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I cribbed these broker comments from advfn. Thankyou.

Liberum
Mar 25, 2022 11:15 AM GMT
Wickes Delivers Strong 2021, Shares Look Cheap

Wickes 2021 results were very strong, and its shares still look far too cheap for the value on offer, Liberum says. The home-improvement retailer's current share price fails to reflect the quality of the business and its valuation creation opportunities, the brokerage says. Wickes has raised pretax profit guidance by 5% for 2022, dividends are up with the payout higher than forecast, and capital allocation is an exciting split between investing in faster growth and market share gains, and return excess cash to shareholders, Liberum says. The brokerage retains its buy rating and target price of 450.0 pence on the stock. Shares are up 6.3% at 183.4 pence.

Berenberg
Wickes is too cheap, says Berenberg

Shares in building materials and DIY group Wickes (WIX) are ‘simply too cheap’, according to Berenberg.

Analyst Thomas Davies retained his ‘buy’ recommendation but lowered the target price from 290p to 280p on the stock, which closed up 1.9% at 183p on Monday.

Full-year 2021 profits for the group came in ahead of expectations. However, for Davies the key focus was the outlook.

‘While the UK consumer outlook faces increased challenges, Wickes’ exposure to do-it-for-me and local trade customers should support estimates,’ he said.

‘We expect improved sales densities and self-help opportunities to underpin profits, and we expect free cashflow improvements to support capital returns.’

Although estimates are up, Davies lowered the target price to reflect lower peer multiples and higher-than-expected capital expenditure on the horizon.

‘However, with the shares trading on c.7x price/earnings, they are simply too cheap,’ he said.

Peel Hunt.
“Despite much-publicized pressure on consumers, revenue in the first 11 weeks of the year matched those in FY21, Wickes expects to make further progress in FY22, and pretax profit estimates are likely to increase by at least 5%, Peel Hunt says. "Looking further out, the store-investment program has been accelerated and management sees scope for a further 20 store openings over the next five years or so, both of which should help to support the top line. The shares remain severely under-priced," Peel Hunt says.’

https://www.lse.co.uk/rns/WIX/wickes-group-plc-director-pdmr-shareholding-tbijccsjv34b1nq.html

https://www.insightdiy.co.uk/news/wickes-launches-new-responsible-business-strategy-commits-to-net-zero/11035.htm

28-Mar-22 Berenberg Bank Buy (290.00) 280.00 Reiteration

28-Mar-22 Deutsche Buy 320.00 Reiteration

With reference to the last para, Wickes reported

“ Where the business generates cash in excess of that needed to maintain a strong balance sheet, fund investment for growth and once the ordinary dividend has been met, the Board may conclude that it has surplus cash. Were this to arise, there is currently a preference to return this surplus cash to shareholders via share buybacks or special dividends.”

Shares News

DIY retailer Wickes in demand on profits surge and improved outlook?

25 March 2022, 10:55

Home improvement retailer Wickes’ (WIX) 2021 results were strong on all fronts and while consumers face a cost of living crisis, the DIY retailer is confident it can continue to outperform the market and is accelerating investment in new store openings and refits to drive growth.
Spun out of Travis Perkins (TPK) in April of last year, shares in Wickes rallied 6.3% to 183.4p as profits topped estimates and it issued a confident outlook, though Liberum Capital argues the retailer remains ‘ridiculously too cheap’.
The broker’s 450p price target implies 245% upside.
SOLID SHOWING
Despite grappling with supply chain disruption, Wickes grew adjusted pre-tax profits by 72% to a better than expected £85 million in the year to 1 January 2022.
Turnover ticked up 14% to £1.53 billion as consumers splashed out on home renovations and refurbishments.
Wickes grew at over twice the rate of the market thanks to strong digital sales, a strengthened trade position and a resilient showing from its DIFM (Do-it-for-me) business despite Covid disruption.

ACCELERATING INVESTMENT
‘Our strategy is delivering strong growth and return on investment,’ insisted CEO David Wood. ‘The results we are seeing, plus these strong returns, give us confidence to accelerate our investments to drive further growth.
‘Looking ahead, we expect to continue outperforming the market and are well-placed to capitalise on the ongoing requirement for home improvement - namely an ageing housing stock, favourable consumer trends, and the increased focus on insulating and retrofitting homes.’
Wood continued: ‘While we recognise the pressure that consumers will be facing in 2022, we have the right model, a strong pipeline and order book, and remain confident of making further progress in the current year driven by a material increase in DIFM revenues.’
Wickes reported flat trading in the first 11 weeks of 2022 as it laps tough prior year comparatives, although the DIFM business has had a very strong start to the year.
The retailer also declared final dividend of 8.8p per share, taking the payout ratio to 40% of adjusted pre-tax profits, ahead of the 30% guidance given at the time of its demerger from Travis Perkins.
Wickes also flagged a preference to return any surplus cash it generates in future to shareholders via share buybacks or special dividends.

In a nutshell, although included as debt, they are not due, and will be paid when they are.

Perhaps not here, but there seems to be some misunderstanding either by accident or design around the consequences of the adoption of accounting rule IFRS 16, where contracted future lease payments are included within the debt figure, so I mention it again.

“Net debt of £365.0m post IFRS 16 (2020: £238.2m) and £128.6m pre-IFRS 16 (2020: £4.1m), reflecting investment in inventory to optimise customer service at a time of supply shortages, as previously guided, as well as one-off costs related to refinancing and M&A investment.”

Thus £236.4m is the debt in the normal sense of the word, incurred for the reasons given. Payments for leases will be paid as part of the payment cycle. I imagine these will be paid from cash generation. “We expect to be free cash flow neutral for the year, before returning to sustainable free cash generation thereafter, enabling us to continue to invest in and drive our strategic goals.”

That old chestnut again. The lease liabilities are forward under contract and not ‘due’ . It comes from IFRS 16 accounting requirement. I would expect leas payments to be paid from cash generation at the appropriate times in the accounting cycles.

https://www.lbbonline.com/news/new-generation-of-house-proud-brits-celebrated-in-wickes-latest-advertising-campaign

https://www.lse.co.uk/rns/WIX/wickes-group-plc-full-year-results-t5ef5fwqmv0vmcf.html

Nothing wrong with that at all. Better vibes than expected really. I won’t pick anything particular out - at this stage anyway - it’s there to be read.
And it’s relatively cheap by ‘normal’ standards, through being sold down over the months.
Kingfisher was on 8.29 trailing PE on results publication ( price 292.1, adj eps 35.2 ) It is cheaper now.
Using the same adjusted eps metric to give an idea of performance in its first year as a standalone with what that entails ( stripping out non recurring costs, including demerger, associated IT separation, and so on) Wickes is operating now on a trailing PE of 6.34 (price 172.5, adj eps 27.2)

Investors and analysts though will be considering the future, inflation, and disposable income - choices - a new kitchen or a holiday, or none - that sort of thing. Priorities. It’s all debatable to some sort of floating conclusion on this and other supplier shares. But Wickes expects to outperform the market. I can’t ask more than that.

Kingfisher went down on results, though may now be stabilising. Wickes just might also, though these results smack of greater promise to the future in my view.

The last financial year was a bumper one for home improvement, and due to circumstances and it’s success around that Wickes will be up against a strong comparator. But whatever this year brings, Wickes has done well in its first set of annual results since demerger. It is agile by comparison and investing in the future (no share buybacks to increase EPS yet - available cash going to growth plus some dividend ) and is well-placed and improving as a company in the UK small trades/DIY/DIFM market.

Only 3 buys since November 2019, recorded on this site. Must pull their socks up, the lot of them!

https://www.retailtimes.co.uk/kimberley-walsh-signed-as-new-face-of-wickes/

VAT on energy-saving materials scrapped in Spring Statement 2022

https://www.developmentfinancetoday.co.uk/article-desc-9022_VAT%20on%20energy-saving%20materials%20scrapped%20in%20Spring%20Statement%202022

Is that right? The lease liabilities are forward under contract and not ‘due’ under IFRS. I would expect them to be paid from cash generation at the appropriate times.

Marked down by analysts after a tremendous year - perhaps wise to at least have stops in place here.

A 37% drop in EPS is quite a pessimistic guess - but they will be up against really strong comparators arising from the good side.

“Profits at Kingfisher have crossed the £1 billion mark and risen by a third after making the most of a DIY boom with strong online sales.
The B&Q and Screwfix owner beat analyst forecasts with a 33.1 per cent rise in pre-tax profits from £756 million to £1 billion for the year to January 31, making it the third British retailer to ever make £1 billion profit, joining Tesco and Marks & Spencer. “

“As a result of the above, we are comfortable with the current consensus of sell-side analyst estimates for FY 22/23 adjusted pre-tax profit.”
Effectively they have no reason to differ with them that’s paid to present this stuff. - sell side.

This has shown resilience since I and others put a lump in before posting on 4th. March. It’s swings and roundabouts for me though. The other I post on not doing so well. Other stuff pretty mediocre, too. So well done Sig.