Eddie Stobart Logistics

LN: ESL

£263.7m market cap

69.5p last close

Eddie Stobart Logistics is a market leader in end-to-end, multi-modal transport and logistics. Operations are primarily focused in the UK, with some activities in mainland Europe. Key customer segments include retail, consumer, industrials and increasingly, e-commerce.

Investment summary

Recent strategic acquisitions have transformed Eddie Stobart Logistics (ESL) into a full end-to-end logistics provider. This strategy has resulted in strong FY18 revenue (+35% y-o-y, of which +18% y-o-y organic growth) and earnings growth (EBIT +14% and EPS +15%), reflecting the strength of its pay-as-you-go model and its ability to achieve synergies. We expect ESL to focus on margin improvement and cash flow generation in FY19 and now forecast a 13% EPS CAGR in FY18–20. Following recent share price weakness, the stock offers > 7% dividend yield for FY19 with 5% growth in FY20, on our estimates. ESL continues to trade at a large discount to logistics companies in the UK and Europe on P/E multiples.

Y/E Nov
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 623.9 55.3 37.8 9.8 7.1 7.6
2018A 843.1 62.9 49.2 11.4 6.1 31.9
2019E 969.9 74.7 60.7 13.1 5.3 3.9
2020E 1034.9 81.7 67.9 14.7 4.7 3.6
Last updated on 17/06/2019
Industry outlook

The trend for customers deciding to outsource logistics to achieve savings continues to provide a tailwind for growth, especially in the consumer and retail sectors where there are revenue and cost pressures. In our view, the outsourcing opportunity is large, with 45–80% of logistics and supply chain services in the UK and Europe still performed in house (according to EU Commission estimates). Furthermore the shift to e-commerce and the high UK logistics market fragmentation offer medium-term growth opportunities for ESL.

Last updated on 17/06/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (£m) 146
Forecast gearing ratio (%) 58
Price performance
%
1m
3m
12m
Actual (23.2) (24.5) (50.7)
Relative* (23.1) (25.4) (48.3)
52-week high/low 141.0p/69.5p
*% relative to local index
Key management
Alex Laffey CEO
Anoop Kang CFO