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Edison Investment Research Limited London, UK, 30 October 2018 Edison issues outlook on Eddie Stobart Logistics (ESL) Eddie Stobart Logistics (ESL) saw a strong level of new contract wins in H118, which contributed to its 25% revenue growth, of which 10% was organic. We believe that new opportunities are arising as customers look to outsource their logistics to both save money and cope with the shift to e-commerce. ESL's e-commerce revenues rose from 5% of the total in FP14 (8M14) to 21% in H118. As well as organic growth, the company is seeing a good revenue and profit contribution from acquisitions as it looks to further consolidate a fragmented market. In June, ESL completed its largest acquisition since listing when it bought The Pallet Network (TPN), which adds pallet distribution to its range. We use a DCF model to value ESL. Our DCF valuation of 190p/share, which is unchanged, provides 73% potential upside to the current share price of 109.5p. We use a WACC of 6.9% and a terminal growth rate of 1%. We note that ESL is the second lowest rated company in our pan-European logistics peer group and yet it has the highest EBIT margin. The next scheduled event will be the full year pre-close statement in November, which could be a positive catalyst if the current growth rate continues. We have made adjustments to our estimates so that our 2018 EPS reduces by 5.9% and our 2019 EPS reduces by 0.9%. All reports published by Edison are available to download free of charge from its website About Edison: Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the . Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information please contact Edison: Robert Plant +44 (0)203 077 5700
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