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  • Writer's pictureMark Watson-Mitchell

Likewise Group – despite doubled sales the shares look over-rated

In the last year not many companies have seen their turnovers more than double – but Likewise Group (LON:LIKE) was one of the few quoted companies to have done so.


The fast-growing UK floor coverings distributor in its latest Trading Update reported that its sales revenue for the year increased 103.5% to £124.4m, boosted by a strong showing in its final quarter.


Acquired growth of the group over the last couple of years was reflected in these increases.


Sales and coverage growth


On a pure like-for-like basis group sales were 26.6% better in Q4, while the overall annual figure showed a 25.7% improvement.


The geographic coverage has also been increased in the last couple of years, with new operations in Newcastle, Birmingham, Leeds and Newbury, while a new site in Sidcup is opening this month and another in Glasgow due to open in March.


Analyst Opinion – continuing market share growth


Analysts Andy Hanson and Carl Smith, at the group’s NOMAD and broker Zeus Capital, consider that Likewise has built a business of real scale and is the number two player in the UK distribution market.


They now have estimates out for the year to end December to report £124.4m sales, adjusted pre-tax profits of £2.5m (£1.6m), worth 0.9p in earnings and covering a 0.2p dividend per share.


The year now underway could see £136.6m revenues, £2.5m profits, 0.9p earnings and an increased dividend of 0.3p per share.


The analysts see next year kicking in £146.9m sales, £3.5m profits, 1.1p earnings and maintaining the 0.3p dividend per share.


Conclusion – until profits grow shares look over-rated


We will have to wait until May for the full final figures from CEO Tony Brewer’s market share gaining group.


Since coming to the market in mid-August 2021, when the group was valued at £48.1m having raised £10m from a Placing @ 25p a share, its shares peaked at 48.69p in the following October before easing back to a 13.25p low a year later.


Today the group is still valued at £48.1m, despite having raised a further £12m @ 35p to fund the £30m acquisition of Valley Wholesale Carpets early last year.


Now with its shares trading at 19.5p the group needs to report real profits growth to continue to earn such a high rating for its equity.


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