Brand strength reaps rewards

Better than expected sales revenue and profits, substantial growth in the online business, robust finances and a strong start to FY2021 were salient features of UPGS’s FY2020 year-end trading statement, which was released today. Despite Covid-19 challenges, their brand portfolio and distribution strength show clear, positive momentum: evidenced by resuming dividends and repayment of furlough monies.

Our valuation metrics suggest scope for more upside as revenue and earnings grow with international demonstrating strong potential. As a result, we raise our fair value for the shares from 100p to 150p. At this price key valuation multiples would be only a 1.1x EV/sales ratio and a 17x P/E ratio based on FY2022 forecasts.