London, UK, 1 September 2017

Edison issues update on Eddie Stobart Logistics (ESL)

Eddie Stobart Logistics' (ESL) H1 numbers, well trailed at the trading update in July, showed high levels of growth (13% revenues and 14% EBIT) consistent with management guidance and market expectations. New contract wins, which totalled £25m in the first half, were bolstered by organic growth in key business units. The iForce acquisition is integrating well, with the post-period acquisitions of Speedy Freight (announced at the trading update) and the remaining 50% of the Logistics People (announced yesterday) set to benefit earnings. Taken together, these growth drivers helped ESL achieve a slight increase in EBIT margin from 5.8% to 5.9%, which is well above other listed logistics firms. Also, H117 witnessed the announcement of the company's maiden dividend of 1.4p. We increase our earnings and FY17 acquisition charge to reflect post-balance sheet events and nudge up our fair value to 203p.

The net effect of increased underlying earnings forecasts and increased acquisition costs results in a marginally increased fair value of 203p per share, which offers investors 27% upside to the current price. We continue to base our fair value on EVA and DCF methodologies.

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