Founded in 2000 by CEO John Roberts, AO World has grown to be a major online retailer of major domestic appliances (“MDA”) such as washing machines and fridges with 16% market share. The company also sells a wide variety of small domestic appliances (“SDA”), televisions (“AV”), mobile phones, consumer electricals and laptops. With a focus on brilliant service and two-person delivery, installation and recycling, the group has received over 500,000 Trustpilot reviews with an impressively high average score of 4.9/5. The group has also invested in its own recycling centre (“WEEE processing facility”), ensuring customers’ electronic waste is dealt with responsibly.

16 Sep 2025

5* Momentum

AO’s 1H26 trading update yesterday has once again proven the power of its 5* customer service focussed business model. Group revenue is expected to increase 13%, with B2C Retail revenues +11%, and FY26E Adj. PBT is anticipated to be at the upper end of the previous guidance range (now £45m-£50m). Moreover with c.£70m net cash at the half year end, AO is launching its first £10m share buyback. In this report we review AO’s attractive investment case and raise our cal 2026 Adj. PBT by 5%, Adj. EPS by 6% and our fair value by c.7% from 150p to 160p. Hence, even though the stock has recovered some its summer weakness with a rise back to 95p, it is still materially below our fair value.

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