Edison Investment Research Limited: Edison issues outlook on Findel (FDL)

London, UK, 19 June 2019

Edison issues outlook on Findel (FDL)

Studio, the main customer-facing business for Findel (FDL), is delivering impressive results and improvements across all key performance metrics through its unique digital-first value proposition with integrated consumer credit, which sets it apart from the peers. Despite a recent rebound in the share price the stock remains significantly undervalued for a predominantly online retailer with a strong balance sheet and significant growth opportunities. We forecast a two-year EPS CAGR of 7.3%.

Despite a rebound in the share price following the recent upbeat post-close trading update and results, FDL trades on a lowly FY20e P/E of 8.9x. This appears unjustified given the strength of trading for this predominately online retailer, the significant market opportunities and ongoing reduction in core net debt. Our blended DCF and peer valuation increases to 423p (previously 348p), reflecting a sector re-rating and our forecast upgrade in early May, and represents a significant c 60% premium to the current share price.

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