Gear4music (Holdings) Plc – Value Analysis (LONDON:G4M) : December 26, 2017

Capitalcube gives Gear4music (Holdings) Plc a score of 57.

Investment Outlook

Gear4music (Holdings) Plc has a fundamental score of 57 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Taking peer performance into consideration, relative performance over the last month and last year is around the peer median.
  • It’s current Price/Book of 10.33 is about median in its peer group.
  • The market expects G4M-GB to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • G4M-GB‘s relative asset efficiency and net profit margins are both around the median level.
  • Changes in the company’s annual revenue and earnings are around the median among its peers.
  • G4M-GB‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • G4M-GB‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • G4M-GB has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

G4M-GB has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 4.57% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 4.57%), and a well-cushioned interest coverage level of 18.75x, G4M-GB can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • None of the 0 chosen peers for the company have an outstanding debt balance.

G4M-GB has maintained its Quick & Able profile from the prior year-end.

  • G4M-GB‘s interest coverage is its highest over the last four years and compares to a low of 0.42x in 2015.
  • The increase in its interest coverage to 18.75x from 3.200x (in 2016) was also accompanied by an increase in its peer median during this period to 18.75x from 3.200x.
  • G4M-GB‘s debt-EV is its highest over the last four years and compares to a low of 4.02% in 2016.
  • Like the interest coverage trend, the increase in its debt-EV (to 4.57% from 4.02%) was also accompanied by an increase in its peer median during this period (to 4.57% from 4.02%).

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Gear4music (Holdings) PLC 4.57 1.79 18.75 55.35
Peer Median 4.57 1.79 18.75 55.35
Best In Class 4.57 1.79 18.75 55.35

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Company Profile

Gear4music (Holdings) Plc engages in the online retail of musical instruments and music equipment. It carries products catered to beginners, music enthusiasts and professionals. The company was founded September 26, 2011 and is headquartered in York, the United Kingdom.


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