The Property Franchise Group – over the last ten years this group has grown its adjusted pre-tax profits at a 27% compound annual growth rate – and there is so much more to come, shares 405p, TP 595p

08.04.2025

What a cracking business this has grown into being within the last year or so.

From a market capitalisation of just around £100m it has made two significant acquisitions, with its value now up to over £270m.

The biggest push was in the purchase of the Belvoir Group, which was a competitor of the TPFG base business of Martin & Co.

Then the addition of The Guild of Property Professionals and the Fine & Country outfits helped to boost the group – which is now split into three main divisions – franchising; financial services; and licensing.

Transformational Year

This morning’s results for the year to end-December 2024 exemplified just what a transformational year it was.

Revenues increased 146% at £67.3m (£27.3m), while adjusted pre-tax profits were up 99% at £22.3m (£11.2m), with earnings per share up 7% at 31.7p (29.7p) easily covering the 29% improved dividend of 18.0p (14.0p) per share.

Through the acquisitions and its own organic growth the group now manages a portfolio of 153.000 (78,000) properties.

Today the group is the UK's largest multi-brand property franchisor, with a network of over 1,946 outlets delivering high-quality services to residential clients, combined with an established Financial Services business.

Management Comment

CEO Gareth Samples stated that:

"I am delighted to be reporting another set of record financial results in what has been a truly transformational year for the Group.

The period under review has seen us successfully deliver two substantial acquisitions and make headway in realising the resultant synergies whilst concurrently delivering strong organic growth and executing against our strategy.

The Property Franchise Group has a track record of growth and now, with our increased scale and capability, we are a significantly stronger business, able to offer even greater value and growth potential.

I am incredibly excited for what lies ahead, with a clear strategy and an exceptional team in place to realise the full potential of the enlarged Group."

Broker’s Views

Analysts Justin Bates and Portia Patel, at Canaccord Genuity Capital Markets, rate the group’s shares as a Buy, having today increased their Target Price from 589p to 595p, following these results.

They consider that the enlarged group is well-positioned and has a solid outlook.

For the current year to end-December, they estimate that group revenues will increase to £84.2m, while adjusted pre-tax profits will be some £29.8m, generating earnings of 35.2p and paying a 20.0p dividend per share.

Without the benefits of any acquisitions, for next year they see £87.1m revenues, with £32.0m of profits, 37.7p earnings and a 22.0p per share dividend.

At Singer Capital Markets, analyst Greg Poulton also rates the group’s shares as a Buy, but with a more modest 532p Target Price.

He rates the current valuation of the group as undemanding, whilst noting that the expanded operations offer significant growth potential beyond this as management seeks to achieve revenue synergies and further enhance the group’s market share.

His current year estimates are for £82.3m sales, £30.1m profits, 35.2p earnings and a 20.0p dividend per share.

Next year, to end December 2026, he goes for £88.7m revenues, £32.5m profits, 38.0p earnings per share and a dividend of 21.0p.

My View

I really like the feel of this expanding group, it has the spread and the capital base from which to expand still further, both organically and through acquisition.

It also has an impressive 52% annual recurring revenue rate – which gives it greater strength as it pushes forward.

Looking a lot cheaper after the Trump Tarriff trounce, its shares, at the current 405p, should be bought.

(Profile 03.04.2025 @ 424p set a Target Price of 500p)