Card Factory — It looks like a gift

Card Factory (CARD) made good progress on its strategy to become a leading global celebrations group in FY25. In the UK, further development of its product categories and space expansion led to market outperformance, while its international presence was boosted by extending existing relationships and M&A. Management expects the recent acquisition of funkypigeon.com to provide a meaningful fillip to its online capabilities and growth aspirations. CARD’s attractive medium-term growth prospects and rapidly de-gearing balance sheet provide plenty of flexibility in how to deploy its capital above and beyond existing cash returns. These are not reflected in its valuation with c 64% upside to our revised DCF-based valuation of 169p/share and a double-digit equity free cash flow yield.