Adairs Ltd. (ADH) AI Stock Analysis

• Market Cap: €385.30M
• Dividend Yield: 5.96%
• Average Volume (3M): 660.30K
• Price to Earnings (P/E): 11.6
• Beta (1Y): 2.33
• Revenue Growth: 0.49%
• EPS Growth: -3.64%
• Country: AU
• Employees: N/A
• Sector: Consumer Cyclical
• Sector Strength: 54
• Industry: Specialty Retail
• EPS (TTM): 0.12
• Shares Outstanding: 176,742,070
• 10 Day Avg. Volume: 1,308,774
• 30 Day Avg. Volume: 660,303
• PEG Ratio: -0.47
• Price to Book (P/B): 1.35
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 2.83
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €2.50
• Price Target Upside: 19.22% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 67 Neutral
• Price Target: AU$2.50 ▲(19.05%Upside)

Adairs Ltd.'s stock score reflects its strong valuation and solid financial performance. However, bearish technical indicators and challenges in revenue growth and leverage impact the overall attractiveness. The high dividend yield and low P/E ratio are key strengths.

Adairs Ltd. Business Overview & Revenue Model

Company Description

Adairs Limited operates as a specialty retailer of home decoration and furnishing products in Australia and New Zealand. It operates through three segments: Adairs, Mocka and Focus. The company offers bedroom products, such as bedlinen, bedding, and bedroom furniture and accessories; bathroom products, consisting of towels, bath mats, bathrobes and slippers, bathroom accessories, and laundry and home care products; furniture products, such as bedroom, office, living room, and kids furniture; homewares comprising home styling, home care and gifting, pets, and kitchen products; kid's products, including kids bedlinen, bedding, décor, bathroom, furniture, toys, and nursery; as well as gifting products. It sells its products under various brands and through online stores. 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.

How the Company Makes Money

Adairs Ltd. makes money primarily through the sale of its home furnishings and decor products across its retail and online channels. The company's revenue model is centered around a multi-channel retail strategy, which includes a network of physical stores complemented by a robust e-commerce platform. Key revenue streams include direct sales to consumers through Adairs and Adairs Kids stores, as well as online sales via its website and the Mocka brand. Adairs also benefits from its loyalty program, Linen Lovers, which encourages repeat purchases and enhances customer engagement. Significant factors contributing to Adairs' earnings include its ability to offer exclusive designs, seasonal product launches, and strategic pricing, as well as its expansion into international markets like New Zealand.

Adairs Ltd. Financial Statement Overview

Summary

Adairs Ltd. exhibits solid operational efficiency and cash management. However, challenges in revenue growth and increasing leverage could impact future performance. The company retains a strong equity position and maintains profitability, albeit at reduced margins. Continued focus on revenue growth and managing leverage will be crucial for sustaining financial health.

Income Statement

Adairs Ltd. has shown some revenue growth challenges, with a decrease in total revenue from 2023 to 2024. However, the company maintains a healthy gross profit margin, although it has slightly decreased from the previous year. The EBIT and EBITDA margins are strong, reflecting efficient operational management despite the revenue drop. Net profit margin has declined, suggesting some pressure on profitability.

Balance Sheet

The balance sheet indicates a stable equity base, but the debt-to-equity ratio has been increasing, indicating rising leverage. Despite this, the company's equity ratio remains solid, showing that a good portion of assets is financed by equity. Return on equity is reasonable, but has declined, reflecting the impact of reduced net income.

Cash Flow

Adairs Ltd. demonstrates strong free cash flow generation, although there has been a decline in operating cash flow. The free cash flow to net income ratio is healthy, underscoring effective cash management. However, the decline in free cash flow growth rate poses a concern for future cash generation capabilities.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	602.46M	594.36M	621.34M	564.48M	499.76M	388.93M
Gross Profit	287.30M	282.20M	120.12M	148.05M	157.85M	103.94M
EBITDA	74.53M	126.56M	132.05M	130.22M	150.48M	102.59M
Net Income	32.80M	31.09M	37.84M	44.89M	63.74M	35.28M
Balance Sheet
Total Assets	632.71M	610.50M	595.95M	627.46M	414.83M	389.13M
Cash, Cash Equivalents and Short-Term Investments	12.17M	12.87M	25.90M	26.07M	25.97M	23.92M
Total Debt	267.06M	275.90M	279.86M	307.19M	107.19M	139.53M
Total Liabilities	396.22M	387.33M	393.72M	429.57M	250.17M	248.56M
Stockholders Equity	236.49M	223.16M	202.22M	197.88M	164.66M	140.57M
Cash Flow
Free Cash Flow	66.59M	66.27M	96.07M	52.16M	105.52M	89.78M
Operating Cash Flow	79.99M	93.68M	108.40M	61.17M	116.87M	97.31M
Investing Cash Flow	-13.40M	-27.41M	-12.32M	-108.16M	-11.35M	-50.04M
Financing Cash Flow	-75.73M	-79.24M	-96.48M	47.49M	-103.47M	-40.02M

Adairs Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2.10
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:ADH, the sentiment is Negative. The current price of 2.1 is below the 20-day moving average (MA) of 2.59, below the 50-day MA of 2.51, and below the 200-day MA of 2.39, indicating a bearish trend. The MACD of -0.09 indicates Positive momentum. The RSI at 33.70 is Neutral, neither overbought nor oversold. The STOCH value of 33.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:ADH.

Adairs Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BLX	75 Outperform	AU$804.87M	26.93	17.54%	2.33%	5.33%	-4.25%
ADH	67 Neutral	€385.30M	11.60	14.57%	5.96%	0.49%	-3.64%
Sector *	62 Neutral	$16.34B	10.69	-6.34%	3.17%	1.66%	-24.46%
TPLWF		$1.63B	321.56	5.83%	―	―	―
DSK	68 Neutral	AU$52.31M	9.08	13.17%	9.52%	5.42%	-8.87%
NCK	66 Neutral	AU$1.61B	23.36	29.48%	3.18%	9.36%	-21.69%
BBN	62 Neutral	AU$241.51M	83.26	2.78%	1.03%	-2.62%	-70.47%

Adairs Ltd. Corporate Events

Adairs Limited Projects Record Sales Year Amidst Margin Challenges

Adairs Limited has provided a trading update and guidance for FY25, indicating strong sales momentum with an expected record sales year, achieving approximately 9% growth over FY24. Despite this, the company faces challenges with gross margins due to elevated promotional activity and a weaker Australian dollar. Under new leadership, Adairs is implementing significant changes to reset for long-term growth. While Adairs and Mocka are expected to show significant growth in Underlying EBIT, Focus on Furniture is expected to see a decline. The group anticipates total sales of $614 – $618 million and Underlying EBIT of $53.5 – $57.0 million for FY25.

The most recent analyst rating on (AU:ADH) stock is a Hold with a A$2.00 price target. To see the full list of analyst forecasts on Adairs Ltd. stock, see the AU:ADH Stock Forecast page.

Adairs Limited Announces Change of Share Registry Address

Adairs Limited has announced a change in the address of its share registry office in Sydney, effective April 14, 2025. The registry, managed by MUFG Corporate Markets (AU) Limited, will move to a new location at Liberty Place, Level 41, 161 Castlereagh St, Sydney, NSW 2000, while maintaining the same telephone numbers and postal address. This change is part of the company’s operational updates and is expected to have minimal impact on stakeholders.

Adairs Ltd. Appoints New Director with No Initial Securities Interest

Adairs Limited has announced the appointment of Rachel Marie Kelly as a director, effective April 14, 2025. The initial director’s interest notice indicates that Kelly currently holds no securities in the company, which suggests a fresh perspective without existing financial ties to Adairs. This appointment may influence the company’s strategic direction and governance, impacting stakeholders and potentially affecting its market positioning.

Adairs Limited Strengthens Board with Key Appointments

Adairs Limited has announced changes to its board, appointing Trent Peterson as the Independent Chair and Rachel Kelly as an independent non-executive director. Trent Peterson, with a history of leadership in retail, will continue to lead the People & Remuneration Committee temporarily. Rachel Kelly, with extensive experience in retail and financial technology, will join the Audit & Risk Committee and the People & Remuneration Committee, enhancing the board’s expertise in retail operations and growth strategies.

Adairs Director Increases Shareholding via Dividend Reinvestment

Adairs Limited announced a change in the director’s interest, with Kiera Grant acquiring an additional 5,403 fully paid ordinary shares through the FY25 dividend reinvestment plan. This acquisition increases her total holding to 182,457 shares, reflecting continued confidence in the company’s performance and strategic direction. The transaction was conducted outside of a closed period, ensuring compliance with trading regulations.

Adairs Ltd. Announces Quotation of New Securities on ASX

Adairs Ltd. has announced the application for quotation of 863,768 ordinary fully paid securities on the Australian Securities Exchange (ASX), with the issue date being April 3, 2025. This move is part of a dividend or distribution plan, potentially impacting the company’s market presence and providing stakeholders with insights into its financial strategies and future growth plans.

Adairs Limited Updates Dividend Distribution Announcement

Adairs Limited has updated its previous announcement regarding the dividend distribution for its ordinary fully paid securities. The update includes the Dividend Reinvestment Plan (DRP) price, which was not included in the initial notification. This announcement pertains to the dividend distribution for the six-month period ending on December 29, 2024, with a record date of March 11, 2025, and a payment date of March 10, 2025. This update provides clarity for stakeholders regarding the financial aspects of their investments and ensures transparency in Adairs’ financial operations.