Daily Stock Market Report (Wed 7 May 2025) - GMS, CARD, KITW, BA., SNX, TRN, VARE, SNWS, HERC, OHT, FRAN

Good morning! I see that the FTSE All-Share is now up 3% year-to-date, not including dividends. For once it is outperforming the S&P 500, which is down 4.5% year-to-date.

The Agenda is now complete.

1.30pm: wrapping it up there, thank you.

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Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
BAE Systems (LON:BA.) (£53.5bn)	AGM Update	Trading in line, guidance maintained. Order backlog and pipeline provide good visibility. 2025 EPS growth is expected to be 8% to 10%.	AMBER/GREEN (Roland) [no section below] BAE says it’s well positioned to benefit from increase in EU defence spending and is engaged in the UK’s defence review. The wildcard remains the US, where there’s little visibility on how the current administration may alter defence spending. The US generated 44% of group revenue last year. This year’s expected capex/revenue ratio of 3.3% suggests to me that BAE is still waiting for clarity before committing to major new investments in capacity. With the shares on a P/E of 23, the valuation looks full to me. But I can’t deny the momentum here, so I’m taking a moderately positive view.
Tritax Big Box REIT (LON:BBOX) (£3.6bn)	Trading Update	Expecting “acceleration in rent income capture as the year progresses”. 28% rental reversion.
Trainline (LON:TRN) (£1.2bn)	Full Year Results	FY25: rev +12%, op profit +54%. FY26: headwinds (as previously announced). Growth 6-9%.	AMBER (Roland) [no section below] Today’s results look strong to me, with a 19% op margin and 20% ROE. The commentary highlights the potential for medium-term structural growth as EU rail networks are opened up to new operators. However, TRN also flags up a range of near-term headwinds. Google changes are expected to hit traffic while revenue take could fall due to lower commission rates. Localised monopolies (e.g. TFL) and the potential for greater competition also seem like risks to me. The opportunity for TRN is to build a brand (like Rightmove) that dominates competition and doesn’t rely on search traffic. That could happen, but I’m not sure TRN is there yet. Given the number of moving parts here, I think a neutral view makes sense at this point.
J D Wetherspoon (LON:JDW) (£801m)	Trading Update	Year-end net debt £720-740m. “Reasonable” outcome this year. Wage/tax increases £1.2m/week.
Georgia Capital (LON:CGEO) (£628m)	Q1 Results	NAV per share +11.2% to GEL 106.73. Excellent underlying operating performances.
Card Factory (LON:CARD) (£347m)	Final Results	Rev +6.2%, adj. PBT +6.3%. FY26: confident in mid-to-high single digit % profit growth.	GREEN (Graham) Upgrading this as I can't find anything that is obviously problematic, apart from the fact that it's a card shop! But it's growing, has a reasonable balance sheet and trades cheaply.
Franchise Brands (LON:FRAN) (£283m)	Trading Update	Market remains challenging, but performance in Q1 generally improved since start of the year.	AMBER (Graham) [no section below] Full-year EBITDA for 2024 slipped in below expectations at £35.1m but the company tries to strike a more positive tone today.. There is mention of "gradual improvement" and "resilient" demand. The company is profitable but may need cleaner profits or a step-change in growth to help justify the current market cap (adj. PBT £21m, actual PBT £9m for 2024). I note that like-for-like system sales growth in 2024 was only 4%, despite total system sales of 20%. Today's update is stoic - they are "controlling the controllables". From my perspective a neutral stance continues to make sense, which is consistent with the StockRank of 52.
Kitwave (LON:KITW) (£256m)	Trading Update	Trading in line. Confident that full-year results will be in line. H2 weighting as in previous years.	AMBER/GREEN (Roland) [no section below] Today’s statement looks broadly reassuring to me but does highlight some risks: 1) Hospitality demand was soft early this year, before picking up at Easter. 2) Efforts to mitigate cost headwinds such as NI are also underway. 3) A two-year programme including “IT harmonisation” will be required to achieve the expected benefits from last year’s £70m acquisition of Creed Foodservice. However, on balance I think Kitwave’s growing scale and sophistication are being well managed. I don’t see any reason to change our moderately positive view of this food distribution group.
Andrews Sykes (LON:ASY) (£213m)	Full Year Results	Rev down 3.6%, op profit slightly up (£23.2m). Current year: overall performance year-to-date in line.
Redcentric (LON:RCN) (£199m)	Trading Update & new CEO	FY March 2025: rev +4.2%, adj. EBITDA +30.7% (£37m). New CEO formerly of Vodafone/Citrix.
Gulf Marine Services (LON:GMS) (£189m)	Trading Update	Q1 rev +14%, adj. EBITDA +21% ($25.6m). Utilisation 89%. 2025 EBITDA guidance remains $100-108m. 2026 EBITDA guidance introduced at $105-115m.	GREEN (Roland) Rising day rates and continued deleveraging support equity value and the potential for shareholder returns in 2025. While I can see risks relating to external conditions and (eventual) fleet renewal, GMS’s discount to book value and trading momentum mean I am happy to leave my positive view unchanged today.
Smiths News (LON:SNWS) (£138m)	Interim Results	Trading in line with FY August 2025 expectations. Revenue -0.6%, adj. operating profit +3% (£19m), unadjusted net income +16% to £13.5m. 91% of published publishers signed until at least 2029. On track to deliver £5m of cost savings in FY 2052. Average net debt £1m, finishing the period with net debt of £12m. Consensus estimates for FY25: adjusted PBT £33m, adjusted earnings per share 10.4p.	GREEN (Graham) [no section below] The contrarian positive stance here continues to look reasonable as this news wholesaler posts a rise in all profit metrics, both adjusted and unadjusted. They remind us once again that 91% of contract revenues are renewed through to 2029, so the cliff-edge, if it exists, will be after then at least. In the meantime, the shares pay a yield of 10% at a PER of less than 6x. And they aren’t sitting still, investing £6m p.a. into the business in optimisation/efficiency initiatives. A very interesting cigar-butt style stock with a StockRank of 97.
Carr's (LON:CARR) (£122m)	Interim Results & CEO Succession	H1 rev +7%, continuing op profit +63% to £5.9m. Challenging US agri impacting FY26 expectations.
Accsys Technologies (LON:AXS) (£117m)	Trading Update	FY25 results to be in line with exps. Total sales inc JV +8%. Net debt €42.6m, facility extended.
Synectics (LON:SNX) (£58m)	AGM Update	Trading in line, exps unchanged. Recent wins in all key sectors, “solid order book”.	AMBER/GREEN (Roland - I hold) [no section below] The Synectics share price has been volatile recently, but today’s in line update doesn’t suggest any new concerns to me, highlighting recent wins in key sectors including offshore energy, casinos and critical infrastructure. I’m happy to maintain my previous view ahead of July’s interim results.
1Spatial (LON:SPA) (£57m)	Final Results	Rev +3%, PBT -79% to £0.2m. FY26: slower decision-making in US is likely to impact growth rate.
Hercules Site Services (LON:HERC) (£38m)	Trading Update	H1 revenue is expected to be more than £54m (+17%). Trading in line with exps. Good momentum at key infrastructure sites. Following up on my comments in January, I note that Hercules did sell its suction excavator business for the modest price of £2.4m, with the main benefits being that it focuses HERC on its core labour supply activities, dramatically reduces HERC’s debt and lease liabilities, and also removes suction excavator’s small losses.	AMBER/GREEN (Graham) [no section below] Company commentary suggests that this business is currently benefiting from macro tailwinds in the form of infrastructure spending, with the water sector getting a particular mention. I upgraded our stance on this to AMBER back in January when it made a divestment, and I’m happy to upgrade this by another notch as improved profit forecasts have seen its earnings multiple collapse to only 12x. If we get clean accounts and real profits over the next 6-12 months, with sustained momentum, I could think about going GREEN on this at the current valuation.
NAHL (LON:NAH) (£29m)	Final Results	Rev -8%, adj op profit -4% to £3.9m, in line with exps. Net debt £7.1m. 2025 “has started well”.
Various Eateries (LON:VARE) (£23m)	Trading Update	Trading in line with exps. H1 revenue +8.8%, like-for-like sales 1.3% after adjusting for Easter. Profitability ahead of the prior year. Cash at bank £6m. Evaluating expansion opportunities. New CEO in place.	AMBER/RED (Graham) [no section below] Site-level EBITDA +81% on the prior period is promising but the company has a long way to go: it was EBITDA negative in H1 last year, and only around breakeven for the full year. This sector has not been kind to investors and Various Eateries is yet to make a real profit. The company raised £10m in Dec 2023; the remaining cash gives it some runway so I don’t need to be fully RED on it. But a high degree of caution is appropriate. Note also that only a sliver of shares aren’t owned by Hugh Osmond and other large shareholders.
CT Automotive (LON:CTA) (£17m)	Final Results	Rev -16%, adj PBT +5% to $8.7m. Outlook: Q1 25 trading in line, exp FY revenue & margin growth.
James Cropper (LON:CRPR) (£13m)	Trading Update	FY25 adj EBITDA in line with exps. Net debt improved. FY26 exp revenue growth, cost savings.
B90 Holdings (LON:B90) (£10m)	Final Results	Rev +16% to €3.5m, adj EBITDA €0.7m vs ‘23 loss. Overheads cut by 32%. Exp growth in 2025.
Ocean Harvest Technology (LON:OHT) (£7m)	Strategic and Funding Update	SP -76% Urgently requires funding commitment to continue as a going concern.	RED (Graham) [no section below] No point getting into the weeds on this one: it has been discussing funding plans with investors, but has yet to secure commitments. Cash may run out in June. Should assume the existing equity is worthless.

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Graham's Section

Card Factory (LON:CARD)

Down 4% to 95.8p (£333m) - Final Results - Graham - GREEN

cardfactory, the UK's leading specialist retailer of greeting cards, gifts and celebration essentials, announces its preliminary results for the year ended 31 January 2025 ('FY25').

As noted by Roland in January, CardFactory has been stubbornly refusing to give the market the profit warning that the market expects.

For context, here are the valuation metrics:

Today’s full-year results show robust profitability. And with one of my favourite features: a narrow gap between “adjusted” PBT and actual PBT (£66m vs. £64.1m).

I would like to see a little more emphasis on like-for-like numbers - total revenue has benefited from the addition of 32 net new stores, and from acquisitions.

In like-for-like terms, store revenue has grown 3.4%.

CEO Comment:

Our performance in FY25 demonstrates the strength and resilience of cardfactory and our strategy as we continue to evolve the business into a leading global celebrations group. We delivered strong revenue growth, outperforming the wider celebration occasions market. Further expansion of our store estate combined with continued development of our gift and celebration essentials categories, were key drivers of our performance.

Current trading/Outlook

More reassuring news on this front: current trading is in line and expectations for FY 2026 are unchanged.

These expectations are for “mid-to-high single digit percentage increases in Adjusted PBT” with margin in line with FY25:

Against the backdrop of significantly higher inflation than anticipated we are targeting Adjusted PBT growth in the mid-to-high single digit percentage range and mid-single-digit percentage sales growth each year going forwards.

Higher living wage/national insurance will cost £14m in the current financial year, which will be offset by “our productivity and efficiency programme, product range development and retail pricing”.

There is no material impact expected from tariffs.

Estimates

Edison regularly publishes on CARD. Their estimates for FY 2026 (last confirmed in January) are:

• Revenue £589m

• Adj. PBT £73m

• Earnings per share 15.66p

The only difficulty is that adj. PBT of £73m would represent a growth rate of over 10% vs. FY 2025, which is higher than the company itself has guided for.

So there has been a slight reduction in expectations - you can see this in the light blue line below. The adj PBT estimate for FY 2026 is now more like £70m, with an EPS estimate of 15.2p.

That puts the shares on a P/E ratio of 6.3x for the current year, with further growth expected then in FY 2027.

Balance sheet

The P/E ratio can’t be discussed in isolation from the balance sheet. Net debt excluding leases finished the year at £58.9m, up year-on-year due to acquisition spending (c. £22m) and dividend payments (c. £20m).

I don’t view this debt as excessive; it’s less than 1x EBITDA.

Including leases, leverage finished the year at 1.3x EBITDA.

Companies with leases do need to be more careful with leverage than companies without leases. But I think CARD’s numbers are reasonable.

As usual, my main quibble would be with the dividend payments - is it really necessary to pay out so much?

Cardfactory is showing signs of international ambition, with acquisitions in Ireland and the US. That’s on top of domestic growth and the expansion of partnerships in the UK, Ireland, Australia, the US and the Middle East.

With so much ambition and growth potential, I think that if I was a shareholder here, I’d be happier for the company to keep as much cash on hand as possible, giving it maximum flexibility to invest for growth (or until the growth opportunities present themselves, to reduce the company’s financial risk even further by minimising debt).

Graham’s view

I’m happy to give this a GREEN as I can’t find anything that is obviously problematic with the story here.

Concerns around living wage/national insurance are addressed by the company’s high profit margins and stated plans to mitigate these higher costs. They are also reflected in the small reduction in the profit forecasts for the current year.

The balance sheet is not very strong in my book, but it is strong enough with a low leverage multiple.

There are growth opportunities in wholesale and in partnerships, on top of the core business that is outperforming the wider celebrations market.

Valuation is cheap in P/E terms.

It’s not a sleep-sound investment: card shops are economically exposed, their products are commoditised, and like other retailers, they are prone to financial difficulties. Clintons Cards has been insolvent twice since 2012. Thankfully, Card Factory has a much better record than Clintons - let’s hope that this continues.

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Roland's Section

Gulf Marine Services (LON:GMS)

Up 5% to 17.6p (£197m) - Q1 trading update & 2025 guidance - Roland - GREEN

GMS, a leading provider of advanced self-propelled, self-elevating support vessels serving the offshore oil, gas and renewables industries, is pleased to announce highlights of its unaudited operational results for the three months period ended 31 March 2025 (Q1 2025).

This morning’s Q1 update from GMS looks broadly positive to me. Higher day rates are continuing to support debt reduction. Demand appears to be broadly stable, with a secured backlog equivalent to nearly 3.5 years’ work. Updated guidance for FY25 and FY26 suggest this progress should continue.

However, the stock market practice of comparing key metrics with the same period one year earlier does mean that some of the comparisons in today’s update are more favourable than they would be when compared to Q4 2024.

Given that this is not really a seasonal business, I’d argue that sequential quarter-on-quarter comparisons may be more useful for investors monitoring GMS’s progress – so I’ve included some of these below.

Q1 financial highlights:

• Revenue: $42.3m (+2% vs 4Q24, +14% vs 1Q24)

• Adjusted EBITDA: $25.6m (+5.4% vs 4Q24, +17% vs 1Q24

• Net debt: $187.4m (-6.9% vs 4Q24, -27% vs 1Q24)

• Net debt/EBITDA: 1.8x (4Q24: 2.0x, 1Q24: 3.0x)

One positive is that finance costs are continuing to fall due to lower leverage and the reduced cost of refinanced facilities announced in January. This should boost free cash flow, allowing for faster debt reduction and potential shareholder returns – brokers are pencilling in a possible dividend this year.

Q1 operational metrics:

• Fleet utilisation: 89% (4Q24: 92%, 1Q24: 86%)

• Day Rates avg: $34.2k (4Q24: $33.1k, 1Q24: $31.8k)

• Contracted backlog: $570m (1Q24: $459m)

Continued improvements to the company’s day rate are supporting debt reduction and profit growth. Day rates remain well below historic highs:

Utilisation is currently below the 2024 year end level, but this was also true at the start of 2024 – so perhaps there is some seasonality here after all?

However, the company does also comment on the potential impact of new vessels entering the market in today’s update:

Demand in the market remains strong due to a combination of high market activity and limited vessel availability. An estimated 18 new vessels are expected to be operational in the next 2 to 3 years. Provided the recession fears don't materialize, we expect market growth and retirement of aged assets from 2025-2027 to absorb the supply increase.

For context, GMS owns 14 vessels, with a further one leased.

While it may be true that the impact of new vessels will be offset by retirements and demand growth, I wonder if the capabilities of newer vehicles might change the relative appeal of some of GMS’s older vessels to charterers.

FY25 and FY26 guidance: guidance from the company for 2025 is unchanged today:

• 2025 adjusted EBITDA of $100m to $108m (FY24 actual: $100.4m)

The company notes some macro uncertainty but has introduced 2026 guidance today:

• 2026 adjusted EBITDA of $105 to $115m

Broker estimates: Zeus and Panmure Liberum have both left their 2025 forecasts unchanged today, in line with Stockopedia’s consensus.

Forecasts for 2026 bracket the Stocko consensus estimate of 5.2 cents, suggesting this also may not change very much:

• Zeus 2026E EPS 5.5 cents (previously 5.1 cents)

• PanLib 2026E EPS 5 cents (previously 5 cents)

Roland’s view

Leaving aside geopolitical and cyclical risks here, GMS appears to be performing well. Recent news that OPEC intends to increase oil production could play well for GMS, which does most of its business in the Middle East.

Continued deleveraging should provide funds for shareholder returns and – perhaps – help close the share price discount to book value.

The question remains over whether the company will happen when the company decides either to expand its fleet or replace its oldest ships.

As Mark and I have commented before, while margins are high, the return being generated on the value of the company’s assets is low, at around 6%. Arguably, this means a degree of leverage is essential to generate satisfactory shareholder returns.

Hopefully, the process of fleet renewal will be handled more successfully than last time. Or perhaps not at all – GMS could simply run its fleet to the point of liquidation and return cash to shareholders.

This isn’t a stock for which I’d pay a premium to book value, but as things stand I think the shares do look reasonably valued and could have further to go. I’m happy to maintain my positive view for now.