Report
Chris Wickham

Profitability Takes Centre Stage

Gear4music is clearly in a far better position than at the start of the current calendar year. Interim results indicate that ahead of peak trading G4M is not only enjoying volume growth, but is also better placed to execute. Focus in H2 will be on margin restoration at some expense of sales. We adjust numbers accordingly. In our view, investors should focus on profit growth rather than sales. Moreover, we note the company’s arguably undemanding valuation.

The current EV/sales ratio is just 0.5x, which we think should expand as profitability rises. To us, 0.7x marks a sensible next step that, based on our revised estimates, implies a 350p share price.
Underlying
Gear4Music Holdings

Gear4music (Holdings) is an e-commerce retailer of musical instruments and music equipment. The products are sourced from over 710 manufacturers, and range from kazoos to digital pianos, drum kits and guitars.

Provider
Equity Development
Equity Development

​Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.

Analysts
Chris Wickham

Other Reports on these Companies
Other Reports from Equity Development

ResearchPool Subscriptions

Get the most out of your insights

Get in touch