AO World (AO) AI Stock Analysis

• Market Cap: £534.22M
• Dividend Yield: N/A
• Average Volume (3M): 265.15K
• Price to Earnings (P/E): 20.4
• Beta (1Y): 0.95
• Revenue Growth: -0.39%
• EPS Growth: 2.68%
• Country: UK
• Employees: 2,842
• Sector: Consumer Cyclical
• Sector Strength: 66
• Industry: Specialty Retail
• EPS (TTM): 0.05
• Shares Outstanding: 580,303,470
• 10 Day Avg. Volume: 143,096
• 30 Day Avg. Volume: 265,148
• PEG Ratio: 4.32
• Price to Book (P/B): 4.07
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 9.40
• 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: £127.50
• Price Target Upside: 35.78% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 63 Neutral
• Price Target: ―

AO World's stock score reflects a blend of moderate financial performance and neutral technical indicators. While improved profitability and cash flow metrics are positive, the declining revenue trend and asset base contraction are concerns. Valuation appears fair but lacks dividend yield. The absence of earnings call data and corporate events limits additional insights.

Positive Factors

Financial Performance

The group's clear confidence in the delivery of its medium-term targets is a notable takeaway.

Growth Strategy

There is a noticeable emphasis on the importance of Membership as the biggest driver of top-line growth plans.

Profitability

AO has clearly demonstrated that it is back on track - profitability has been recovered.

Negative Factors

Market Valuation

Material upside is seen with the price target reinstated at 150p, and analyst coverage resumes at Buy.

AO World Business Overview & Revenue Model

Company Description

AO World plc, together with its subsidiaries, operates as an online retailer of domestic appliances and consumer electronics in the United Kingdom and Europe. The company retails fridge freezers, cookers and washing machines, and audiovisual equipment, as well as computing, mobile, and gaming products. It also provides logistics and transport services. In addition, the company engages in the investment activities; and WEEE recycling activities. AO World plc sells its products through its websites and third-party websites. AO World plc was founded in 2000 and is headquartered in Bolton, the United Kingdom.

How the Company Makes Money

AO World generates revenue through the online sale of electrical appliances and consumer electronics. The company's primary revenue stream is the direct sale of these products via its e-commerce platforms in the UK and Germany. Additionally, AO offers ancillary services such as product delivery, installation, and recycling of old appliances, which contribute to its revenue. The company also partners with various manufacturers and suppliers to ensure a wide product range and competitive pricing. AO's business model emphasizes enhancing customer satisfaction through efficient logistics and exceptional service, which helps drive repeat business and customer loyalty.

AO World Financial Statement Overview

Summary

AO World has improved profitability metrics with a positive net profit margin and robust cash flow generation. However, declining revenue and reduced assets present challenges for future growth.

Income Statement

AO World has shown improvement in profitability metrics over the years. The gross profit margin of 23.41% for the last annual period indicates efficient cost management. The net profit margin has recovered to 2.38% from a negative margin in the prior year, signaling a return to profitability. This is supported by a positive EBIT margin of 3.48% and an EBITDA margin of 6.25%. However, revenue has declined over the past three years, with a revenue decrease of 8.71% year-over-year. This declining revenue trend poses a risk to sustained profitability growth.

Balance Sheet

The balance sheet shows a solid capital structure with a debt-to-equity ratio of 0.51, suggesting moderate leverage. Return on equity (ROE) has improved significantly to 17.92%, reflecting effective utilization of equity to generate profits. The equity ratio stands at 31.20%, indicating a stable proportion of equity financing. However, the company's total assets have decreased, which might affect future expansion capabilities.

Cash Flow

Cash flow analysis reveals a strong operating cash flow to net income ratio of 2.49, indicating robust cash generation relative to reported profits. Free cash flow has increased significantly, with a growth rate of 140.09% year-over-year, showcasing improved cash efficiency. The free cash flow to net income ratio is 2.16, which is favorable. These metrics highlight the company's robust cash flow management, although past volatility in operating cash flow remains a concern.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
1.07B	1.04B	1.14B	1.56B	1.66B	1.05B
	Gross Profit
255.20M	243.30M	238.30M	269.40M	292.50M	178.30M
	EBIT
52.50M	36.20M	12.50M	-32.30M	29.70M	-3.80M
	EBITDA
100.80M	65.00M	44.50M	23.70M	51.10M	26.90M
	Net Income Common Stockholders
26.50M	24.70M	-2.60M	-30.40M	17.70M	1.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.14M	40.10M	19.10M	19.50M	67.10M	6.90M
	Total Assets
36.95M	441.80M	460.30M	549.20M	615.70M	449.00M
	Total Debt
1.56M	70.90M	95.30M	153.60M	95.30M	106.00M
	Net Debt
-2.59M	30.80M	76.20M	134.10M	28.20M	99.10M
	Total Liabilities
25.65M	304.00M	354.60M	476.80M	519.30M	369.30M
	Stockholders Equity
11.29M	137.80M	105.70M	73.40M	97.70M	80.70M
Cash Flow		Free Cash Flow
59.00M	53.30M	22.30M	-62.00M	105.50M	6.10M
	Operating Cash Flow
67.50M	61.60M	24.40M	-52.40M	114.60M	14.10M
	Investing Cash Flow
-9.80M	-7.60M	7.70M	-9.60M	-9.10M	-7.90M
	Financing Cash Flow
-37.00M	-33.00M	-32.30M	14.40M	-45.30M	-28.20M

AO World Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 93.90
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:AO, the sentiment is Negative. The current price of 93.9 is below the 20-day moving average (MA) of 100.97, below the 50-day MA of 97.87, and below the 200-day MA of 102.66, indicating a bearish trend. The MACD of -0.22 indicates Positive momentum. The RSI at 36.18 is Neutral, neither overbought nor oversold. The STOCH value of 11.16 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:AO.

AO World Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CURY	74 Outperform	£1.33B	6.79	2.95%	―	-10.46%	396.13%
MOON	64 Neutral	£825.20M	―	890.75%	0.40%	5.32%	-152.26%
AO	63 Neutral	£534.22M	20.41	20.28%	―	-0.39%	2.68%
Sector *	63 Neutral	$6.96B	11.51	2.80%	3.85%	2.70%	-24.43%
ASC	49 Neutral	£380.12M	―	-62.59%	―	-15.86%	-18.46%
THG	49 Neutral	£363.39M	―	-27.20%	―	-14.37%	-28.78%
DEBS	48 Neutral	£268.39M	―	-96.36%	―	-16.32%	-202.39%