Home shopping and education supplies group Findel has expressed confidence in its ability to capitalise on any opportunities for profitable growth.

There has been a focus within the group to cut costs and improve distribution channels and this has proved a success as recent results reported a pre-tax profit of £22.1m, an impressive improvement from the pre-tax losses of £59.4m reported in 2017.

Its Express Gifts business remains the main driver of growth with a 9.6% increase in product revenue growth last year. The growing customer base has resulted in an increase in online orders, with its clothing business particularly enjoying an upsurge.

The Education business continues to improve and the market particularly noticed the positive tone in comments on the outlook for the new financial year. However, investors should be wary of the persisting pressure on school budgets which may continue to hamper attempts to turn around the education division.

The shares have made a good start to 2018 but continue to trade on a 2020 PE of just 9.5, which is relatively low compared to other retailers with mostly online sales. The price-to-book value of 1.5 times is about average relative to peers and Findel is expected to see earnings growth over the next two years at least.

We retain our ‘buy’ recommendation due to the potential for further growth at the Express Gifts business. There are better signs within Education but there is clearly some way to go to return that side of the company to strong growth so the shares are suitable for higher risk investors.