In this weekly summary, Mark Watson-Mitchell updates his readers on previous company profiles and other news of interest from the exciting world of small cap stocks…
Begbies Traynor – with more companies going bust or needing restructuring 2021 will be a good year
On Tuesday 8 December Begbies Traynor (LON:BEG) will declare its interim results for the six months to end October.
The business recovery, financial advisory and property services consultancy group enjoyed a strong first half year, we were told in its 18 November trading update.
Revenue was up 10% and adjusted pre-tax profits were 25% better. Furthermore, it has strengthened its financial position switching from £2.8m net debt in April to £0.7m of net cash six months later.
The company’s management is confident in expecting another year of growth, probably above market expectations of £9.8m in profits to end-April 2021.
The group’s shares, currently 91.5p, look very capable of edging back up to their May peak of 117p, so a good statement will help push them back over the 100p level quite quickly.
(Profile 26.11.19 @ 85p set a Target Price of 110p*)
(Profile 21.04.20 @ 93p set a Target Price of 110p*)
Cohort – sales order book is running quickly ahead
Despite Covid-19 this international technology group should have seen its order books expand over the first half.
By the end of August, it was up to £210m, against the end-April figure of £183.3m, and that first figure represents some 83% of the consensus current year expectations.
Furthermore, Cohort (LON:CHRT) also has a very good pipeline of additional business that it is currently working upon.
We shall get a good idea of the first half year’s trading when the company announces its interims to end-October on Thursday 10 December.
Estimates for the full year to end-April 2021 suggest that sales will be close to last year’s £131m, while pre-tax profits could well leap 80% to £17.6m, worth 33.5p per share in earnings.
Already, views for 2022 look for £140m revenues, £20m profits and 38p of earnings per share.
This is a cracking £252m capitalised group, with its recent acquisition of Chess beginning to shine through in these results.
At 616p the shares are trading on only 18 times current year earnings and a mere 16 times prospective. For such advanced technology I would expect very much higher ratings coming through when the current-year prospects are seen. They were up to 738p in January this year, a level which could be seen again quite soon.
(Profile 06.08.19 @ 446p set a Target Price of 607p*)
DWF Group – who was it that said ‘lawyers always make money’?
Another company that will be announcing its interim results on Thursday 10 December is the DWF Group (LON:DWF).
This global legal business issued a very bullish trading update in early November, declaring that revenues were up 14% at £147m, while its underlying adjusted pre-tax profits for the six months to end-October were a staggering £13m, which is close to what the group made in the whole of last year.
It showed both strong revenue growth and profit performance in the first half, and despite having spent £12m on acquisition related outflows, it still ended up with a £6m lower net debt figure.
These imminent results should be accompanied by a very positive full-year prospects comment.
The group’s shares, now at 85p, look to me to be ready for a further uplift in price, they were trading at around 140p in early March this year, so I do see the 100p barrier being easily penetrated.
(Profile 01.06.20 @ 67p set a Target Price of 100p)
UP Global Sourcing – what are the longer-term prospects like
The owner, manager, designer and developer of an extensive range of value-focused consumer goods brands, UP Global Sourcing (LON:UPGS) will be holding its AGM on Friday 11 December.
It has faced up well to its retailer clients’ demands in these difficult times.
In the short term, market conditions for general merchandise, they say, look set to remain challenging in both the UK and in Europe.
But the group’s management have confidence that they will ride it enough to be able to enjoy the longer-term prospects.
Estimates for the current year to end-July 2021 look for a £7m rise in sales to £123m and pre-tax profits of £8.7m (£8.3m). That should increase earnings to 8.4p (7.9p) per share putting the shares at 100p on 11.5 times current year earnings.
The shares touched 119p in early September and could well be up there again on the back of a good AGM statement.
(Profile 13.07.20 @ 74.8p set a Target Price of 100p*)
Volution Group – insider dealings well worth watching ahead of AGM
I always like to see directors of companies buying their own shares.
So I was impressed to see that on 2 November Paul Hollingsworth, the non-executive chairman of Volution Group (LON:FAN), bought another 16,704 shares at 199.5p, taking his holding up to 47,620 shares.
This global group is a leading international designer and manufacturer of energy efficient indoor air quality solutions. Its Vent-Axia brand is possibly the best known of its 16 key brands.
On Friday 11 December it will be holding its AGM.
I would hope for a positive statement that would give some credence to current year market estimates for the group to increase sales by £8.6m to around £226m, while its pre-tax profits could well increase 250% to £36m, worth 14p per share in earnings and easily covering a 4p dividend payment.
At the current 232p that puts the shares out on 17 times current year earnings, which is not too demanding for such a market leading global business. Insiders buying is always a good indication of price potential.
(Profile 23.05.19 @ 174p set a Target Price of 250p*)
Driver Group – ready to progress in tighter and more profitable ways
This group is a leading global professional services consultancy for the construction and engineering industries. It provides multi-disciplinary consultancy services, such as expert witness, claims and dispute resolution services.
On Thursday 15 December Driver Group (LON:DRV) will announce its finals to end-September this year.
Estimates of £53m of revenues, down £5.5m, for the year could well see £2.5m pre-tax profits being reported (£3.24m). That would kick in earnings of 3.7p against 4.7p previously.
The group has been reorganising itself under the new CEO Mark Wheeler, only appointed in June this year.
A cost reduction programme is now underway, with particular emphasis upon higher-margin business being secured.
The £28m capitalised group has some £8m cash in the bank, which should give it some confidence and financial strength as it faces the current year, for which the group has given the market no guidance (as yet).
At 53.75p the shares could react well and smartly to any good news with the final results.
(Profile 23.04.19 @ 59p set a Target Price of 85p)
(* denotes that Target Prices have been attained subsequent to profile publication)