Stock Spirits Group Plc – Value Analysis (LONDON:STCK) : November 20, 2017

Capitalcube gives Stock Spirits Group Plc a score of 56.

Our analysis is based on comparing Stock Spirits Group Plc with the following peers – Distil PLC, Chapel Down Group plc, Majestic Wine PLC and Pol Roger et Compagnie (DIS-GB, CDGP-GB, WINE-GB and MLPOL-FR).

Investment Outlook

Stock Spirits Group Plc has a fundamental score of 56 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative outperformance over the last year has faded more recently.
  • It trades at a lower Price/Book multiple (1.57) than its peer median (4.42).
  • We classify STCK-GB as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • STCK-GB has relatively high profit margins while operating with median asset turns.
  • Changes in the company’s annual revenue and earnings are around the median among its peers.
  • Over the last five years, STCK-GB‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • STCK-GB‘s revenues have grown more slowly than the peer median over the last few years, which combined with the stock price’s relatively low P/E ratio suggests substandard growth expectations relative to peers.
  • The company’s level of capital investment is relatively low and suggests it is milking the business.
  • STCK-GB has additional debt capacity.

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Leverage & Liquidity

STCK-GB has additional debt capacity.

  • With debt at a reasonable 21.27% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 8.82%), and a well-cushioned interest coverage level of 19.50x, STCK-GB has the capacity to borrow some more.
  • Of the 4 chosen peers for the company, only 2 of the stocks have an outstanding debt balance. Companies with no debt include DIS-GB and CDGP-GB.

STCK-GB has moved to a relatively high liquidity from an Some Capacity profile at the prior year-end.

  • STCK-GB‘s interest coverage is its highest over the last four years and compares to a low of 1.06x in 2012.
  • The increase in its interest coverage to 19.50x from 6.56x (in 2015) was also accompanied by an increase in its peer median during this period to 19.50x from 6.56x.
  • STCK-GB‘s debt-EV is its lowest over the last four years and compares to a high of 147.77% in 2012.
  • The decrease in its debt-EV to 21.27% from 31.29% (in 2015) was also accompanied by a decrease in its peer median during this period to 8.82% from 9.83%.
  • Relative to peers, debt-EV fell 9.02 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Distil PLC 0 13.09 No interest exp 999
Chapel Down Group plc 0 3.58 53.99 999
Majestic Wine PLC 19.25 1.29 -0.15 38.64
Pol Roger et Compagnie 8.82 5.77 14.19 28.32
Stock Spirits Group Plc 21.27 1.44 19.5 42.4
Peer Median 8.82 3.58 19.5 42.4
Best In Class 8.82 13.09 No interest exp 999

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Company Profile

Stock Spirits Group Plc manufactures and markets spirits and liqueurs. The company products include vodka, vodka-based liqueurs, liqueurs, herbal bitters, and brandy. Its brands include stock 84 brandy, fernet stock bitter, Keglevich and wodka zoladkowa gorzka, zoladkowa gorzka de luxe, stock prestige, and limonce. The company was founded in 2007 and is headquartered in Wooburn Green, the United Kingdom.

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