Edison Investment Research Limited: 4imprint Group (FOUR) - Moving on up

London, UK, 1 March 2022

4imprint Group (FOUR) - Moving on up

4imprint's year-end trading update points to FY21 revenues of $787m, ahead of our expectation of $775m, up 41% on the prior year, after a strong Q4. PBT is indicated at the high end of the (wide) consensus range and we increase our estimate from $22.6m to $30.4m. Supply chain and inflation issues look set to continue, so margins will take longer to recover to the levels pre-COVID-19 pandemic, but the group has a degree of flexibility around substitution and pricing, which should mitigate the heaviest potential trading impact. 4imprint's long-term growth record, strong cash generation and robust balance sheet underpin the premium rating.

4imprint benefits from its scale, low fixed-cost base and limited capital requirements, attractive cash flow characteristics and cash positive balance sheet, all of which justify its premium rating. A DCF suggests a price of £33.29, while it trades on an FY22e EV/EBITDA of 21.5x, versus marketing services stocks on 10.5x. We expect continuing good growth will narrow this valuation gap.

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