Coats Group plc (COA) AI Stock Analysis

• Market Cap: £1.09B
• Dividend Yield: 3.38%
• Average Volume (3M): 3.99M
• Price to Earnings (P/E): 13.5
• Beta (1Y): 1.17
• Revenue Growth: 4.70%
• EPS Growth: 26.05%
• Country: UK
• Employees: 16,042
• Sector: Consumer Cyclical
• Sector Strength: 62
• Industry: Apparel - Manufacturers
• EPS (TTM): 0.05
• Shares Outstanding: 1,597,810,400
• 10 Day Avg. Volume: 4,535,968
• 30 Day Avg. Volume: 3,991,739
• PEG Ratio: 0.52
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.21
• Price to Cash Flow (P/CF): 11.60
• P/FCF Ratio: 11.70
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: 130.00p
• Price Target Upside: 79.31% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

Coats Group plc is positioned strongly with solid financial performance and strategic corporate actions. High leverage and bearish technical indicators are potential concerns. However, a reasonable valuation and positive corporate events, such as executive share purchases and strategic divestments, offer a positive outlook for future growth.

Positive Factors

Financial Targets

Coats Group's new medium-term financial targets indicate a more resilient earnings growth profile than historically, offering further re-rating potential.

Strategic Business Exit

Exiting the US Yarns business will increase Performance Materials margins to 8.2%, with potential for over 10% margins after cost savings.

Negative Factors

Business Performance

The Personal Protection business, which accounts for 40% of revenue, is underperforming due to lower demand.

Market Reaction

A lacklustre share price reaction to today's new financial targets is disappointing.

Coats Group plc Business Overview & Revenue Model

Company Description

Coats Group plc is a leading industrial thread manufacturer and a major player in the textile industry. It operates in the apparel and footwear sectors, providing high-quality threads, zips, trims, and related accessories. The company also extends its expertise into performance materials, offering engineered yarns and fibers used in various applications such as automotive, telecoms, energy, and protective wear. Coats Group's commitment to innovation and sustainability positions it as a pivotal supplier to global markets.

How the Company Makes Money

Coats Group plc generates revenue primarily through the sale of industrial threads and related products to apparel and footwear manufacturers, as well as other industries requiring specialized yarns and materials. The company's revenue streams are diversified across different sectors, with a significant portion coming from the fashion industry. Coats also leverages its technological advancements to offer value-added services, such as product design and technical support, enhancing its earning potential. Strategic partnerships with major global brands and a focus on sustainable solutions further bolster its financial performance, ensuring a robust and resilient business model.

Coats Group plc Financial Statement Overview

Summary

Coats Group plc shows solid financial performance with consistent revenue growth and healthy operating margins. However, the high debt-to-equity ratio and the decrease in free cash flow suggest financial pressures. The company should focus on managing debt and improving net profit margins to enhance financial stability.

Income Statement

Coats Group plc has demonstrated consistent revenue growth with a recent increase of 7.66% from 2023 to 2024. The gross profit margin is solid at 34.04%, indicating strong pricing power and cost control. However, the net profit margin is moderate at 5.34%, suggesting room for improvement in operating efficiency. EBIT and EBITDA margins of 13.31% and 18.54% respectively show healthy operational performance.

Balance Sheet

The company has a relatively high debt-to-equity ratio of 1.96, indicating significant leverage. Stockholders' equity decreased over the past year, affecting the equity ratio, which stands at 21.49%. Return on equity is moderate at 23.14%, suggesting efficient use of equity in generating profits, despite the high leverage.

Cash Flow

Free cash flow decreased by 26.71% from 2023 to 2024, indicating potential cash flow management issues. However, the operating cash flow to net income ratio is robust at 1.20, suggesting good cash generation relative to profit. The free cash flow to net income ratio of 0.85 further supports the company's ability to generate cash relative to its earnings.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
740.70M	1.50B	1.39B	1.58B	1.50B	1.16B
	Gross Profit
272.60M	511.00M	483.30M	486.80M	484.30M	351.80M
	EBIT
118.00M	199.80M	184.00M	181.00M	179.40M	103.10M
	EBITDA
148.10M	278.20M	260.40M	233.30M	230.40M	155.40M
	Net Income Common Stockholders
60.50M	80.10M	56.50M	94.90M	88.90M	42.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
136.30M	146.00M	132.40M	172.40M	107.20M	72.00M
	Total Assets
1.30B	1.61B	1.71B	1.92B	1.51B	1.21B
	Total Debt
358.40M	678.50M	603.30M	672.20M	353.30M	318.50M
	Net Debt
222.70M	532.50M	470.90M	499.80M	246.10M	246.60M
	Total Liabilities
1.00B	1.23B	1.12B	1.23B	927.20M	893.30M
	Stockholders Equity
270.90M	346.10M	558.10M	665.20M	553.00M	290.50M
Cash Flow		Free Cash Flow
62.50M	68.10M	92.90M	62.60M	97.40M	50.20M
	Operating Cash Flow
73.80M	95.80M	123.90M	96.40M	128.60M	65.60M
	Investing Cash Flow
-9.80M	-61.30M	-20.30M	-319.30M	-30.00M	-48.30M
	Financing Cash Flow
-46.60M	3.60M	-147.00M	295.00M	-57.60M	-99.20M

Coats Group plc Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 72.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:COA, the sentiment is Negative. The current price of 72.5 is below the 20-day moving average (MA) of 78.28, below the 50-day MA of 84.14, and below the 200-day MA of 91.66, indicating a bearish trend. The MACD of -1.85 indicates Positive momentum. The RSI at 33.42 is Neutral, neither overbought nor oversold. The STOCH value of 6.45 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:COA.

Coats Group plc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SMIN	75 Outperform	£5.66B	18.95	13.99%	2.59%	6.10%	33.05%
COA	73 Outperform	£1.09B	13.48	17.76%	3.38%	4.70%	26.05%
SPX	71 Outperform	£4.11B	21.49	16.16%	2.90%	-1.03%	4.06%
WEIR	69 Neutral	£5.17B	16.56	17.83%	1.93%	-4.95%	36.95%
SRP	67 Neutral	£1.57B	37.10	4.71%	2.33%	-0.68%	-78.93%
DPLM	66 Neutral	£4.88B	37.73	14.50%	1.63%	13.59%	6.14%
Sector *	59 Neutral	$11.40B	10.19	-0.83%	4.03%	1.27%	-16.17%

Coats Group plc Corporate Events

Coats Group’s Non-Executive Chair Acquires Shares, Signaling Confidence

Coats Group plc announced a transaction involving the purchase of ordinary shares by David Gosnell, the Non-Executive Chair. This transaction, conducted on the London Stock Exchange, involved the acquisition of 148,600 shares at a price of £0.67588 each, amounting to a total of £100,435.77. The purchase reflects a strategic move by the company’s leadership, potentially signaling confidence in the company’s future performance and stability, which may impact stakeholder perceptions positively.

Spark’s Take on GB:COA Stock

According to Spark, TipRanks’ AI Analyst, (GB:COA) is a Outperform.

Coats Group plc exhibits solid financial performance with consistent revenue growth and healthy operating margins. However, high leverage and declining free cash flow are concerns. The company shows reasonable valuation with a decent dividend yield. Despite bearish technical indicators, recent corporate actions reflect strategic focus and confidence in future growth, supporting the overall positive outlook.

To see Spark’s full report on (GB:COA) stock, click here.

Coats Group Exits US Yarns Business to Boost Profitability

Coats Group plc has announced its strategic decision to exit the US Yarns business within its Performance Materials division, following a review of its Americas Yarns operations. This move, which includes the closure of the Kings Mountain, North Carolina facility, is expected to enhance the company’s EBIT margins and allow it to focus on more profitable areas of its portfolio. The exit is anticipated to be completed by Q2, generating a modest cash inflow after closure costs, and reflects Coats’ strategy to streamline operations and concentrate on growth in other segments.

Coats Group CFO Exercises Share Options Under Long-Term Incentive Plan

Coats Group plc announced that its Chief Financial Officer, Jacqueline Callaway, exercised nil-cost options over 1,000,328 ordinary shares as part of the company’s Long-Term Incentive Plan. Following this transaction, Callaway sold 472,040 shares to cover tax liabilities and retained 528,288 shares, which will remain subject to a two-year post-vesting holding period. This move reflects the company’s ongoing commitment to aligning executive compensation with long-term performance goals, potentially impacting its financial strategy and shareholder value.

Coats Group plc Announces Share Awards to Key Executives

Coats Group plc announced the award of nil cost share options to its CEO, David Paja, and CFO, Jacqueline Callaway, under the Deferred Annual Bonus Plan (DABP) and Long Term Incentive Plan (LTIP). These awards, which are part of the company’s compensation strategy, reflect the achievement of 2024 bonus targets and are subject to specific forfeiture and clawback provisions. The LTIP includes performance measures such as earnings per share growth, cash conversion, total shareholder return, and sustainability goals, which are aligned with the company’s strategic objectives and market expectations.

Coats Group plc Director Acquires Shares to Strengthen Governance

Coats Group plc announced a transaction involving the purchase of ordinary shares by Sarah Highfield, an Independent Non-Executive Director. The transaction, conducted on the London Stock Exchange, involved the acquisition of 59,227 shares at a total price of £49,414.51, reflecting the company’s ongoing commitment to strengthening its governance and aligning management interests with shareholder value.

Coats Group Releases 2024 Annual Financial Report Highlighting Sustainability and Innovation

Coats Group plc has released its Annual Financial Report for 2024, which is now available on their website and the National Storage Mechanism. The report details the company’s financial performance, with a revenue of $1.5 billion, and outlines its commitment to sustainability and innovation. The release of the report is significant for stakeholders as it highlights Coats’ strategic focus on maintaining its market position and advancing its sustainability goals, including its aspiration to achieve net-zero by 2050.

Coats Group CEO Acquires Significant Shareholding

Coats Group plc announced a significant transaction involving its Chief Executive Officer and Executive Director, David Paja, who purchased 150,000 ordinary shares at a price of £0.8302762 per share, totaling £124,541.43. This transaction, conducted on the London Stock Exchange, reflects a potential vote of confidence in the company’s future prospects and may influence stakeholder perceptions regarding the company’s market positioning.

Coats Group Reports Strong 2024 Results and Sets Ambitious Growth Targets

Coats Group plc reported strong financial results for 2024, with an 8% increase in revenue and a 16% rise in adjusted EBIT. The company achieved significant market share gains in apparel and footwear, and saw a 144% revenue growth in recycled thread products. Strategic initiatives, including the closure of the Toluca site and a UK pension de-risking, have positioned Coats for further growth. The company has set ambitious medium-term targets, including organic revenue growth of over 5% and EBIT margins of 19-21%, while maintaining a strong financial position to support capital allocation strategies.