Wickes Group PLC (LSE:WIX) has had its 'buy' rating reiterated by analysts at Liberum Capital in a read-across from third-quarter results posted by home improvements rival Kingfisher PLC (LSE:KGF).
In a note to clients, the City broker's analysts said: "Kingfisher’s Q3 shines a positive light on Wickes in two respects: (i) it highlights how Wickes continues to outperform its peers – Wickes reported Jul-Sept LFLs +2.6% y/y (+19.2% 3-yr basis) vs. B&Q’s -3.5% y/y (+13.1%); and (ii) the trading pick-up in early Nov (LFLs +2.8% y/y) is good news with resilience in DIY, DIFM and Trade – all areas where Wickes’ market-leading proposition plays."
They added: "This gives further confidence on how Wickes’ balanced model, integrated digital/physical approach and market-leading offer continues to take share in the UK RMI space."
The Liberum analysts noted that Wickes' market cap of around £380mln and their forecast year-end net cash (excluding leases) of about £100mln give the company an enterprise value (EV) of £280mln, putting the shares on (pre-IFRS 16) a current year EV/sales of 0.2 times, EV/EBITDA of 2.8 times, PER of 6.2 times and a FCF (free cashflow) yield of 15% as de-merger costs fall away.
This, they think, is "far too cheap for the quality, growth levers and cash generation on offer".
Liberum has a 360p price target for Wickes' shares, which currently trade at 146.50p.