Headlam (HEAD.L) are a Birmingham based flooring supplier who operate in the UK, France, Switzerland and Netherlands. They are the largest floor covering distributor in the UK, supplying recognisable names such as ScS and B&Q as well as smaller independent retailers and individual contractors. 

Lockdown as a whole generally benefitted the home improvement industry as people were forced to spend more time at home. This was not the case for Headlam, as flooring is normally too large a job for most DIYers and general consumers to undertake themselves. This could be set to change. With the UK government now taking a more cautious approach to lifting lockdown, the current round of lockdowns could be the last. This would likely benefit Headlam. As the general trend in home improvement suggests, demand is there. So the eventual easing of restrictions should facilitate the undertaking of larger home improvement projects such as changing flooring.

The Headlam stock price is currently approx. 35% off its pre-pandemic level, meaning a rally once restrictions ease could offer significant growth returns. In addition to this, prior to COVID, HEAD.L offered a dividend (yield 1.9%) which was cancelled due to poor performance during the pandemic. As performance recovers this dividend could return, making HEAD.L more enticing to prospective investors.

Broker Consensus (16/02/21)

Analysts who cover this security

Investec Bank (UK) Plc – Michael Donnelly
Arden Partners – Kunal Walia
Panmure Gordon – Adrian Kearsey
Peel Hunt – Charles Hall
Zeus Capital