DB:1FQ

Stock Analysis Report

NOT FOR DISTRIBUTION
Header cover image

Executive Summary

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


Snowflake Analysis

Undervalued with acceptable track record.


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

Stable Share Price: 1FQ's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

5.8%

1FQ

5.1%

DE Specialty Retail

1.5%

DE Market


1 Year Return

-12.1%

1FQ

-2.3%

DE Specialty Retail

-0.2%

DE Market

Return vs Industry: 1FQ underperformed the German Specialty Retail industry which returned -3.3% over the past year.

Return vs Market: 1FQ underperformed the German Market which returned 0.1% over the past year.


Shareholder returns

1FQIndustryMarket
7 Day5.8%5.1%1.5%
30 Day17.6%10.2%5.7%
90 Day-13.4%-2.6%-2.7%
1 Year-7.9%-12.1%0.004%-2.3%1.5%-0.2%
3 Yearn/a-26.5%-57.3%-7.1%-14.3%
5 Yearn/a-18.9%-59.5%5.2%-8.3%

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

No news available

Valuation

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

37.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 1FQ (€1.1) is trading below our estimate of fair value (€1.76)

Significantly Below Fair Value: 1FQ is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 1FQ is good value based on its PE Ratio (11.1x) compared to the Specialty Retail industry average (11.6x).

PE vs Market: 1FQ is good value based on its PE Ratio (11.1x) compared to the German market (19.3x).


Price to Earnings Growth Ratio

PEG Ratio: 1FQ is good value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: 1FQ is overvalued based on its PB Ratio (2.6x) compared to the DE Specialty Retail industry average (1.2x).


Next Steps

Future Growth

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

10.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 1FQ's forecast earnings growth (11.1% per year) is above the savings rate (0.2%).

Earnings vs Market: 1FQ's earnings (11.1% per year) are forecast to grow slower than the German market (21.7% per year).

High Growth Earnings: 1FQ's earnings are forecast to grow, but not significantly.

Revenue vs Market: 1FQ's revenue (8.3% per year) is forecast to grow faster than the German market (5.8% per year).

High Growth Revenue: 1FQ's revenue (8.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 1FQ's Return on Equity is forecast to be low in 3 years time (17.2%).


Next Steps

Past Performance

How has Adairs performed over the past 5 years?

22.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 1FQ has high quality earnings.

Growing Profit Margin: 1FQ's current net profit margins (7.7%) are lower than last year (9.5%).


Past Earnings Growth Analysis

Earnings Trend: 1FQ's earnings have grown significantly by 22.3% per year over the past 5 years.

Accelerating Growth: 1FQ's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 1FQ had negative earnings growth (-11.4%) over the past year, making it difficult to compare to the Specialty Retail industry average (-0.4%).


Return on Equity

High ROE: 1FQ's Return on Equity (23.7%) is considered high.


Next Steps

Financial Health

How is Adairs's financial position?


Financial Position Analysis

Short Term Liabilities: 1FQ's short term assets (A$78.8M) do not cover its short term liabilities (A$86.5M).

Long Term Liabilities: 1FQ's short term assets (A$78.8M) do not cover its long term liabilities (A$180.9M).


Debt to Equity History and Analysis

Debt Level: 1FQ's debt to equity ratio (48.6%) is considered high.

Reducing Debt: 1FQ's debt to equity ratio has reduced from 192.3% to 48.6% over the past 5 years.

Debt Coverage: 1FQ's debt is well covered by operating cash flow (92.2%).

Interest Coverage: 1FQ's interest payments on its debt are well covered by EBIT (15.2x coverage).


Balance Sheet


Next Steps

Dividend

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

1.93%

Forecast Dividend Yield


Dividend Yield vs Market

Notable Dividend: Unable to evaluate 1FQ's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate 1FQ's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if 1FQ's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if 1FQ's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: 1FQ is not paying a notable dividend for the German market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of 1FQ's dividend in 3 years as they are not forecast to pay a notable one for the German market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.0yrs

Average management tenure


CEO

Mark Ronan

3.58yrs

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 ($USD411.72K) is below average for companies of similar size in the German market ($USD712.37K).

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


Leadership Team

NamePositionTenureCompensationOwnership
Mark Ronan
MD, CEO & Executive Director3.58yrsAU$620.14k0.40% A$782.5k
Michael Cherubino
Executive Director Property & Business Development and Executive Director10.42yrsAU$471.67k1.22% A$2.4m
Ashley Gardner
Chief Financial Officer0.83yrno datano data
Jamie Adamson
Head of Investor Relationsno datano datano data
Fay Hatzis
Financial Controller & Company Secretary1yrno datano data

1.0yrs

Average Tenure

Experienced Management: 1FQ's management team is not considered experienced ( 0.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Mark Ronan
MD, CEO & Executive Director3.58yrsAU$620.14k0.40% A$782.5k
Michael Cherubino
Executive Director Property & Business Development and Executive Director10.42yrsAU$471.67k1.22% A$2.4m
Trent Peterson
Non-Executive Directorno dataAU$75.83k0.83% A$1.6m
Kathryn Spargo
Independent Non-Executive Director5.08yrsAU$81.67k0.025% A$47.8k
Michael Butler
Independent Non-Executive Chairman5.17yrsAU$141.61k0.35% A$688.4k
David MacLean
Non-Executive Director10.42yrsAU$75.83k1.77% A$3.4m
Kiera Grant
Independent Non-Executive Director1.42yrsAU$35.18k0.084% A$163.6k
Simon West
Independent Non-Executive Director1.42yrsAU$35.18kno data

5.1yrs

Average Tenure

55yo

Average Age

Experienced Board: 1FQ's board of directors are considered experienced (5 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: 1FQ insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

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


Key Information

  • Name: Adairs Limited
  • Ticker: 1FQ
  • Exchange: DB
  • Founded: 1918
  • Industry: Homefurnishing Retail
  • Sector: Retail
  • Market Cap: AU$318.710m
  • Listing Market Cap: AU$194.081m
  • Shares outstanding: 169.08m
  • 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, blankets, quilts, pillows, pillowcases, mattress and pillow protectors, valances and bedwraps, mattress toppers, bedspreads, and outlets; and towels, bath mats, bathroom accessories, bathrobes and slippers, laundry and home care products, beach towels and accessories, beds and bedheads, chairs and stools, tables, ottomans and bench seats, storage and shelves, and furniture. Its stores also provide floor rugs and mats, baskets, home décor and fragrance products, lighting products, tableware, laundry and home care products, pet products, flannelettes, rugs, gifts and toys, nursery products, wall arts, and mirrors, as well as plants, pots, and vases. It operates various store formats comprising Adairs, Adairs Kids, and Home Republic stores, as well as an online store. The company was formerly known as Home & Decor Holdings Pty Ltd and changed its name to Adairs Limited in May 2015. Adairs Limited was founded in 1918 and is based in Scoresby, Australia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/06/02 02:00
End of Day Share Price2020/05/29 00:00
Earnings2019/12/29
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.