Small Cap catch-up featuring CentralNic, Marlowe, Gleeson and more

CentralNic Group (LON:CNIC) – a staggering 72% CAGR in revenue over five years

Over the last five years this group has registered a compound annual growth rate of 72% in its revenues – that puts it into the top list of Europe’s fastest-growing technology companies.

As it widens its service offering, the group this week announced the small $19m acquisition of M.A. Aporia, which is a social media and native advertising technology company.

Analysts Richard Williamson and Dan Ridsdale at Edison Investment have pencilled in estimated 2022 end December revenues of $642.3m ($410.5m), while pre-tax profits could almost double to $58.7m ($31.9m), with earnings lifting from 11.8c to 17.3c per share.

For the coming year they see $736.4m sales, $70.7m profits and 18.9c per share in earnings.

I look forward to seeing the group announce its Q3 Trading Update on 19 October.

In the meantime, I note the Zeus Capital discounted cash flow valuation on the company at 221p a share.

They closed last night at only 123.25p, which still shouts out to me as being incredible value for such a ‘money machine’ that delivers growth, earnings outperformance and accretive acquisitions as it continues to build up its corporate base.

(Profile 12.07.21 @ 89p set a Target Price of 110p*)

Marlowe (LON:MRL) – broker has a price objective of 1160p

This compliance services and software group has been a wonderful performer over the last couple of years, despite Covid, supply and price pressures.

On Wednesday it announced its AGM Statement covering the first four months of its current trading year.

It stated that its run-rate revenues and adjusted EBITDA have grown to over £450m and £79m respectively.

As it continues to build upon its positions across the highly attractive and resilient compliance markets, the group remains confident of achieving its run-rate targets of £500m of revenues and £100m of adjusted EBITDA materially ahead of the end of FY24, as originally targeted.

The combination of its strong and increasing margins together with its low capital intensity, makes this business highly cash generative. It expects to continue to generate at least 90% cash conversion per annum.

That enables the group to fund the increasing organic investment in its business, as well as funding further bolt-on acquisitions.

Analyst Calum Battersby at Berenberg, who is impressed by the group’s 85% rate of annual recurring revenues, has a Buy out on the group’s shares, with an objective of 1160p for its shares.

On the back of the Statement the group’s shares leapt 75p to 750p at one stage, before closing last night at 748p.

I remain bullish about the quality of this stock and of its prospects to expand further in its marketplace.

(Profile 30.01.20 @ 468p set a Target Price of 550p*)

MJ Gleeson (LON:GLE) – latest figures indicate significant undervalue

Much as predicted this housebuilding group achieved its 2,000-home medium term target.

The latest full-year results to end June saw sales rise from £288.6m to £373.4m, with adjusted pre-tax profits of £55.5m (£41.7m), earnings of 77.9p (58.1m) and a dividend of 18.0p (15.0p) per share.

Analysts James Tetley and Greg Poulton, at Singer Capital Markets, rate the shares as a Buy with a price objective of 825p a share.

For the current year they anticipate £428.4m sales, £58.0m profits, 76.1p earnings and 21.0p in dividends per share.

The group’s shares at just 485p are way below my early April Profile price, however I still have much higher hopes for its recovery.

(Profile 11.04.22 @ 613p set a Target Price of 750p)

Macfarlane Group (LON:MACF) – steady European expansion

Analyst Robin Speakman at Shore Capital has a ‘fair value’ estimate at 150p for this protective packaging group’s shares, compared to the current 108p.

His estimates for the current year to end December go for sales improving to £284.4m (£264.5m), adjusted pre-tax profits of £22.7m (£22.0m), earnings of 11.4p (10.7p) and a dividend of 3.3p (3.2p) per share.

For the next year he sees £300.2m sales, £24.4m profits, 11.6p earnings and a 3.5p dividend per share.

As this group continues to move cautiously ahead with its European expansion its shares are, in my view, trading at a steadily improving price rate.

At 108p they will not set the world alight but instead should be considered for any conservative growth portfolio.

(Profile 08.07.20 @ 77p set a Target Price of 100p*)

Kier Group (LON:KIE) – looking for a positive AGM Statement

This infrastructure group’s sales for its June year end were £3.26bn, with £94.1m profits and earnings of 16.39p per share.

For the current year analyst Joe Brent at Liberum Capital is estimating £3.38bn, £102.6m profits and 18.16p per share of earnings.

He rates the shares as a Buy, going for a price objective of 150p, compared to the 72.5p at which they closed last night.

I like this group and its corporate profile, its growth prospects will reflect increased public spend. Its shares are a cheap purchase at these levels.

A positive AGM Statement in November will certainly help to gain attraction to the group’s shares. I have no worries that my Target Price will be achieved.

(Profile 24.06.22 @ 71p set a Target Price of 90p)

Portmeirion Group (LON:PMP) – interims lead to lower price estimates

Analyst Sahill Shan at Singer Capital Markets still rates the pottery and homewares group’s shares as a Buy, despite now having lowered his price objective from 840p, now looking for 600p.

His estimates for the current year to end December are for almost unchanged sales at £106.2m (£106.0m), while adjusted pre-tax profits could rise to £8.0m (£7.2m), worth 44.5p (38.7p) of earnings and well covering a 14.85p (13.00p) dividend per share.

He sees further rises in 2023 and 2024.

The group’s shares fell 22p to 332.5p on the latest interims released yesterday.

I see them picking up again over the next few months, ahead of the year-end Trading Update due in January.

(Profile 28.08.20 @ 376p set a Target Price of 480p*)

(Asterisks * denote that Target Prices have been achieved since Profile publication)