Founded in 2000 by CEO John Roberts, AO World (“AO”) is the leading online retailer of major domestic appliances (“MDA”) such as washing machines and fridges with 17% 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 1m Trustpilot reviews with an impressively high average score of 4.9/5. The group has also invested in its own recycling centre.

25 Mar 2025

5* service drives 5* growth above expectations

AO has ended FY25E on a high with Adj. PBT rising c.30% (c.9% above consensus expectations), driven by its continuing commitment to excellent customer service.

We anticipate AO’s investments in its proposition, Five Star membership club, market-leading delivery offer and recycling facilities will lead to significant profit and cashflow potential which we think is materially under-valued.

Despite the macro cost-headwinds in FY26E, we forecast a 20% CAGR in Adj. PBT FY25E-FY28E which we think is undervalued, trading on under 14x cal 2026 PER.

We raise our Fair Value from 140p to 150p, equating to a cal 2026 FCF yield of 5%.

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