DAVY VIEW

Marshalls is an impressive company with a robust business model and a super track record. The group has been transformed in less than a decade from a low margin, low returns business to market leader, with returns on capital regularly exceeding 20%. That has been achieved by investing organically and avoiding expensive acquisitions, which now means the group is all but debt-free. Marshalls has also built a reputation as an ESG leader, and its sustainability credentials are among the most impressive in the sector. Not surprisingly, that kind of quality does not come cheap; despite a recent pullback in the shares, we initiate coverage with a ‘Neutral’ rating and an 800p price target.