ASX:ADH

Stock Analysis Report

Executive Summary

Adairs Limited operates as a specialty retailer of homewares and home furnishings in Australia and New Zealand.

Snowflake

Fundamentals

Flawless balance sheet, good value and pays a dividend.


Similar Companies

Share Price & News

How has Adairs's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-1.1%

ADH

-1.5%

AU Specialty Retail

-1.0%

AU Market


1 Year Return

-10.0%

ADH

29.1%

AU Specialty Retail

12.2%

AU Market

Return vs Industry: ADH underperformed the Australian Specialty Retail industry which returned 29.1% over the past year.

Return vs Market: ADH underperformed the Australian Market which returned 12.2% over the past year.


Shareholder returns

ADHIndustryMarket
7 Day-1.1%-1.5%-1.0%
30 Day-1.6%-1.3%-1.4%
90 Day22.3%15.0%-1.9%
1 Year-1.9%-10.0%35.0%29.1%18.8%12.2%
3 Year-13.5%-29.6%24.5%8.3%38.4%19.8%
5 Yearn/a90.2%54.0%50.8%16.5%

Price Volatility Vs. Market

How volatile is Adairs's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Adairs undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ADH (A$1.81) is trading below our estimate of fair value (A$4.25)

Significantly Below Fair Value: ADH is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ADH is good value based on its PE Ratio (10.1x) compared to the Specialty Retail industry average (16.4x).

PE vs Market: ADH is good value based on its PE Ratio (10.1x) compared to the Australian market (18.6x).


Price to Earnings Growth Ratio

PEG Ratio: ADH is poor value based on its PEG Ratio (1.6x)


Price to Book Ratio

PB vs Industry: ADH is overvalued based on its PB Ratio (2.5x) compared to the AU Specialty Retail industry average (2.2x).


Next Steps

Future Growth

How is Adairs forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

6.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ADH's forecast earnings growth (6.5% per year) is above the savings rate (2.3%).

Earnings vs Market: ADH's earnings (6.5% per year) are forecast to grow slower than the Australian market (10.1% per year).

High Growth Earnings: ADH's earnings are forecast to grow, but not significantly.

Revenue vs Market: ADH's revenue (6.4% per year) is forecast to grow faster than the Australian market (3.6% per year).

High Growth Revenue: ADH's revenue (6.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ADH's Return on Equity is forecast to be high in 3 years time (25.8%)


Next Steps

Past Performance

How has Adairs performed over the past 5 years?

28.6%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: ADH's earnings have grown significantly by 28.6% per year over the past 5 years.

Accelerating Growth: ADH's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ADH had negative earnings growth (-2.9%) over the past year, making it difficult to compare to the Specialty Retail industry average (-2%).


Return on Equity

High ROE: ADH's Return on Equity (25.1%) is considered high.


Return on Assets

ROA vs Industry: ADH has a higher Return on Assets than the Specialty Retail industry average last year.


Return on Capital Employed

ROCE Improving: ADH has improved its Return on Capital Employed over the past 3 years.


Next Steps

Financial Health

How is Adairs's financial position?


Financial Position Analysis

Short Term Liabilities: ADH's short term assets (A$68.7M) exceeds its short term liabilities (A$46.6M)

Long Term Liabilities: ADH's short term assets (68.7M) exceeds its long term liabilities (45.4M)


Debt to Equity History and Analysis

Debt Level: ADH's debt to equity ratio (21.1%) is considered satisfactory

Reducing Debt: ADH's debt to equity ratio has reduced from 268.6% to 21.1% over the past 5 years.

Debt Coverage: ADH's debt is well covered by operating cash flow (140.4%).

Interest Coverage: ADH's interest payments on its debt are well covered by EBIT (37.2x coverage).


Balance Sheet

Inventory Level: ADH has a high level of physical assets or inventory.

Debt Coverage by Assets: ADH's debt is covered by short term assets (assets are 2.8x debt).


Next Steps

Dividend

What is Adairs's current dividend yield, its reliability and sustainability?

8.01%

Current Dividend Yield


Dividend Yield vs Market

company8.0%marketbottom25%2.4%markettop25%5.6%industryaverage4.0%forecastin3Years8.7%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: ADH's dividend (8.01%) is higher than the bottom 25% of dividend payers in the Australian market (2.45%).

High Dividend: ADH's dividend (8.01%) is in the top 25% of dividend payers in the Australian market (5.59%)

Stable Dividend: ADH has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: ADH's dividend payments have increased, but the company has only paid a dividend for 4 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (81.1%), ADH's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ADH's dividends in 3 years are forecast to be covered by earnings (76.9% payout ratio).


Next Steps

Management

What is the CEO of Adairs's salary, the management and board of directors tenure and is there insider trading?

0.3yrs

Average management tenure


CEO

Mark Ronan 0

2.9yrs

Tenure

AU$620,140

Compensation

Mr. Mark Ronan has been the Chief Executive Officer and Managing Director of Adairs Limited since November 18, 2016. Mr. Ronan served as Chief Operating Officer of Adairs Limited since 2014 until November  ...


CEO Compensation Analysis

Compensation vs. Market: Mark's total compensation ($USD425.74K) is about average for companies of similar size in the Australian market ($USD459.54K).

Compensation vs Earnings: Mark's compensation has been consistent with company performance over the past year.


Management Age and Tenure

0.3yrs

Average Tenure

Experienced Management: ADH's management team is not considered experienced ( 0.3 years average tenure), which suggests a new team.


Board Age and Tenure

4.4yrs

Average Tenure

55yo

Average Age

Experienced Board: ADH's board of directors are considered experienced (4.4 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


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Ownership Breakdown


Management Team

  • Ashley Gardner

    Chief Financial Officer

    • Tenure: 0.2yrs
  • Michael Cherubino

    Executive Director Property & Business Development and Executive Director

    • Tenure: 9.8yrs
    • Compensation: AU$471.67k
  • Jamie Adamson

    Head of Investor Relations

    • Tenure: 0yrs
  • Mark Ronan

    MD, CEO & Executive Director

    • Tenure: 2.9yrs
    • Compensation: AU$620.14k
  • Fay Hatzis

    Financial Controller & Company Secretary

    • Tenure: 0.3yrs

Board Members

  • Trent Peterson

    Non-Executive Director

    • Tenure: 0yrs
    • Compensation: AU$75.83k
  • Kate Spargo (68yo)

    Independent Non-Executive Director

    • Tenure: 4.4yrs
    • Compensation: AU$81.67k
  • Michael Butler (63yo)

    Independent Non-Executive Chairman

    • Tenure: 4.5yrs
    • Compensation: AU$141.61k
  • Michael Cherubino

    Executive Director Property & Business Development and Executive Director

    • Tenure: 9.8yrs
    • Compensation: AU$471.67k
  • David MacLean

    Independent Non-Executive Director

    • Tenure: 9.8yrs
    • Compensation: AU$75.83k
  • Kiera Grant (47yo)

    Independent Non-Executive Director

    • Tenure: 0.8yrs
    • Compensation: AU$35.18k
  • Mark Ronan

    MD, CEO & Executive Director

    • Tenure: 2.9yrs
    • Compensation: AU$620.14k
  • Simon West (45yo)

    Independent Non-Executive Director

    • Tenure: 0.8yrs
    • Compensation: AU$35.18k

Company Information

Adairs Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Adairs Limited
  • Ticker: ADH
  • Exchange: ASX
  • Founded: 1918
  • Industry: Homefurnishing Retail
  • Sector: Retail
  • Market Cap: AU$298.575m
  • Shares outstanding: 165.87m
  • Website: https://www.adairs.com.au

Number of Employees


Location

  • Adairs Limited
  • 2 International Court
  • Scoresby
  • Victoria
  • 3179
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ADHCHIA (Chi-X Australia)YesOrdinary SharesAUAUDJun 2015
ADHASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJun 2015
1FQDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJun 2015

Biography

Adairs Limited operates as a specialty retailer of homewares and home furnishings in Australia and New Zealand. The company’s stores offer a range of quilt covers and coverlets, sheets, cushions, throws, b ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/23 10:38
End of Day Share Price2019/10/23 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.