No-Moat Ocado reported its consolidated results for the 52-week period ended December 1, reaching revenue of £3.1656 billion, imposing 14% year-on-year growth. The adjusted EBITDA reached £153 million before the company put together a consensus.
However, despite strong operating results, stocks plummeted 17% with the market open on February 27, as slow forecasts for automated warehouses under the technology solutions sector.
OCADO plans to open at least seven new customer fulfillment centres (CFCS) over the next three years, projecting its division to impose revenue growth of approximately 10% in fiscal year 2025.
We maintain our fair value estimate for the GBX 920 as the long-term estimate has not changed. Ocado’s retail business, now a joint venture between Marks and Spencer, reported strong results last month with a 14% year-on-year revenue growth rate.
However, the spotlight was in the Technology Solutions and Logistics division. Technology Solutions delivered a revenue growth rate of 18% in 2024, while OCADO expects a more modest 10% in 2025.
Slow growth in 2025 will only be affected by the five new modules that will be present live for the automated grocery business and one CFC opening.
The logistics business is expected to maintain medium to single digit revenue growth, consistent with the previous year.
Management expects a fundamental cash outflow of around £200 million in fiscal year 2025, bringing the company back on track to turn cash well in 2026.
OCADO also significantly reduced cash outflows from £473 million in fiscal year 2023 to £224 million in fiscal year 2024, benefiting from improved EBITDA and a transition to a capital-intensive research and development cycle.
Ocado Stock’s Major MorningStar Metrics
OCDO Stock Prices and Morning Star Fair Value Estimates
Ocado Group Stock vs. Morningstar Fair Value Quotation
Source: Morningstar Direct. Latest prices after 3:22pm. Data as of February 27, 2025.
Source: Morningstar Direct
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