Gear4music (holdings) Share Discussion Threads

[nurdin] 17/10/2016 11:16

Need a strong stomach to buy at over 30x forecast earnings but admit that the future earnings growth could well exceed the PE.Will be interesting to read the interims.

[paulypilot] 16/10/2016 15:31

Whilst the Yorkshire Post article above is several years old, I think it's very interesting in that the CEO's optimism at the time was well-founded. The company has subsequently delivered exactly what he said it would deliver. That's important to me, as it shows the CEO is positive, but realistic. Remember this is not a start-up, it's been going for about 13 years.

If only all AIM companies had management which had these characteristics! I also liked that he didn't try to take all the credit for strong performance, but referred to having great staff. Again, that speaks volumes to me - a grounded person who recognises that it's all about teamwork.

Although the share price has risen a lot recently, I think it's justified, based on stellar growth & breaking strongly into Europe. Let's see what the interim results are like, but right now I have to say this is probably my favourite GARP share.

Also after recent share price rises, this is now one of my largest long positions. No plans to sell any for the foreseeable future, it's all about running the winners when you find something good.

Regards, Paul. (long)

[kcr69] 15/10/2016 12:39

Thanks for all the links johnyee 7, really good to see the trust pilot reviews, particularly the number in the last 24 hours alone. Never a bad sign to see so much recruitment going on either. I remain unashamedly bullish and excited about this business. Best wishes.

[johnyee 7] 15/10/2016 11:47

Taking on lots of people.

[johnyee 7] 15/10/2016 11:41

9.6 out of ten,not bad.

[johnyee 7] 15/10/2016 11:39

19 different websites,you learn something new every day, even though it's old news.

[johnyee 7] 15/10/2016 11:32

Now this is a showroom.

[johnyee 7] 14/10/2016 12:08

She's gonna blow,and I'm not just talking about the wife.

[bigbigdave] 14/10/2016 12:05

2 shs quite often mm signal.

[johnyee 7] 14/10/2016 12:02

well someone just splashed out £6.44p plus costs on buying 2 shares.

[panic investor] 14/10/2016 11:44

Intra Day reversal, always nice.

[johnyee 7] 14/10/2016 11:14

Doesn't stay down for long

[kcr69] 14/10/2016 08:46

Subtle de-ramping? Who, what, where?

[little minx] 14/10/2016 08:27

Subtle de ramping because the rise caught him out

[kcr69] 14/10/2016 07:47

allstar4eva, I appreciate you weren't giving any recommendation, and I fully agree with you that high growth companies in a bang on trend growth sector are attracting comparatively high PE's, but for all the right reasons. My point was that I don't think a PE of 40 for a business such as Boohoo or G4M is at all excessive with growth of 40%+, and that while I believe Boohoo is fairly valued, I think the prospects for ASOS aren't as strong and it is currently overvalued.

Fruitninja84, many thanks for coming back to me regarding your thoughts on potential bidders. Clearly wise words as well on taking profit and de-risking portfolios. I was a little late to this party compared to you and while I fully expect wild swings and retraces, I have to base my thoughts on my interpretation of official numbers, and unless that story changes on Tuesday or in the future, can only see upside from here over a relatively short time period irrelevant of short term market behaviour.

I should add that if my interpretation of numbers are close to how reality plays out, there will need to be a fairly substantial amount of investment in the next 12 months both in labour but moreover capex as the £100k revenue capacity will soon be under pressure.

Best regards to you both, its good to hear differing views and have a healthy debate.

[johnyee 7] 14/10/2016 07:33

Broker already said they should reach next years targets this year,1 year ahead.

[fruitninja84] 13/10/2016 22:56

As the saying goes - Bulls and Bears make money, greedy pigs get slaughtered!I think its absolutely the right thing to top-slice an overweight position. And i have been doing so around the £3 mark. I will admit here too being greedy and having at one point 30% of my portfolio in this from £2 and up. Im now about 5% going into results which I'm roughly 63% in profit. I intend to add after depending on the numbers.In answer to your question from last night Kcr69 when i say that i think this looks like a target it is just pure speculation on my part. I have been in the game for a while and been in a few that got taken out, KENZ PRZ ESS to name a few and i feel the same could happen here ( Dec2017 :p ) but again just my gut feeling...

[allstar4eva] 13/10/2016 22:51

Kcr neither stock were recommendations - just giving people an idea of the kind of PE that can be justified here by looking at other online retailers...

[kcr69] 13/10/2016 22:32

Bamboo, we all get it wrong sometimes, well frequently if I listen to my wife. I looked at your chart and had no idea which day of the week it was anymore, let alone the turn of a rising wedge. Wish I understood it but double Dutch to me.

Allstar4eva, without getting into any detail on Boohoo, particularly as it is my biggest holding and I like it a lot, I think it is really difficult to value at the moment, as there are so many permutations that could play out in the next 6 months which will have a profound effect on the share price. For the record I personally have an earnings estimate of circa £28m - £32m on it for this year (inclusive of PLT) and see its current price of £1.15 - £1.30 to be about fair value at a forward multiple of 40-45 on those earnings. Great business though and see a lot of similarities to G4M in terms of customer focus, deep rooted industry knowledge, genuine product passion and of course the obvious online thingy.

ASOS, not for me I am afraid.

Best wishes.

[allstar4eva] 13/10/2016 21:43

ASOS is trading on 86 for the year just ended and 67 for the year ahead for eps growth of 30% and 29% respectively...

[allstar4eva] 13/10/2016 21:17

Very useful post again Krc thanks. My random estimates were pretty far out as I was thinking of 40% eps growth - not 70% for a PE of 10 but your detailed calcs show that to be incorrect - although it shows that the share price is still potentially cheap if and it's a big IF next year's forecasts can be hit this year.

For the record BOO trades on a pe of 70 for the yr ending Feb 2017 and 56 for the following year I believe.
BOO's forecast eps growth is 54% and 23% respectively (Digital look so could be wrong!).

Shows what there is to aim for here...

[bamboo2] 13/10/2016 21:16

kcr, Great to see your estimates, thanks for sharing.

I dropped a clanger with my trading yesterday due to an error reading my chart. In fact, if you look back at the chart I posted previously, the turn was today. doh. There is another turn suggested by the apex of the rising wedge on results day. It is the proximity of these potential turns that I was attempting to trade. [the implication being that I think the share price will rise next week]

[kcr69] 13/10/2016 20:40

Thanks allstar4eva. In essence you are spot on.

These are my own forecasts (which are aligned relatively closely to broker numbers for 2017/18.)


2016 - 17 Earnings estimate. £2.6m - £3.4m
Market Cap (close of trade today). 64.5m
PE @ 2.6m - 25
PE @ 3.4m - 19

Projected share price estimates at £2.6m earnings
PE of 30 - £3.84
PE of 40 - £5.13
PE of 50 - £6.42

Projected share price estimates at £3.4m earnings
PE of 30 - £5.06
PE of 40 - £6.75
PE of 50 - £8.44

OK so coming up with an estimate for 2017 / 18 at this stage is obviously finger in the air stuff so just for illustrative purposes and so the numbers don't look to exciting lets assume 40% earnings growth. As such

2017/18 Earnings estimate at 40% growth £3.6m - £4.8m
on todays market cap
PE @ £3.6m - 18
PE @ £4.8m - 14

Projected share price estimates @ £3.6m earnings
PE of 30 - £5.39
PE of 40 - £7.18
PE of 50 - £8.98

Projected share price estimates at £4.8m earnings
PE of 30 - £7.09
PE of 40 - £9.45
PE of 50 - £11.81

To take your example of earnings growing at 70% through 2017/18 would give
2017/18 earnings at 70% growth £4.4m - £5.8m

on todays market cap
PE @ £4.4m - 15
PE @ £5.8m - 11

Projected share price estimates @ £4.4m earnings
PE of 30 - £6.54
PE of 40 - £8.72
PE of 50 - £10.90

Projected share price estimates at £5.8m earnings
PE of 30 - £8.61
PE of 40 - £11.48
PE of 50 - £14.34

Its take your pick time but in essence you are right, 70% growth for the remainder of this year and next and at current market value the PE would be 10.

My own personal view which is slightly conservative but forms the basis of my own decisions are as follows

2016/17
Revenue - £61.1m (71.% yr, 155% 2 yrs)
Earnings - £2.6m - £2.8m
PE of 40 - share price £5.13 - £5.75 (by xmas 2016)

2017/18 Growth of 50% blanket
Revenue £90m
Earnings £4.2m - £4.5m
PE 40 - share price £8.33 - £9.00

A myriad of assumptions in all of the above but I guess you have to have a plan, even if it is reworked every other day.

Best wishes.