Foxtons Group (LON:FOXT) – Getting It Done With London’s Number One
London’s leading estate agency group is hell-bent upon delivering its medium-term target of doubling the adjusted operating profit that it earned in 2023.
That aim, coupled with the visible determination of the group’s Management, looks very achievable, making its shares now at just 52p look to be a very healthy bet.
Only established some 43 years ago, the group today also claims to be the UK’s largest lettings estate agency brand, managing a portfolio of over 28,000 tenancies.
And that is what appeals very much to me – its ability to create massive annual recurring revenues.
It has a policy of acquisitive growth in its Lettings side, looking to acquire, integrate and service high quality lettings portfolios.
It has a natural organic growth ability as it continues to win new business, to quickly market those tenancies and provide a good service to its landlords.
But ARR is not the only attraction about Foxtons, it has really a very visible Selling agent business too.
In addition, it creates revenues through its Financial Services side.
Last year, to end December, the group as a whole reported an operational turnaround, whilst strengthening its operating platform helped to drive both its market outperformance and its adjusted operating profit growth.
Revenues were up 5% at £147.1m (£140.3m), while adjusted operating profit was 2% better at £14.3m (£13.9m), while its pre-tax profit was hit by a £4.5m one-off acquisition integration charge, easing 34% to £7.9m (£11.9m), leaving adjusted earnings 3% lower at 3.0p (3.1p) per share, whilst maintain its 0.9p dividend.
For the current year broker estimates range around £158m in revenues, some £15m in profits, around 3.8p per share in earnings and a 1.2p dividend.
The estimates for 2025 are some £166m revenues, £18m profits and 4.5p earnings covering a 1.45p dividend per share.
CEO Guy Gittins stated that:
“2023 was a year in which Foxtons has been fundamentally transformed. We have achieved a lot in a short space of time by making improvements across the business and Foxtons is now in much better shape than the company I inherited 18 months ago.
We have restored Foxtons’ competitive advantages by investing in core capabilities, growing fee earners and reinvigorating our culture and this has been achieved ahead of schedule. As a result, Foxtons was the UK’s fastest growing large lettings and sales agency brand in the UK in 2023 and reclaimed its position as London’s leading estate agency.
Most importantly, we have rebuilt and strengthened the Foxtons Operating Platform. The platform is a unique, industry-leading and proprietary asset which will underpin our future growth and, due to its scalability, will provide Foxtons with the capability to expand and consolidate across our industry.
Our strategy to deliver growth through sales market cycles by delivering Lettings growth is working, delivering resilient earnings for the year despite a weak sales market and the investment we made in fee earners. We are on track against our medium-term target of delivering £25m to £30m of adjusted operating profit, through organic and acquisitive growth and supported by improving market conditions.”
This group really appeals to me, especially now that it has the target of hitting doubled operating profits within a few years.
It may well take some time before achievement of my 76p Target Price, however my January 2024 new Target Price was within 0.5p of success just over a month ago, when it hit 60.5p.
On Friday night the group’s shares were back to 52p, at which level the whole group is only capitalised at £157m and is looking ready for another run up and through that 61p level, which is a healthy 17% gain to look forward to within months.
That move might well be helped along by any comment from the group on its AGM in one month’s time, 7th May.
(Profile 07.07.21 @ 60p set a Target Price of 76p)
(Profile 08.01.24 @ 49.25p set a Target Price of 61p)
Billington Holdings (LON:BILN) – Looking For Strong Guidance
On 2nd January this year, the shares of this provider of structural steel and safety solutions to the construction industry, peaked at 489p before drifting back to 380p two months ago.
On 22nd March, following the announcement of some £90m of new contracts being awarded to the group, its shares leapt to 450p before then edging further to 469p a few days later.
Those new orders took the Forward Book up to a record High.
Capitalised at just under £60m, this group of companies focusses on structural steel and engineering activities throughout the UK and European markets.
The morning of Tuesday 16th April will see the Barnsley-based company declaring its annual results to the end of December last.
Analyst David Buxton at Cavendish Capital Markets, who has a Price Objective of 541p out on the shares, is estimating £125.0m (£86.6m) of revenues, with adjusted pre-tax profits lifting from £5.8m to £13.3m, boosting earnings to 83.9p (39.1p) and covering a 20.0p (15.5p) dividend per share.
Next week we will see just how the £59m capitalised group will present its current year prospects, especially with such a massive Order Book going forward.
Regular readers will already know that I am very keen on this group, having been a favourite of mine for years.
It is a very well-run company and appears to have tight financial management, with good cash balances to hand.
We have enjoyed excellent returns for investors so far and hope that the statement accompanying next weeks results will help to bolster improving sentiments.
At Friday’s closing price of just 450p they are a very tight Hold, awaiting current year guidance.
(Profile 02.04.19 @ 266p set a Target Price of 314.5p*)
(Profile 13.06.22 @ 217.5p set a Target Price of 295p*)
(Asterisks * denote that Target Prices have been achieved since Profile publication)