As another example of the entrepreneurial DNA of Lords Group (LORD), the company said today that it had sold its non-core 'Lords at Home' brand to the subsidiary's Managing Director for £805,000 - equivalent to 10x EV/EBITDA.
To me, this 'corporate spring-cleaning' is a win-win and makes perfect strategic sense, since it allows the board to further focus on its more profitable builders merchant, DIY, plumbing & heating interests. In comparison, Lords at Home sells high quality homewares across West London and generated £80k of EBITDA (at a 2.7% margin) on £3.0m of sales in 2022.
CEO Shanker Patel commented: "I am confident that the sale of Lords at Home is a good outcome for all stakeholders. As a Group we are focused on disciplined capital allocation to deliver strategic growth and the divestment reflects this approach."
In terms of the numbers, broker Stifel has a 100p per share price target based on 2023 adjusted EBITDA, PBT and EPS of £29.2m, £16.4m & 7.0p, respectively, on revenues up c.4% to £468m. That leaves Lords' shares trading on a forward PE ratio of only 11.7x, alongside paying a 2.6% dividend yield.
Similarly, finnCap has a 114p a share fair value, and believes the business is "an excellent buying opportunity".
Lords improves focus with homewares disposal
Feb 2, 2023Disclaimer & Declaration of Interest
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