3i Group (LON:III) Issues Earnings Results

Key Points

• 3i delivered a 5% total return for the half-year, with NAV per share at £31.54 after a 48p dividend; portfolio gains were partly offset by foreign-exchange losses.
• Portfolio company Action reported nine-month sales growth of 13.6% and EBITDA growth of 10.7%. Management expects further store openings and stronger fourth-quarter margins, though recent margins faced pressure from weaker sales, shrink and staff absenteeism.
• 3i launched a new share buyback programme of up to £750 million, following completion of a previous £750 million programme; management said it believes the shares trade below the portfolio’s fundamental value.

3i Group (LON:III - Get Free Report) released its quarterly earnings data on Thursday. The company reported GBX 160 earnings per share (EPS) for the quarter, Digital Look Earnings reports. 3i Group had a net margin of 94.84% and a return on equity of 17.91%.

Here are the key takeaways from 3i Group's conference call:

• 3i delivered a 5% total return for the half, ending September with NAV per share of £31.54 after paying a 48p dividend. Portfolio value growth added 186p per share, while foreign-exchange movements reduced NAV by 47p.
• Action reported nine-month sales growth of 13.6% and operating EBITDA growth of 10.7%; like-for-like sales rose 3.4%, mainly driven by transactions. Management expects at least 400 store openings, around 4% like-for-like growth and a 14.7%–14.8% EBITDA margin for the year, subject to no material trading disruption.
• Management described the broader portfolio as resilient: 96% of private-equity holdings by value grew earnings, with no material write-downs, and infrastructure delivered a 13% gross investment return. The company also said most private-equity value growth came from Action.
• Action’s third-quarter EBITDA margin was pressured by weaker-than-expected sales, higher shrink and staff absenteeism. Management said October margins moved above 15% and expects a material step-up in the fourth quarter, but that recovery remains an outlook.
• After completing a £750 million share buyback at an average price of £24.95, 3i announced a second programme of up to £750 million through May 2027. Management said it believes the shares trade below the portfolio’s fundamental value and expects cash generation to support the buyback alongside a progressive dividend policy.

3i Group Stock Down 3.0%

Shares of III stock traded down GBX 81.50 during trading hours on Friday, hitting GBX 2,628.50. 642,035,313 shares of the company were exchanged, compared to its average volume of 27,909,275. 3i Group has a one year low of GBX 1,825 and a one year high of GBX 3,626. The business's 50-day simple moving average is GBX 2,539.52 and its two-hundred day simple moving average is GBX 2,683.44. The company has a debt-to-equity ratio of 4.08, a quick ratio of 0.09 and a current ratio of 131.80. The stock has a market capitalization of £26.65 billion, a price-to-earnings ratio of 4.88, a P/E/G ratio of -0.35 and a beta of 1.63.

3i Group declared that its Board of Directors has approved a stock repurchase program on Thursday, November 12th that authorizes the company to buy back £750 million in outstanding shares. This buyback authorization authorizes the company to purchase up to 2.9% of its shares through open market purchases. Share buyback programs are generally an indication that the company's management believes its stock is undervalued.

Insider Buying and Selling

In related news, insider Simon Borrows acquired 37,600 shares of the firm's stock in a transaction dated Thursday, November 12th. The stock was acquired at an average cost of GBX 2,674 per share, for a total transaction of £1,005,424. Company insiders own 2.13% of the company's stock.

3i Group Company Profile

3i is an investment company specialising in Private Equity and Infrastructure. We invest in mid-market companies headquartered in Europe and North America. We generate attractive returns for our shareholders and co-investors by investing in private equity and infrastructure assets. As proprietary capital investors we have a long-term, responsible approach. We aim to compound value through thoughtful origination, disciplined investment and active management of our assets, driving sustainable growth in our investment companies.

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