LSE:HEAD

Stock Analysis Report

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Executive Summary

Headlam Group plc, together with its subsidiaries, sells, markets, supplies, and distributes floorcovering and other ancillary products in the United Kingdom and Continental Europe. More Details

Rewards

Trading at 12.7% below our estimate of its fair value

Earnings are forecast to grow 112.55% per year

Risk Analysis

No risks detected for HEAD from our risk checks.


Snowflake Analysis

Reasonable growth potential with mediocre balance sheet.

Share Price & News

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


Latest Share Price and Events

Stable Share Price: HEAD has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-9.6%

HEAD

-0.5%

GB Retail Distributors

-3.0%

GB Market


1 Year Return

-45.9%

HEAD

-11.9%

GB Retail Distributors

-16.0%

GB Market

Return vs Industry: HEAD underperformed the UK Retail Distributors industry which returned -11.9% over the past year.

Return vs Market: HEAD underperformed the UK Market which returned -16% over the past year.


Shareholder returns

HEADIndustryMarket
7 Day-9.6%-0.5%-3.0%
30 Day-12.5%-0.4%-2.7%
90 Day-14.3%3.3%-2.6%
1 Year-45.0%-45.9%-11.0%-11.9%-12.6%-16.0%
3 Year-52.9%-58.3%-8.0%-15.9%-7.2%-18.5%
5 Year-38.9%-51.4%7.9%-6.3%20.3%-6.8%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

12.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: HEAD (£2.46) is trading below our estimate of fair value (£2.82)

Significantly Below Fair Value: HEAD is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: HEAD is unprofitable, so we can't compare its PE Ratio to the XE Retail Distributors industry average.

PE vs Market: HEAD is unprofitable, so we can't compare its PE Ratio to the UK market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate HEAD's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: HEAD is good value based on its PB Ratio (1x) compared to the XE Retail Distributors industry average (1.6x).


Next Steps

Future Growth

How is Headlam Group forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

112.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HEAD is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.2%).

Earnings vs Market: HEAD is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: HEAD's is expected to become profitable in the next 3 years.

Revenue vs Market: HEAD's revenue (8.2% per year) is forecast to grow faster than the UK market (6.3% per year).

High Growth Revenue: HEAD's revenue (8.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: HEAD's Return on Equity is forecast to be low in 3 years time (13.3%).


Next Steps

Past Performance

How has Headlam Group performed over the past 5 years?

-7.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: HEAD is currently unprofitable.

Growing Profit Margin: HEAD is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: HEAD is unprofitable, and losses have increased over the past 5 years at a rate of 7.9% per year.

Accelerating Growth: Unable to compare HEAD's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: HEAD is unprofitable, making it difficult to compare its past year earnings growth to the Retail Distributors industry (10.7%).


Return on Equity

High ROE: HEAD has a negative Return on Equity (-4.24%), as it is currently unprofitable.


Next Steps

Financial Health

How is Headlam Group's financial position?


Financial Position Analysis

Short Term Liabilities: HEAD's short term assets (£239.5M) exceed its short term liabilities (£116.2M).

Long Term Liabilities: HEAD's short term assets (£239.5M) exceed its long term liabilities (£98.1M).


Debt to Equity History and Analysis

Debt Level: HEAD's debt to equity ratio (24.6%) is considered satisfactory.

Reducing Debt: HEAD's debt to equity ratio has increased from 12.8% to 24.6% over the past 5 years.

Debt Coverage: HEAD's debt is not well covered by operating cash flow (5.6%).

Interest Coverage: HEAD is unprofitable, therefore interest payments are not well covered by earnings.


Balance Sheet


Next Steps

Dividend

What is Headlam Group current dividend yield, its reliability and sustainability?

5.05%

Forecast Dividend Yield


Dividend Yield vs Market

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

High Dividend: Unable to evaluate HEAD'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 HEAD's dividends per share have been stable in the past.

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


Current Payout to Shareholders

Dividend Coverage: HEAD is not paying a notable dividend for the UK market.


Future Payout to Shareholders

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


Next Steps

Management

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

3.3yrs

Average management tenure


CEO

Steve Wilson (65 yo)

4yrs

Tenure

UK£799,000

Compensation

Mr. Stephen Graham Wilson, also known as Steve, BSc., FCA, has been Chief Executive Officer of Headlam Group Plc since September 14, 2016. Mr. Wilson served as Finance Director of Headlam Group PLC from De ...


CEO Compensation Analysis

Compensation vs Market: Steve's total compensation ($USD1.02M) is above average for companies of similar size in the UK market ($USD684.51K).

Compensation vs Earnings: Steve's compensation has increased whilst the company is unprofitable.


Leadership Team

NamePositionTenureCompensationOwnership
Stephen Wilson
CEO & Director4yrsUK£799.00k0.79%
£ 1.6m
Chris Payne
CFO & Executive Director3.08yrsUK£632.00kno data
Adrian Harris
UK Operations Director1.67yrsno datano data
Catherine Miles
Director of Communications3.67yrsno datano data
Sue LaVerne
People Director2.92yrsno datano data
James Kellett
Managing Director of Mercado4.67yrsno datano data
Adrian Laffey
Managing Director of Mercado4.67yrsno datano data
Karen Atterbury
Company Secretary1.67yrsno datano data

3.3yrs

Average Tenure

47.5yo

Average Age

Experienced Management: HEAD's management team is considered experienced (3.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Stephen Wilson
CEO & Director4yrsUK£799.00k0.79%
£ 1.6m
Chris Payne
CFO & Executive Director3.08yrsUK£632.00kno data
Keith Edelman
Senior Independent Director1.67yrsUK£55.00k0.0084%
£ 17.4k
Philip Lawrence
Non-Executive Chairman2.25yrsUK£143.00kno data
Amanda Aldridge
Independent Non-Executive Director2.58yrsUK£53.00kno data
Alison Littley
Independent Non-Executive Director1.67yrsUK£49.00kno data

2.4yrs

Average Tenure

61yo

Average Age

Experienced Board: HEAD's board of directors are not considered experienced ( 2.4 years average tenure), which suggests a new board.


Ownership

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


Insider Trading Volume

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


Ownership Breakdown

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


Top Shareholders

Company Information

Headlam Group plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Headlam Group plc
  • Ticker: HEAD
  • Exchange: LSE
  • Founded: 1948
  • Industry: Distributors
  • Sector: Retail
  • Market Cap: UK£207.130m
  • Shares outstanding: 84.20m
  • Website: https://www.headlam.com

Number of Employees


Location

  • Headlam Group plc
  • Gorsey Lane
  • Coleshill
  • Birmingham
  • West Midlands
  • B46 1LW
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
HEADLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
HEADLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992

Biography

Headlam Group plc, together with its subsidiaries, sells, markets, supplies, and distributes floorcovering and other ancillary products in the United Kingdom and Continental Europe. It offers its products ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/09/25 03:32
End of Day Share Price2020/09/24 00:00
Earnings2020/06/30
Annual Earnings2019/12/31


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.