With the value of the stock up 35% in the year to date, you might think that shares in B&M European Value Retail SA (LSE:BME) are up with events.
This emphatically, is NOT the case, according to Liberum, which reckons there are still "too many positives to ignore".
In a recent analysis by the boutique investment bank, value retailer B&M was spotlighted as a standout performer in the retail market. The bank's research note underscores several compelling reasons for B&M's promising position.
Firstly, B&M's sales trajectory has been impressive and this upward trend shows no signs of waning. The retailer's commitment to offering value is evident, with a recent survey indicating that its products are priced over 15% lower than those of its competitors. Such competitive pricing, especially in a market that's increasingly price-conscious, places B&M in a favourable position, Liberum said.
The company's leadership was also commended by analysts. The presence of the trading director, Bobby Arora, who is also a co-founder, adds a layer of trust and reliability to B&M's operations, Liberum said in a 26-page note. Furthermore, the retailer's enhanced operational practices have positioned it as a more streamlined and effective player in the market.
From a financial perspective, B&M's projected price-to-earnings ratio (PER) multiple for 2023 stands at 15 times. For investors, this could signal an undervalued stock, especially given the company's robust performance. The 7% free cash flow (FCF) yield further accentuates B&M's attractiveness, indicating a healthy cash generation relative to its valuation, Liberum said.
Perhaps most notably, between 2020 and 2023, B&M returned £1.6 billion to its shareholders, amounting to 30% of its market capitalisation. Such a move not only showcases the company's profitability but also its commitment to rewarding investors. Liberum's analysis suggests that this trend of shareholder returns is likely to persist, the investment bank said.
As the retail sector continues to evolve, B&M's strategic positioning, combined with its financial prowess, makes it a company to watch in the coming months, the Liberum note concluded.
In early trade, the stock was up 7.2p at 573.2p.