B&M European Value Retail S.A. (BME.L) | Investment Case

1. Company Snapshot

1.a. Company Description

B&M European Value Retail S.A. operates general merchandise and grocery stores.The company operates a chain of 701 stores under the B&M brand, and 311 stores under the Heron Foods and B&M Express brands in the United Kingdom; and 107 stores under the B&M brand in France.It also provides employment and property management services.

The company was founded in 1978 and is based in Luxembourg, Luxembourg.

Show Full description

1.b. Last Insights on BME

B&M European Value Retail S.A. faces challenges, including a warned earnings drop due to price deflation and underperformance in its UK business. The company's adjusted earnings are expected to decline. Additionally, Deutsche Bank analysts have taken a cautious view on the UK consumer, cutting ratings on UK retail stocks. B&M European Value Retail S.A. has also been added to the Zacks Rank #5 (Strong Sell) List, citing concerns about its financials. Its Q1 FY26 revenue growth of 4.4% may not be sufficient to offset these negative factors.

1.c. Company Highlights

Last Price	166.75
Change Percentage	0.33%
Open	166.6
Previous Close	166.2
Market Cap ( Millions)	1674
Volume	3427233
Year High	378.5
Year Low	154
M A 50	192.77
M A 200	253.67

FCF Yield	32.49%
Dividend Yield	16.91%
ROE	36.57%
Debt / Equity	341.36%
Net Debt / EBIDTA	280.10%
Price To Book	2.23
Price Earnings Ratio	5.25
Price To FCF	3.08
Price To sales	0.3
EV / EBITDA	4.8

2. Transcript Summary

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3. NewsRoom

Investors Can Find Comfort In B&M European Value Retail's (LON:BME) Earnings Quality

Nov -20

Source:

B&M profits tumble amid turnaround efforts

Nov -13

Source:

The most popular stocks and funds investors bought in October

Nov -07

Source:

B&M (LSE:BME): Is the Discount Retailer Undervalued After a 33% Share Price Slide?

Oct -21

Source:

B&M reveals freight cost accounting error as CFO quits

Oct -20

Source:

New Strong Sell Stocks for October 10th

Oct -10

Source: zacks.com

What Is B&M European Value Retail S.A.'s (LON:BME) Share Price Doing?

Oct -07

Source:

B&M European Value Shares Fall After Company Warns of Earnings Drop

Oct -07

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.54%)

6. Segments

United Kingdom B&M

Expected Growth: 8.5%

B&M's 8.5% growth in the UK is driven by its successful discount retail model, strategic store expansion, and effective supply chain management. Additionally, the company's focus on everyday low prices, convenient locations, and a wide range of products resonates with price-conscious UK consumers, contributing to its growth momentum.

United Kingdom Heron

Expected Growth: 8.0%

United Kingdom's Heron segment, part of B&M European Value Retail S.A., is driven by increasing demand for discount retail, strategic store expansions, and effective cost management. Additionally, the segment benefits from a strong supply chain, efficient logistics, and a loyal customer base, contributing to its 8.0% growth.

France B&M

Expected Growth: 9.5%

France B&M's 9.5% growth is driven by increasing market share in the discount retail space, successful store refurbishments, and effective supply chain management. Additionally, the company's focus on everyday low prices, private label products, and strategic store locations contribute to its growth momentum.

7. Detailed Products

Home and Furniture

B&M European Value Retail S.A. offers a wide range of home and furniture products, including sofas, beds, dining tables, and decorative items.

Food and Beverages

The company sells a variety of food and beverages, including snacks, beverages, and household essentials.

Health and Beauty

B&M European Value Retail S.A. offers a selection of health and beauty products, including skincare, haircare, and personal care items.

Household and Cleaning

The company sells a variety of household and cleaning products, including cleaning supplies, paper products, and laundry essentials.

Pet Food and Accessories

B&M European Value Retail S.A. offers a range of pet food and accessories, including food, toys, and pet care products.

Seasonal and Leisure

The company sells a variety of seasonal and leisure products, including gardening, outdoor, and seasonal decorations.

8. B&M European Value Retail S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

B&M European Value Retail S.A. operates in a market with relatively low threat of substitutes, as customers have limited alternatives to physical retail stores. However, the rise of e-commerce and online shopping platforms poses a moderate threat to the company's sales.

Bargaining Power Of Customers

B&M European Value Retail S.A. operates in a highly competitive market, where customers have a high bargaining power due to the availability of alternative retailers and online shopping options. This forces the company to maintain competitive pricing and quality of products.

Bargaining Power Of Suppliers

B&M European Value Retail S.A. has a relatively low bargaining power of suppliers, as it sources products from a diverse range of suppliers, reducing dependence on any single supplier. This allows the company to negotiate better prices and terms.

Threat Of New Entrants

The threat of new entrants in the retail market is moderate, as it requires significant investment in infrastructure, logistics, and marketing. However, the rise of e-commerce and online shopping platforms has lowered the barriers to entry, making it easier for new entrants to enter the market.

Intensity Of Rivalry

The retail market is highly competitive, with many established players competing for market share. B&M European Value Retail S.A. faces intense competition from other retailers, which forces the company to focus on differentiating its products and services to attract and retain customers.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	75.80%
Debt Cost	5.50%
Equity Weight	24.20%
Equity Cost	8.98%
WACC	6.34%
Leverage	313.19%

11. Quality Control: B&M European Value Retail S.A. passed 6 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

BIC

A-Score: 6.0/10

Value: 7.6

Growth: 4.1

Quality: 6.7

Yield: 8.1

Momentum: 1.5

Volatility: 7.7

1-Year Total Return ->

Cranswick

A-Score: 5.5/10

Value: 4.4

Growth: 6.7

Quality: 5.2

Yield: 3.1

Momentum: 4.0

Volatility: 9.7

1-Year Total Return ->

B&M European Value Retail

A-Score: 5.5/10

Value: 8.4

Growth: 6.4

Quality: 5.2

Yield: 10.0

Momentum: 0.5

Volatility: 2.3

1-Year Total Return ->

Colruyt

A-Score: 5.2/10

Value: 7.7

Growth: 4.6

Quality: 4.3

Yield: 6.9

Momentum: 1.0

Volatility: 7.0

1-Year Total Return ->

Tokmanni

A-Score: 5.0/10

Value: 7.1

Growth: 4.8

Quality: 3.2

Yield: 9.4

Momentum: 2.5

Volatility: 3.0

1-Year Total Return ->

SalMar

A-Score: 4.8/10

Value: 3.0

Growth: 6.6

Quality: 3.3

Yield: 6.2

Momentum: 4.0

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-8.90%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.34%

B&M European Value Retail S.A. - LU1072616219

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on BME

1.c. Company Highlights

Higher Yield

Higher Growth

Average Quality

Revenues Beats

Average Growth

Earnings Miss

Revenues Miss

Stable Momentum

Weak Momentum

Earnings Beats

Fairly Valued

Cheaper

Medium Volatility

More Volatile

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.54%)

6. Segments

United Kingdom B&M

Expected Growth: 8.5%

United Kingdom Heron

Expected Growth: 8.0%

France B&M

Expected Growth: 9.5%

7. Detailed Products

Home and Furniture

Food and Beverages

Health and Beauty

Household and Cleaning

Pet Food and Accessories

Seasonal and Leisure

8. B&M European Value Retail S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: B&M European Value Retail S.A. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.67$

Current Price

1.67$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA