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AO World (GB:AO)
LSE:AO
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AO World (AO) AI Stock Analysis

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GB:AO

AO World

(LSE:AO)

Rating:55Neutral
Price Target:
91.00p
▼(-0.44% Downside)
The overall stock score is primarily influenced by financial performance and technical analysis. While AO World shows signs of financial recovery, its low profitability and cash flow challenges are concerning. The technical indicators suggest a bearish trend, with the stock being oversold. The high P/E ratio indicates overvaluation, further impacting the score.
Positive Factors
Financial Performance
AO has reported results in line with expectations, marking the end of a very successful year.
Growth Prospects
Leveraging its growing membership proposition and outstanding customer-facing fundamentals, strong growth is anticipated for the next year.
Negative Factors
Market Sentiment
Material upside is seen with the price target reinstated at 150p, and analyst coverage resumes at Buy.

AO World (AO) vs. iShares MSCI United Kingdom ETF (EWC)

AO World Business Overview & Revenue Model

Company DescriptionAO 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 MoneyAO 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
65
Positive
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
70
Positive
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
60
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.14B1.14B1.04B1.14B1.56B1.66B
Gross Profit276.00M276.00M243.30M238.30M269.40M292.50M
EBITDA50.60M51.30M65.00M44.50M23.70M51.10M
Net Income10.50M10.50M24.70M-2.60M-30.40M17.70M
Balance Sheet
Total Assets426.60M426.60M441.80M460.30M549.20M615.70M
Cash, Cash Equivalents and Short-Term Investments27.40M27.40M40.10M19.10M19.50M67.10M
Total Debt63.30M63.30M70.90M95.30M153.60M95.30M
Total Liabilities282.10M282.10M304.00M354.60M476.80M519.30M
Stockholders Equity144.50M144.50M137.80M105.70M73.40M97.70M
Cash Flow
Free Cash Flow48.30M49.10M53.30M22.30M-62.00M105.50M
Operating Cash Flow57.10M58.00M61.60M24.40M-52.40M114.60M
Investing Cash Flow-14.50M-13.50M-7.60M7.70M-9.60M-9.10M
Financing Cash Flow-54.90M-57.20M-33.00M-32.30M14.40M-45.30M

AO World Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price91.40
Price Trends
50DMA
93.95
Negative
100DMA
95.84
Negative
200DMA
98.71
Negative
Market Momentum
MACD
-1.38
Negative
RSI
49.62
Neutral
STOCH
52.18
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:AO, the sentiment is Neutral. The current price of 91.4 is above the 20-day moving average (MA) of 90.42, below the 50-day MA of 93.95, and below the 200-day MA of 98.71, indicating a neutral trend. The MACD of -1.38 indicates Negative momentum. The RSI at 49.62 is Neutral, neither overbought nor oversold. The STOCH value of 52.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:AO.

AO World Peers Comparison

Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
69
Neutral
£1.21B11.015.01%2.71%-34.19%
57
Neutral
HK$25.94B4.53-4.73%5.53%-0.79%-51.25%
55
Neutral
£463.95M-27.20%-14.37%-28.78%
55
Neutral
£508.62M48.806.87%9.45%-57.24%
49
Neutral
£681.45M890.75%0.48%2.62%-129.82%
48
Neutral
£184.09M-96.36%-16.32%-202.39%
46
Neutral
£366.40M-62.59%-15.86%-18.46%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:AO
AO World
91.40
-22.60
-19.82%
GB:ASC
ASOS plc
304.50
-50.10
-14.13%
GB:DEBS
boohoo group Plc
16.10
-12.38
-43.47%
GB:CURY
Currys plc
110.00
30.75
38.80%
GB:THG
THG
29.74
-31.21
-51.21%
GB:MOON
Moonpig Group Plc
205.50
-12.04
-5.53%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 06, 2025