Education
About Us
Working with TipRanks
Follow Us
Coats Group plc (GB:COA)
LSE:COA
Top Page
Coats Group plc
(LSE:COA)
Select Model
Select Model
Rating:80Outperform
Price Target:
109.00p
▲(14.62% Upside)
Action:ReiteratedDate:03/06/26
The score is driven primarily by strong financial performance (step-change improvement in cash flow and a strengthened balance sheet in the provided statements) and supportive earnings-call guidance (upgraded medium-term targets and continued margin/FCF focus). Valuation further boosts the score due to a low P/E and a reasonable dividend yield. Technicals are positive with price above key moving averages and healthy momentum.
Positive Factors
Free cash flow strength
A large, sustained jump in operating cash flow and near-200M free cash flow in 2025 indicates the business generates strong internal funds. Durable cash generation supports reinvestment, dividend policy, deleveraging and disciplined M&A, increasing strategic optionality through cycles.
Material balance-sheet de‑risking
A sharp reduction in reported debt alongside a material equity increase meaningfully improves financial resilience. Lower leverage enhances funding flexibility, reduces bankruptcy risk, and allows management to pursue growth or return capital while better withstanding cyclical downturns.
Margin expansion & upgraded targets
Management upgraded medium‑term targets after margin expansion to ~19.8% driven by pricing, premium/sustainable mix and productivity. Higher margin guidance and clearer FCF goals reflect sustainable structural improvements in mix, pricing power and operational efficiency.
Negative Factors
Historic earnings/cash volatility
Past swings in revenue, a prior loss year and uneven free cash flow raise doubts about consistency of recent improvements. This volatility makes forecasting tougher, increases execution risk for long-term targets, and means recent strong results may revert if market conditions weaken.
Elevated acquisition leverage & costs
Large cash deployment for OrthoLite and temporary 2.2x leverage raise interest costs and constrain near‑term flexibility. Integration and amortization expenses increase profit volatility; deleveraging is planned, but elevated leverage until executed limits capital allocation choices and raises refinancing risk.
Exposure to cyclical end markets
Significant exposure to apparel and footwear cycles means demand and volumes can decline quickly with destocking, tariffs or consumer weakness. Structural reliance on OEM production volumes creates persistent downside risk to revenue and utilization in 2–6 month horizons.
Coats Group plc (COA) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£1.82B
Dividend Yield2.92%
Average Volume (3M)3.81M
Price to Earnings (P/E)6.7
Beta (1Y)1.20
Revenue Growth0.47%
EPS Growth-14.06%
CountryUK
Employees16,042
SectorConsumer Cyclical
Sector Strength84
IndustryApparel - Manufacturers
Share Statistics
EPS (TTM)0.03
Shares Outstanding1,917,372,400
10 Day Avg. Volume3,003,632
30 Day Avg. Volume3,812,491
Financial Highlights & Ratios
PEG Ratio3.35
Price to Book (P/B)4.92
Price to Sales (P/S)1.66
P/FCF Ratio35.23
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£125.00Price Target Upside31.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)0.1
Revenue Forecast (FY)£1.75B
Coats Group plc Business Overview & Revenue Model
Company DescriptionCoats Group plc, together with its subsidiaries, manufactures and supplies industrial threads worldwide. The company provides apparel and footwear, and accessories threads for sport/athleisure, denim, women wear, menswear, children's wear, leather wear, workwear, footwear, and intimates and underwear under Epic, Dual Duty, Seamsoft, Nylbond, Gral, Gramax, Astra, Sylko, Knit, EcoVerde, Eloflex, and Drybond brands; zips, trims, and crafting's for use in zips, interlinings, reflective tapes, and crafting products under Opti, Signal, and Connect brands; and software solutions that enables supply chain productivity gains and enhances supply and facilitating compliance under Coats Digital, FastReactPlan, VisionPLM, GSDCost, Intellocut, and Intellobuy. It also offers performance materials comprising fire retardant and cut resistant threads and yarns for personal protection sectors under Firefly, FlamePro, and Armoren brands; composites for telecommunications and energy, automotive, and footwear sectors under Gotex, Synergex, Lattice, Ultrabloc, Aptan XU, Gral Binder, and Protos Ripcord brands; and performance threads and yarns for the automotive, and household and recreation industries, as well as other technical industrial applications under Gral, Helios, Gral Quilt, Protos Fil, Epic, Gramax, Admiral, and Neophil brands. The company was formerly known as Guinness Peat Group plc and changed its name to Coats Group plc in March 2015. Coats Group plc was incorporated in 1909 and is headquartered in Uxbridge, the United Kingdom.
How the Company Makes MoneyCoats Group generates revenue primarily through the production and sale of industrial thread and consumer textile products. The company's revenue model is centered around two key segments: Industrial and Crafts. In the Industrial segment, Coats earns money by supplying high-performance threads and related products to manufacturers in the apparel, automotive, and other sectors. In the Crafts segment, the company sells sewing and craft products directly to consumers through retail channels and online platforms. Significant partnerships with major retailers and manufacturers enhance its distribution capabilities and market reach, contributing to steady revenue growth. Additionally, Coats focuses on sustainability, which not only aligns with market trends but also enhances brand reputation, potentially leading to increased sales.
Coats Group plc Earnings Call Summary
Earnings Call Date:Mar 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Aug 04, 2026
Earnings Call Sentiment Positive
The call conveyed a predominantly positive outlook: the group delivered resilient top-line performance that outperformed weaker end markets, expanded margins (EBIT margin +80 bps to 19.8%), produced a record $160 million free cash flow, executed strategic M&A (OrthoLite) with identified synergies, and upgraded medium-term targets (higher margin and $1 billion 5-year free cash flow). Headwinds included temporary higher leverage (2.2x) from the OrthoLite acquisition, increased finance and acquisition-related costs, and end-market softness in footwear with late-year destocking and tariff/geopolitical uncertainty. Overall, the company emphasized strong cash generation, margin progress, sustainability leadership and clear plans to deleverage and realize synergies, with manageable near-term risks.Q4-2025 Updates
Positive Updates
Record Free Cash Flow
Generated $160 million of free cash flow pre-dividends in 2025 — described as more than the free cash flow delivered in the prior 10 years combined — reflecting high margins, low capital intensity and timing benefits from the OrthoLite acquisition.
Revenue Resilience and Market Outperformance
Group revenue of $1.46 billion was flat on an organic constant exchange rate (CER) basis, outperforming core apparel and footwear end markets which the company estimates were down low- to mid-single digits for the full year.
Margin Expansion and Profitability
EBIT of $290 million, up 3% on an organic CER basis; group EBIT margin expanded by 80 basis points to 19.8%, driven by pricing discipline, favorable mix (premium and sustainable products), productivity and strategic project savings.
Divisional Outperformance — Apparel
Apparel revenue of $769 million, up 1% CER; EBIT increased 4% on a CER basis to $156 million and EBIT margin rose 60 basis points to 20.2%, supported by premium/recycled thread mix, pricing discipline and operational agility in China.
Divisional Resilience — Footwear
Footwear revenue $440 million, down 2% organic CER but outperformed a core footwear market estimated down ~4–5%; division grew estimated organic market share to ~30%, delivered EBIT of $105 million (flat organically) and improved margin by 40 basis points to 23.9%.
Performance Materials Improvements and Adjacency Growth
Performance Materials revenue $256 million flat on an organic CER basis with a H2 return to growth (+2%); target adjacencies performed strongly — Safety Fabrics +40% and composite tapes for energy +21% — with divisional EBIT up 10% to $29 million and margin to 11.3% (Q4 exit 11.8%).
Strategic M&A — OrthoLite Acquisition
Completed acquisition of OrthoLite (enterprise value $770 million) in October 2025; OrthoLite contributed ~$11 million operating profit in two months and delivered full-year profit in line with expectations. Identified $20 million of joint cost synergies by 2028 with $5 million expected in 2026 and material cross-selling/innovation opportunities.
Organic Adjacencies and Addressable Market Expansion
Target organic adjacencies added 1 percentage point to group growth in 2025; combined adjacency sales were $45 million in 2025. The addressable market for target adjacencies was increased from $1.3 billion to ~$2 billion, growing >5% p.a.
Sustainability Leadership
Sustainable thread portfolio grew 43% in 2025; EcoVerde recycled thread reached ~$550 million of sales (about 52% penetration of thread sales). Achieved a 30% reduction in Scope 1 and 2 emissions since 2022 (ahead of 2026 target of 22%), zero waste to landfill one year early, and 33% women in top 150 leadership roles (ahead of 30% target).
Upgraded Medium-Term Targets
Management upgraded targets: >5% revenue CAGR through the cycle, group EBIT margin target increased by 200 basis points to 21%–23%, 5-year cumulative free cash flow target raised from $750 million to $1 billion, and continued commitment to a strong double-digit EPS CAGR post M&A/share buybacks.
Dividend and Capital Discipline
Proposed final dividend of $0.0228, resulting in a full-year dividend of $0.0328, up 5% year-over-year. Capital expenditure disciplined at $32 million in 2025 with guidance to $40–45 million in 2026 as investment supports growth.
Negative Updates
Macroeconomic, Tariff and Geopolitical Uncertainty
Macroeconomic headwinds and tariff uncertainty from Q2 onward pressured markets; management flagged potential disruption from the conflict in the Middle East as an unresolved risk that could affect demand and supply chains.
Footwear Market Weakness and Destocking
Core footwear end markets estimated down ~4–5% for the full year; customers reduced orders and managed down inventory in late 2025 causing sequential weakness (Footwear revenue down 2% organic CER and OrthoLite experienced some destocking impact late in the year).
Increased Leverage and Large Acquisition Cash Outflow
Net debt (ex-lease) rose to $815 million with pro forma leverage of 2.2x following the OrthoLite acquisition; acquisition-related cash outflows totaled $793 million. Management expects leverage to fall below 2x by end-2026, but leverage is temporarily elevated.
Higher Finance and Acquisition-Related Costs
Finance costs increased to $41 million due to the 2024 U.K. pension buy-in and acquisition loan financing (including $3 million exceptional charges). Acquisition-related charges included $27 million amortization of acquisition intangibles and $20 million of transaction costs, which weighed on EPS despite higher EBIT.
EPS and Share Dilution Impact
Adjusted earnings per share was $0.093 (in line with expectations) but the benefit of higher EBIT was offset by higher finance costs and timing/number of shares following a July 2025 capital raise to part-fund OrthoLite.
Rising Near-Term Capital Expenditure and Working Capital Normalization
Capex expected to increase to $40–45 million in 2026 (including OrthoLite). Working capital as a percentage of sales was 11% in 2025 with an expectation to return to ~12% in 2026, implying some normalization vs 2025 timing benefits.
Exceptional and Acquisition Cash Outflows
Exceptional cash outflows were $24 million in 2025 (lower than 2024), but acquisition-related cash flows were large ($793 million) and acquisition transaction costs ($20 million) materially increased cash deployed in the year.
Company Guidance
Management guided that after a 2025 baseline of $1.46bn revenue, $290m EBIT (19.8% margin), $160m free cash flow (pre‑dividends), adjusted EPS $0.093 and year‑end net debt of $815m (pro‑forma leverage 2.2x), they expect leverage to fall below 2.0x by end‑2026; working capital to normalize from 11% of sales in 2025 to ~12% in 2026; capex to increase from $32m to $40–45m (including OrthoLite); OrthoLite (EV $770m) to deliver $20m of joint cost synergies by 2028 with $5m in 2026 and it contributed $11m operating profit in the two months post‑acquisition (acquisition cash flows ~$793m); medium‑term targets were upgraded to >5% revenue CAGR through the cycle (underlying market ~3% with 100–200bps outperformance), group EBIT margin 21–23% (up 200bps), cumulative free cash flow of $1bn over five years (up from $750m) with FCF now defined after exceptionals, a maintained 1–2x EBITDA leverage target range, an expected slight reduction in the effective tax rate over the medium term, and a continued priority on deleveraging, disciplined M&A, organic growth investment, a progressive dividend and delivering strong double‑digit (>10%) EPS CAGR post M&A/share buybacks.Coats Group plc Financial Statement Overview
Summary
Overall financials improved meaningfully, led by sharply stronger 2025 cash generation (operating cash flow up to 231.1M; free cash flow up to 198.4M) and a much stronger balance sheet in the statements provided (debt down to 93.4M; equity up to 722.8M). Profitability also stepped up (net income rising from 56.5M in 2023 to 105.6M in 2025). Key risk is historical variability (earlier loss year and uneven revenue/FCF swings), so durability of the latest improvement remains the main watch item.Income Statement
Profitability and momentum improved meaningfully versus prior years: net income rose from 56.5M (2023) to 80.1M (2024) and to 105.6M (2025), while operating profit also stepped up. Revenue has been broadly stable with modest growth in 2024 and roughly flat in 2025, following a decline in 2023. Margins shown for 2023–2024 are healthy and fairly steady (gross margin ~34–35%, operating margin ~14%), but the 2022 loss highlights some earnings volatility risk across cycles.74
Positive
Balance Sheet
Leverage improved sharply in the latest period: total debt fell from 678.5M (2024) to 93.4M (2025) while equity increased materially (346.1M to 722.8M), indicating a much stronger capital structure. Earlier years showed higher leverage (debt-to-equity near or above ~1.0, and ~2.0 in 2024) which was a clear balance-sheet overhang. With the 2025 de-risking, the balance sheet looks meaningfully more resilient, though the year-to-year swings suggest investors should monitor sustainability of the improved positioning.78
Positive
Cash Flow
Cash generation strengthened considerably in 2025: operating cash flow increased to 231.1M (from 95.8M in 2024) and free cash flow rose to 198.4M (from 68.1M), a very large improvement versus the prior year. Free cash flow generally covered reported earnings well in 2023–2024 (free cash flow at ~71–75% of net income), supporting earnings quality. The main weakness is variability over time, with free cash flow growth swinging negative in some years and positive in others.81
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.50B | 1.50B | 1.39B | 1.58B | 1.45B |
| Gross Profit | 558.07M | 511.00M | 483.30M | 486.80M | 461.60M |
| EBITDA | 295.88M | 278.20M | 260.40M | 233.30M | 230.40M |
| Net Income | 105.57M | 80.10M | 56.50M | -14.70M | 88.90M |
Balance Sheet | |||||
| Total Assets | 2.59B | 1.61B | 1.71B | 1.92B | 1.51B |
| Cash, Cash Equivalents and Short-Term Investments | 232.08M | 146.00M | 132.40M | 172.40M | 107.20M |
| Total Debt | 93.43M | 678.50M | 603.30M | 672.20M | 353.30M |
| Total Liabilities | 1.82B | 1.23B | 1.12B | 1.24B | 927.20M |
| Stockholders Equity | 722.76M | 346.10M | 558.10M | 616.50M | 553.00M |
Cash Flow | |||||
| Free Cash Flow | 198.38M | 68.10M | 92.90M | 62.60M | 97.40M |
| Operating Cash Flow | 231.15M | 95.80M | 123.90M | 96.40M | 128.60M |
| Investing Cash Flow | -580.33M | -61.30M | -20.30M | -319.30M | -30.00M |
| Financing Cash Flow | 435.75M | 3.60M | -147.00M | 295.00M | -57.60M |
Coats Group plc Technical Analysis
Positive
95.10
Price Trends
86.78
Positive
83.69
Positive
80.52
Positive
Market Momentum
1.36
Positive
63.20
Neutral
34.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:COA, the sentiment is Positive. The current price of 95.1 is above the 20-day moving average (MA) of 90.12, above the 50-day MA of 86.78, and above the 200-day MA of 80.52, indicating a bullish trend. The MACD of 1.36 indicates Positive momentum. The RSI at 63.20 is Neutral, neither overbought nor oversold. The STOCH value of 34.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:COA.
Coats Group plc Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | £1.82B | 6.71 | 18.19% | 2.92% | 0.47% | -14.06% | |
76 Outperform | £15.33B | 9.50 | 51.86% | 1.80% | 9.74% | 0.92% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | £7.65B | 298.74 | 0.68% | 1.18% | 14.13% | -96.12% | |
59 Neutral | £336.82M | -1.12 | -81.34% | ― | -14.89% | 12.08% | |
55 Neutral | £3.95B | -40.23 | -3.00% | ― | -9.44% | -170.53% | |
41 Neutral | £324.59M | -3.32 | -172.24% | ― | -65.42% | 27.73% |
* Consumer Cyclical Sector Average
GB:COA
Coats Group plc
95.10
11.93
14.34%
GB:ASC
ASOS plc
282.00
-6.80
-2.35%
GB:BRBY
Burberry
1,101.50
31.50
2.94%
GB:MKS
Marks and Spencer
378.10
17.75
4.92%
GB:NXT
Next plc
13,245.00
3,863.69
41.19%
GB:DEBS
boohoo group Plc
21.50
-4.48
-17.24%
Coats Group plc Corporate Events
Business Operations and StrategyDividendsFinancial DisclosuresM&A Transactions
Coats Group lifts margins, cash and targets after transformational 2025
Positive
Mar 5, 2026
Coats Group reported 2025 revenue of $1.47 billion, flat on an organic basis but ahead of declining apparel and footwear markets, while raising its operating margin to 19.8% through pricing discipline, cost controls and portfolio changes. The company continued to expand in high-growth adjacencies and sustainable products, with 100% recycled thread revenue jumping 43% to $554 million.
Strategically, Coats exited its lower-margin Americas Yarns business, completed the acquisition of footwear insole specialist OrthoLite, and simplified its structure into Apparel and Footwear divisions to support growth and efficiency. Record free cash flow of $160 million, increased dividends and higher medium-term margin and cash targets underline stronger financial firepower, though leverage rose to 2.2 times following the OrthoLite deal and management flagged potential supply-chain risks from Middle East tensions.
The group expects further organic growth in 2026, driven by market share gains and OrthoLite’s outperformance of the broader footwear sector, alongside modest margin improvement and another year of strong cash generation. Upgraded medium-term goals include an operating margin range of 21–23% and roughly $1 billion in free cash flow over five years, reinforcing Coats’ positioning as a leading Tier 2 components supplier despite a still-uncertain macro environment.
The most recent analyst rating on (GB:COA) stock is a Buy with a £91.00 price target. To see the full list of analyst forecasts on Coats Group plc stock, see the GB:COA Stock Forecast page.
Executive/Board ChangesRegulatory Filings and Compliance
Coats Group Notes Change in External Directorship of Board Member
Neutral
Feb 6, 2026
Coats Group plc has announced a change relating to one of its Non-Executive Directors, confirming that Jakob Sigurdsson has stepped down from his separate role as an Executive Director of Victrex plc. The notification, made in line with UK listing requirements, clarifies Sigurdsson’s external directorship status but does not signal any change to his position at Coats, suggesting limited immediate impact on the company’s governance structure and day-to-day operations.
The most recent analyst rating on (GB:COA) stock is a Buy with a £91.00 price target. To see the full list of analyst forecasts on Coats Group plc stock, see the GB:COA Stock Forecast page.
Business Operations and StrategyExecutive/Board Changes
Coats Group Awards Share Options to New CFO Focused on Growth and Sustainability
Positive
Dec 17, 2025
Coats Group plc has disclosed the grant of several nil-cost share options to its newly appointed Executive Director and CFO, Hannah Nichols. These grants are designed to compensate for awards forfeited due to her transition to Coats and include a Long-Term Incentive Plan tied to performance metrics such as EPS growth, cash conversion, shareholder returns, and sustainability goals, reflecting the company’s commitment to aligning executive incentives with strategic priorities. The announcement underscores Coats’ emphasis on driving sustainable growth, innovation, and shareholder value while ensuring competitive leadership performance in a challenging market environment.
The most recent analyst rating on (GB:COA) stock is a Buy with a £91.00 price target. To see the full list of analyst forecasts on Coats Group plc stock, see the GB:COA Stock Forecast page.
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.