Ocado Group CAPEX surged on 55.6% and Revenue increased on 9.9%
11 Feb 2020 • About Ocado Group (
$OCDO) • By InTwits
Ocado Group reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Ocado Group is a growth stock: FY2019 revenue growth was 9.9%, 5 year revenue CAGR was 13.1% at FY2019 ROIC -14.4%
- EBITDA Margin is quite volatile: 2.6% in FY2019, 3.6% in FY2018, 5.1% in FY2017, 6.3% in FY2016, 7.2% in FY2015
- Ocado Group has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.8%. At the same time it's a lot of higher than industry average of 4.7%.
- CAPEX is quite volatile: £176m in FY2019, £113m in FY2018, £131m in FY2017, £85m in FY2016, £71m in FY2015
- The company has unprofitable business model: ROIC is -14.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ocado Group's Revenue increased on 9.9%. Revenue decline was accelerating on average at -1.9 pp per annum in FY2015-FY2019. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.8 pp from 27.5% to 30.3% in FY2019. EBITDA Margin declined at -1.2 pp per annum in FY2015-FY2019.
Gross Margin decreased slightly on 0.55 pp from 34.2% to 33.7% in FY2019. SG&A as a % of Revenue increased on 9.6 pp from 40.8% to 50.4% in FY2019. SG&A as a % of Revenue pursued a growing trend in FY2015-FY2019.
Net Income margin decreased on 9.3 pp from -2.8% to -12.1% in FY2019. Net Income margin declined at -3.0 pp per annum in FY2015-FY2019.
Investments (CAPEX, working capital and M&A)
Ocado Group's CAPEX/Revenue was 10.0% in FY2019. The company's CAPEX/Revenue increased on 3.3 pp from 6.7% in FY2016 to 10.0% in FY2019. It's average level of CAPEX/Revenue for the last three years was 8.7%. The company maintained rich investment policy and has spent a lot to CAPEX (377% of EBITDA).
Return on investment
The company operates at negative ROIC (-14.4%) and ROE (-26.5%). ROIC dropped on 10.1 pp from -4.3% to -14.4% in FY2019. ROE dropped on 15.4 pp from -11.2% to -26.5% in FY2019. ROIC declined at -4.7 pp per annum in the last 5 years. ROE followed a declining trend at -7.9 pp per annum in FY2015-FY2019.
Leverage (Debt)
Company's Net Debt / EBITDA is -3.1x and Debt / EBITDA is 13.1x. Debt surged on 68.7% while cash surged on 82.7%.
Ocado Group has no short term refinancing risk: cash is higher than short term debt (1,498.2%).
Management team
The company's CEO is Tim Steiner. Tim Steiner is a founder and has 9 years tenure with the company. The company's CFO Duncan Tatton-Brown has spent 7 years with the company.
Financial and operational results
FY ended 01 Dec 2019
Ocado Group ($OCDO) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 1,108 | 1,271 | 1,455 | 1,599 | 1,757 | 9.9% |
| Gross Profit | 375 | 435 | 495 | 547 | 592 | 8.1% |
| SG&A | 405 | 466 | 552 | 652 | 886 | 35.8% |
| EBITDA | 79 | 81 | 75 | 58 | 47 | -20.1% |
| Net Income | 12 | 12 | -8 | -45 | -213 | |
Balance Sheet
|
|---|
| Cash | 46 | 51 | 150 | 411 | 751 | 82.7% |
| Short Term Debt | 28 | 83 | 27 | 23 | 50 | 118.8% |
| Long Term Debt | 145 | 133 | 351 | 338 | 558 | 65.3% |
Cash flow
|
|---|
| Capex | 71 | 85 | 131 | 113 | 176 | 55.6% |
Ratios
|
|---|
| Revenue growth | 16.7% | 14.8% | 14.4% | 9.9% | 9.9% | |
| EBITDA growth | 15.3% | 1.6% | -7.1% | -22.2% | -20.1% | |
|
|---|
| Gross Margin | 33.9% | 34.2% | 34.0% | 34.2% | 33.7% | -0.6% |
| EBITDA Margin | 7.2% | 6.3% | 5.1% | 3.6% | 2.6% | -1.0% |
| SG&A, % of revenue | 36.6% | 36.7% | 37.9% | 40.8% | 50.4% | 9.6% |
| Net Income Margin | 1.1% | 0.9% | -0.6% | -2.8% | -12.1% | -9.3% |
| CAPEX, % of revenue | 6.4% | 6.7% | 9.0% | 7.1% | 10.0% | 2.9% |
|
|---|
| ROIC | 4.8% | 4.4% | 0.7% | -4.3% | -14.4% | -10.1% |
| ROE | 5.1% | 4.8% | -3.3% | -11.2% | -26.5% | -15.4% |
| Net Debt/EBITDA | 1.6x | 2.0x | 3.0x | -0.9x | -3.1x | -2.2x |
Peers in Food & Drug Retailers
Below we provide Ocado Group benchmarking against other companies in Food & Drug Retailers industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Magnit PJSC ($MGNT) | | 12.5% | 6.4% | 8.2% | 10.6% |
| Crawshaw Group ($CRAW) | 17.1% | 50.5% | 19.3% | 0.7% | |
| |
|---|
| Median (2 companies) | 7.4% | 8.0% | 12.4% | 4.5% | 10.6% |
|---|
| Ocado Group ($OCDO) | | 14.8% | 14.4% | 9.9% | 9.9% |
Top companies by Gross margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Crawshaw Group ($CRAW) | 44.4% | 45.1% | 43.5% | 42.0% | |
| Magnit PJSC ($MGNT) | 28.5% | 27.5% | 26.6% | 24.0% | |
| |
|---|
| Median (2 companies) | 24.5% | 24.2% | 23.8% | 33.0% | |
|---|
| Ocado Group ($OCDO) | 33.9% | 34.2% | 34.0% | 34.2% | 33.7% |
Top companies by EBITDA margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Magnit PJSC ($MGNT) | 10.9% | 9.6% | 7.4% | 6.6% | |
| Crawshaw Group ($CRAW) | 6.4% | 1.5% | -0.5% | -27.7% | |
| |
|---|
| Median (2 companies) | 6.4% | 6.0% | 6.3% | -10.5% | |
|---|
| Ocado Group ($OCDO) | 7.2% | 6.3% | 5.1% | 3.6% | 2.6% |
Top companies by CAPEX/Revenue, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Magnit PJSC ($MGNT) | 5.7% | 4.6% | 6.4% | 4.2% | |
| Crawshaw Group ($CRAW) | 6.3% | 6.1% | 6.7% | 2.0% | |
| |
|---|
| Median (2 companies) | 5.1% | 3.9% | 5.0% | 3.1% | |
|---|
| Ocado Group ($OCDO) | 6.4% | 6.7% | 9.0% | 7.1% | 10.0% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Magnit PJSC ($MGNT) | 32.6% | 25.1% | 13.6% | 8.0% | |
| Crawshaw Group ($CRAW) | 7.1% | -1.9% | -7.2% | -91.6% | |
| Dairy Farm International Hldgs ($DFIB) | 21.6% | 18.7% | 13.4% | | |
| O'Key Group Sa ($OKEY) | 10.4% | 5.7% | 7.2% | | |
| X5 Retail Group N.V ($89VS) | 15.7% | 17.0% | 18.0% | | |
| |
|---|
| Median (5 companies) | 10.4% | 9.8% | 13.0% | -41.8% | |
|---|
| Ocado Group ($OCDO) | 4.8% | 4.4% | 0.7% | -4.3% | -14.4% |
Top companies by Net Debt / EBITDA
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Magnit PJSC ($MGNT) | 0.9x | 1.1x | 1.3x | 5.6x | |
| |
|---|
| Median (1 company) | 1.1x | 1.0x | 1.3x | 5.6x | |
|---|
| Ocado Group ($OCDO) | 1.6x | 2.0x | 3.0x | -0.9x | -3.1x |
