true value.

In particular, the researchers conclude that in ‘true valuation’ terms – based upon the potential disposal of its various operations, the actual ‘sum of the parts’ tally is very much higher than today’s market capitalisation.

On Thursday of this week, 12th December, it will issue its Interim Results for the six months to end-October.

I expect to see that Alex Baldock, the Currys CEO, reiterate his positivity about the current year’s trading.

The Business

Currys is a leading omnichannel retailer of technology products and services, operating online and through 719 stores in 6 countries, employing some 24,000 people.

In the UK & Ireland the group trades as Currys, additionally in the UK it also operates its own mobile virtual network, iD Mobile.

In the Nordics the business trades under the Elkjøp brand.

The group is considered to be the market leader in all of its markets.

The UK technology market is worth £20bn and the Nordics market NOK152.4bn (£11.0bn).

The group’s scale underpins its long-term supplier relationships while its high brand awareness presents a significant opportunity for future growth by expanding its market share.

It has a 23.3% market share in the UK & Ireland, while in the Nordics it has a 27.7% share.

Its operations include Europe's largest technology repair facility, a sourcing office in Hong Kong and an extensive distribution network, centred on Newark in the UK and Jönköping in Sweden, enabling fast and efficient delivery to stores and homes.

Currys is also considered as a leader in giving technology a longer life through repair, recycling and reuse.

Management Comment

At the start of September, the group held its AGM, before which the company issued a Trading Update.

CEO Alex Baldock stated that:

"Trading is going well, strengthening our confidence in growing profit and free cash flow again this year.

New AI-enabled computers are bringing excitement and innovation to customers, who are coming to our stores to learn more about the technology, helping us take almost 50% share of the total laptop market.

Along with Mobile and B2B, AI product launches have contributed to an encouraging start to the year in the UK&I, as we gain market share in an improving consumer environment.

The Nordic consumer remains subdued, although we're pleased to be outperforming the market while improving gross margins and controlling costs well.

Across the Group, we're continuing to target growth in high margin, recurring revenue services and solutions.

Currys is well set for our important Peak trading period and beyond."

Analysts’ Views

Some nine analysts follow the group, the consensus of their various views looks for current year revenues to end-April 2025 of £8,538m (£8,476m), while pre-tax profits could be £137.0m (£118.0m), lifting earnings to 9.1p (7.9p) and returning to the dividend list with a 0.5p (nil) per share payment.

For the coming year the view is for £8,633m sales, £155.0m profits, 10.3p earnings and a 1.4p dividend per share.

The year to end-April 2027 could show £8,830m revenues, £173.0m profits, 11.5p earnings and a 1.5p dividend.

The consensus view shows five brokers with a Buy rating, one to Outperform, two to Hold and one to Underperform.

Goodness knows why, but the lowest Price Objective is just 65p a share, the highest is 135p, with the average being 101p.

In My View

This is a great business, with strong upside potential for sales, profits, earnings and its share price too.

Now at only 80p, the group is capitalised at just £910m, while the ‘sum of its parts’ value is a good £1.2bn.

I can totally understand the Panmure Liberum Price Objective of 135p, so obviously readers can assume where I think the shares may be headed.