Online musical instrument retailer Gear4Music (G4M) has raised its earnings forecasts yet again. Just a month ago the firm increased its FY26 outlook, yet already it sees profits topping its previous estimate.

Share price: 318.5p (+2.7%)	PE: 13.7x
Market Cap: £67m	Yield: n/a

MEDIUM TERM GUIDANCE ALSO RAISED

In its Q3 trading update, Gear4Music said it had seen ‘very strong’ revenue growth through the peak seasonal trading period. Sales for the three months to December were £64.6 million, up 32% on the previous year.

In addition, due to disciplined pricing, gross profit rose £5 million to £18.7 million taking the gross margin from 28.1% to 29%.

Meanwhile, capital spending on its new automated UK warehouse is expected to be less than initially estimated. With trading ahead of forecasts and borrowing lower than forecast, the board has raised its earnings outlook a second time.

EBITDA for the year to March 2026 is now seen at not less than £17.7 million. A month ago, the EBITDA forecast was upgraded to £16.7 million from £15 million.

Moreover, given the continued strength of trading and revised capex profile, expectations for FY27 and FY28 have also been upgraded.

This is the sixth earnings upgrade from Gear4Music in total, and covers not just FY26 but FY27 and FY28 too.

While the sales growth is genuinely impressive, we’re also struck by the firm’s ability to increase margins. In other words, it isn’t cutting prices to drive the top line, just the opposite.

Having signed a 15-year lease on its York warehouse, the firm also now has the capacity to support further growth. And, being automated, it will increase efficiency meaning yet more revenue drops through to profits.

Read the press release here: https://www.gear4musicplc.com/investors/

Read related news here: https://sharesify.com/gear4music-raises-outlook-again/

Disclaimer: This content is for information only and is not investment advice. Always do your own research before investing. Click here to see full disclaimer.