Reports of Ocado’s demise appear to have been grossly exaggerated. The debt laden delivery business, which a year ago looked to be staring into the abyss, has staged a remarkable turnaround.
From a low of 58.5p, it is now trading at 425p a share – great news for those who bought the stock at its lowest ebb.
In the last year it has completed its second customer fulfilment centre and agreed a potentially lucrative deal with the Bradford-based Morrisons supermarket chain.
Key to the revival has been the injection of £38.5mln of new funds raised via a placing of shares at 64p each.
In a show of faith the directors also chipped in their own cash, and they have been rewarded handsomely. Chief among the beneficiaries has been chief executive Tim Steiner, whose £640,000 investment is now worth £4.25mln. His near 5% stake in the group, meanwhile, is worth £115mln.
Then there’s Jorn Rausing, the non-executive director and cornerstone shareholder whose family founded Tetra Laval, the packing empire.
He pumped £4mln into the business, which is now worth £26.6mln. Meanwhile, his 11% shareholding is currently valued at just short of £280mln, which would be life changing but for the fact Rausing is reported to be worth £3.2bn.
Meanwhile, the outlook for the company appears to be fairly rosy. Tom Ewing, fund manager at Fidelity UK Growth, believes it will be one of the winners in a grocery sector that is currently undergoing some fundamental changes.
He told the Telegraph newspaper recently: "The share price has gone up because the market is starting to appreciate two things. Firstly, Ocado is not only a going concern but a growth company, and secondly, the company might have the most efficient business model in food retail."
Ocado was also one of the few stocks on Goldman Sachs ‘buy’ list as it gave a rather downbeat assessment of the food retail sector on Thursday.
“We believe that Ocado has developed a significant asset turnover advantage relative to the UK grocery industry with the development of a second CFC [customer fulfilment centre] that builds on the learning from the first warehouse in Hatfield,” it said in a note to clients.
At 11.15am, Ocado’s shares were changing hands for £4.26, valuing the group at just under £2.5bn.