Numbers

Supreme plc — The Numbers

Supreme is a UK FMCG distributor that earns money buying batteries, vaping, lighting, sports nutrition and household goods at scale and pushing them through grocers, discounters and convenience. The business has roughly doubled revenue in five years to £231M while operating margin has rebuilt to 14.1% — yet the equity trades at about 8x earnings and 4.5x EBITDA, levels normally seen at structurally challenged distributors. The single metric most likely to rerate or derate this stock is vaping revenue durability post the June 2025 UK disposable-vape ban: if nicotine pouches and refillable vapes hold the segment flat, the multiple compresses upward toward the 12x five-year mean; if vaping shrinks, the cheap multiple is justified.

A. Snapshot strip

A consensus analyst price target sits near £2.25, implying ~40% upside; the question is whether the market simply does not believe FY26 numbers will hold.

B. Quality scorecard — is this business well-run and durable?

The scorecard says this is a high-quality, conservatively-financed distributor. ROIC of 30% and EBIT/interest of 18x are not what bankrupt or fading businesses look like; the only blemish is that ROA, current ratio and asset turnover all dipped year-over-year as the FY25 Clearly Drinks acquisition expanded the asset base ahead of revenue catching up.

C. Revenue & earnings power — six-year view

The FY24 step-change came from vaping volumes following the 2023 nicotine-pouch and 88vape rollout into Tesco/Asda. FY25 revenue growth slowed to 4.4% YoY but gross margin expanded 320bps to 31.9% — the highest in the printed history — because the acquired Clearly Drinks business and own-brand vaping carry better unit economics than third-party batteries.

D. Cash generation — are the earnings real?

Cash conversion is clean: trailing five-year FCF / Net Income averages 1.04 and CFO / NI averages 1.20 — there are no SBC or working-capital tricks puffing reported profit. Capex stays under 2.4% of revenue even with the FY24 manufacturing build-out, which is the right shape for a distributor with low fixed-asset intensity.

E. Capital allocation

FY25 spent £25.6M on the Clearly Drinks acquisition, the largest deal in company history; the dividend was raised modestly while buybacks were minimal. Allocation is tilted toward bolt-on M&A and a steady ~30% payout ratio — sensible discipline given the founder-CEO still owns roughly a quarter of the company.

F. Balance sheet health

G. Valuation — now vs its own history (the most important visual)

The stock collapsed from 244p in mid-2022 to a 74p low in late-2022 on cost-of-living and disposable-vape regulatory fears, then recovered to a 205p peak in mid-2025 as FY24 results vindicated the vaping pivot, then gave back ~30% on 2025-2026 disposable ban headlines and FY25 deceleration. At 160p the multiple is a third below its own five-year mean and well below where revenue and ROIC say it should sit.

H. Peer comparison — UK Consumer Staples

Supreme posts operating margin in line with AG Barr (14.1%) and ROE materially above every UK peer (35% vs 8-39%) but trades at less than half the EV/EBITDA of branded comparables AG Barr (11x), Nichols (9.5x) and Applied Nutrition (9x), and at a discount even to lower-quality McBride. The peer gap exists because the market still treats Supreme as a one-trick vaping play, not as a multi-category FMCG distributor.

I. Fair value & scenario

Scenario	Method	Inputs	Fair Value
Bear	10x P/E on stressed EPS	UK vape ban erodes 25% of vape rev; FY26 EPS to £0.18	£1.80
Base	12x P/E on normalized EPS (5y mean multiple)	FY26 EPS £0.20 (low single-digit growth)	£2.40
Bull	14x P/E on FY27 EPS	Nicotine pouches & Clearly Drinks scale; EPS to £0.23	£3.20
Cross-check	EV/EBITDA reversion to 7.6x mean	EBITDA £42M → EV £319M	£2.62
Cross-check	Analyst consensus (Stockopedia / Fintel)	12-month target	£2.25-2.29

The asymmetry is favorable: at 160p the stock is 11% below the bear case, and the base case implies 50% upside. The scenarios that need to play out for the bear case are real (vape compliance costs, retailer destocking) but already partially priced in — the disposable ban came into force in June 2025 and FY25 numbers absorbed it.

Closing

The numbers confirm that Supreme is a high-quality FMCG distributor: 30% ROIC, 20% five-year revenue CAGR, 1.04 FCF/NI conversion, and a balance sheet with 0.3x net leverage that could fund another £30-40M bolt-on without strain. The numbers contradict the popular framing that this is a fragile vaping pure-play: gross margin just printed an all-time high of 31.9% as the mix shifted toward sports nutrition, branded soft drinks (Clearly) and refillable vapes — exactly the diversification the regulator-fear narrative claims is not happening. Watch FY26 H1 vaping revenue (June 2026 print) — if vaping holds within 10% of FY25 levels under the disposable ban, the multiple gap to UK FMCG peers (currently ~50%) is the single biggest source of return; if vaping falls 25%+, the bear case takes over and the rerating thesis dies for another year.