As a Balanced large cap stock, B&m European Value Retail Sa (LON:BME) broke the mould when it was pitched to the SIC at its most recent meeting on Tuesday 17th November. At this point shares traded at 497p.

B&M was one of the few 'essential retailers' allowed to stay open during lockdown. Consequently it did not just continue to trade in this tough period - it attracted new customers.

Even with a market cap approaching £5bn, B&M retains the air of a retail upstart with its distinctive product lines, multiple price points, and attractive box economics.

It wants to take share in big markets - so can this multi-billion pound company continue to create shareholder value or is it running out of headroom?

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TLDR;

B&M is a value variety retailer offering 'big brands at big savings', with stores in the UK and France. Its estate of big box units in out-of-town destinations are classified as 'essential retail', meaning it has in fact benefitted from lockdowns.

  • Bull Points: Value Retailing is a 'structurally growing sector'; strong market position with 'substantial scope for further expansion'; founder-led entrepreneurial culture; strong revenue growth; cash generative low cost model; StockRank double re-rating (from 49 to 80, and then from 80 to 96 on its last two updates)
  • Bear Points: a large cap at risk of derating if growth slows; the Covid trading boost might reverse in 2021; the group has attempted international expansion before and has just offloaded its German business

Profile

About the Stock:

B&M is listed on the LSE Main Market and operates in the Consumer Cyclicals sector as part of the Diversified Retail industry group.

It is a large cap Super Stock with a Balanced RiskRating. This means it is in the lowest 35% of stocks in terms of share price volatility and could play a useful stabilising role in a growth-orientated portfolio.

The group has a share price of 495.05p and just over a billion shares in issue, giving it a market cap of £4.95bn.

B&M's StockRanks have improved materially. In the past 30 days the StockRank has improved by 15 points to 97, driven by:

  • A 25 point improvement in Quality Rank to 96,
  • A 25 point improvement in Value Rank to 61, and
  • No change in Momentum Rank at 87
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Business & Model

What…

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