AO World (AO) AI Stock Analysis

• Market Cap: £536.61M
• Dividend Yield: N/A
• Average Volume (3M): 764.87K
• Price to Earnings (P/E): 51.7
• Beta (1Y): 0.99
• Revenue Growth: 9.45%
• EPS Growth: -57.24%
• Country: UK
• Employees: 2,842
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Specialty Retail
• EPS (TTM): >-0.01
• Shares Outstanding: 578,403,750
• 10 Day Avg. Volume: 625,064
• 30 Day Avg. Volume: 764,868
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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: 25.49% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 63 Neutral
• Price Target: 107.00p ▲(5.31% Upside)

The overall stock score of 63 reflects a mixed outlook. The company's financial performance shows recovery signs with improved revenue growth and reduced leverage, but profitability and cash flow remain concerns. Technical analysis indicates positive momentum, supporting a favorable short-term outlook. However, the high P/E ratio suggests potential overvaluation, which could limit upside potential.

Positive Factors

Revenue Growth

Consistent revenue growth indicates a recovery and expansion in market reach, which is vital for long-term business sustainability and competitiveness.

Balance Sheet Health

Improved leverage and a stronger equity position enhance financial stability, providing a solid foundation for future growth and investment.

Gross Profit Margin

An improved gross profit margin reflects better cost management, which can lead to increased profitability and competitive pricing strategies.

Negative Factors

Profitability Concerns

Low net profit margins indicate limited profitability, which could hinder the company's ability to reinvest in growth and withstand market fluctuations.

Cash Flow Challenges

Declining free cash flow may restrict the company's capacity to fund new projects and manage debt, impacting long-term operational flexibility.

Operational Efficiency

Decreasing operational efficiency could signal underlying issues in cost management or revenue generation, affecting long-term profitability.

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 primarily through the sale of household appliances and electronics. Its key revenue streams include retail sales from its online platform, where customers can purchase various products directly. The company also earns income from ancillary services such as delivery and installation, which are increasingly valued by customers seeking convenience. Additionally, AO has partnerships with major appliance brands and manufacturers, allowing it to offer a wide range of products and potentially earn margin on branded items. The company's focus on customer service and experience helps drive repeat business, contributing to its overall revenue growth.

AO World Financial Statement Overview

Summary

AO World shows signs of recovery with improved revenue growth and reduced leverage. However, profitability remains a concern with low net profit margins and declining operational efficiency. The balance sheet is strengthening with a better debt-to-equity ratio, but cash flow challenges persist with declining free cash flow.

Income Statement

AO World has shown a positive revenue growth rate of 6.35% in the latest year, indicating a recovery from previous declines. The gross profit margin has improved to 24.26%, reflecting better cost management. However, the net profit margin remains low at 0.92%, suggesting limited profitability. The EBIT and EBITDA margins have decreased compared to the previous year, indicating potential challenges in operational efficiency.

Balance Sheet

The company's debt-to-equity ratio has improved to 0.44, showing a reduction in leverage and a stronger equity position. Return on equity is positive at 7.27%, indicating effective use of equity to generate profits. The equity ratio stands at 33.87%, suggesting a stable financial structure with a good proportion of assets financed by equity.

Cash Flow

Free cash flow has decreased by 16.78%, which could impact future investments and debt repayments. The operating cash flow to net income ratio is 0.25, indicating moderate cash generation relative to net income. The free cash flow to net income ratio is strong at 0.85, suggesting efficient conversion of profits into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.14B	1.14B	1.04B	1.14B	1.56B	1.66B
Gross Profit	276.00M	276.00M	243.30M	238.30M	269.40M	292.50M
EBITDA	50.60M	51.30M	65.00M	44.50M	23.70M	51.10M
Net Income	10.50M	10.50M	24.70M	-2.60M	-30.40M	17.70M
Balance Sheet
Total Assets	426.60M	426.60M	441.80M	460.30M	549.20M	615.70M
Cash, Cash Equivalents and Short-Term Investments	27.40M	27.40M	40.10M	19.10M	19.50M	67.10M
Total Debt	63.30M	63.30M	70.90M	95.30M	153.60M	95.30M
Total Liabilities	282.10M	282.10M	304.00M	354.60M	476.80M	519.30M
Stockholders Equity	144.50M	144.50M	137.80M	105.70M	73.40M	97.70M
Cash Flow
Free Cash Flow	48.30M	49.10M	53.30M	22.30M	-62.00M	105.50M
Operating Cash Flow	57.10M	58.00M	61.60M	24.40M	-52.40M	114.60M
Investing Cash Flow	-14.50M	-13.50M	-7.60M	7.70M	-9.60M	-9.10M
Financing Cash Flow	-54.90M	-57.20M	-33.00M	-32.30M	14.40M	-45.30M

AO World Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 101.60
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:AO, the sentiment is Positive. The current price of 101.6 is above the 20-day moving average (MA) of 99.88, above the 50-day MA of 93.70, and above the 200-day MA of 96.32, indicating a bullish trend. The MACD of 0.70 indicates Positive momentum. The RSI at 56.99 is Neutral, neither overbought nor oversold. The STOCH value of 44.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:AO.

AO World Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CURY	73 Outperform	£1.50B	14.39	5.01%	1.04%	2.71%	-34.19%
AO	63 Neutral	£536.61M	51.69	6.87%	―	9.45%	-57.24%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
THG	55 Neutral	£669.09M	―	-18.75%	―	-20.36%	44.33%
MOON	49 Neutral	£687.18M	―	―	0.47%	2.62%	-129.82%
ASC	46 Neutral	£294.19M	―	-62.59%	―	-15.86%	-18.46%
DEBS	38 Underperform	£153.21M	―	-185.68%	―	-45.91%	-120.22%