Somero Enterprise Share Discussion Threads

[rivaldo] 01/8/2016 09:06

Hopefully after today's appointment as NOMAD Finncap will give SOM a nice push.

In the meantime I came across this little update which hasn't been posted before:

http ://www.stockopedia.com/content/sif-portfolio-i-add-zulu-pick-cambria-automobiles-plus-an-upgrade-for-somero-142436/

"Somero upgrades profit guidance

I won’t go into Somero’s latest update in detail, as Paul Scott covered it in his report on Tuesday. But in case you missed it, SIF portfolio stock Somero Enterprises said on Tuesday that full-year profits would be slightly ahead of expectations after a strong close to the first half.

Most of Somero’s profits come from North America, where Somero says activity was “particularly strong”. However, what’s perhaps more encouraging is that the group said that China, the Middle East and Europe also contributed to overall growth. Somero’s growth potential, in China in particular, is a key attraction of the stock for me.

The update appears to leave Somero trading on around 9.6 times earnings, or less if you strip out the firm’s net cash balance. The shares have risen by 10% since I added them to the portfolio and remain attractive, in my view."

[cfro] 31/7/2016 22:28

How on earth these didn't breakout into new high ground on Friday i will never know. The buying pretty much all week has been relentless..

Maybe we will wake-up to a nice move at the open in the morning.

[interceptor2] 28/7/2016 10:46

Thanks for the welcome rivaldo.

Since SOM reported their positive trading update, I have read that construction activity in the US is becoming stronger, which ties in with SOMs statement. Bodes well for second half because SOM revenues are 68% from the US.

Having said 6 months into the financial year that they expect results for full year slightly ahead of market expectations, there is a good chance of a trading update during H2 that will be even more positive imv.

[rivaldo] 28/7/2016 09:14

Good to see you here chaps - hopefully we'll see a breakout any day now.

I'd certainly expect a run-up to the 6th September results given we now know that H1 trading was good, and that SOM are already saying the full year will be ahead of expectations.

[interceptor2] 26/7/2016 16:09

Welcome Saucepan, good to see you here.

As you say they are sitting right at the breakout level, with healthy demand for shares this week, so technical breakout looking close if demand continues.

[saucepan] 26/7/2016 11:19

Hi folks. I joined you today. Thanks ic2 and cfro for the heads up. Primed for breakout?

[rivaldo] 25/7/2016 09:45

New highs now - and buying at the full 170p offer price.

[rivaldo] 21/7/2016 13:47

Cheers - that's very encouraging, and reinforces the news I've been posting here.

Methinks SOM still has some way to go from here.

[smallcapinvestor1] 21/7/2016 11:57

Up today after beat from United rentals in the u.s. It shows a strong north American construction market. Ashtead biggest riser in the ftse100 for the same reason.

[rivaldo] 21/7/2016 11:29

A shortage of stock here? A mere 5k of buys today has triggered a big widening of the spread.

[rivaldo] 20/7/2016 12:09

Lots of small buys this morning. Perhaps tipped somewhere, or perhaps due to Finncap's confidence and increase in their target price to 205p yesterday.

[rivaldo] 19/7/2016 12:45

..and importantly, Finncap has now increased its price target to 205p (from 185p):

[rivaldo] 19/7/2016 10:09

Cheers jambo192. Good to see a tick up today after some large share volumes going through.

Finncap's forecast EPS per Paul Scott is 22.5c, i.e 17p EPS.

With around 17p per share of cash, if you strip out that cash pile the adjusted P/E at 163p is still only 8.6 for the current year.

[rivaldo] 15/7/2016 10:37

SOM recruiting in China...

hxxp://www.somero.com/company/somero-enterprises/employment/district-sales-manager-china

[rivaldo] 14/7/2016 14:36

Shares Mag today has a "Play Update" on SOM and says "keep buying":

"SOMERO ENTERPRISES (SOM:AIM)

US-BASED MACHINERY manufacturer Somero Enterprises (SOM:AIM) has announced that it is trading ahead of market expectations for 2016.

The company makes patented laserguided equipment which automates the spreading and levelling of concrete for commercial flooring. We added the company to the Plays portfolio as a tangential beneficiary of the e-commerce trend.

We believe the continuing shift towards online shopping will drive demand for its expanding product range which can create the almost perfectly flat concrete floors required in retailers’ warehousing centres.

The latest update on 12 July 2016, which follows a robust statement last month (6 Jun), suggests the first half has ended strongly with June seeing good trading volumes in the US, Europe and China.

House broker FinnCap has upgraded its pre-tax profit forecast from $18.9 million to $20.3 million.

Canaccord Genuity, which rates the stock a ‘buy’ and recently increased its
price target to 200p, comments on the positive valuation implications of sterling weakness: ‘With numbers reported in USD and a GBP share price,
the shares are now trading at an increasingly attractive multiple, with a price to earnings ratio of 7.9 for FY16E and a free cash flow yield of close
to 10% in FY17E as capex normalises.’

SHARES SAYS:
We are encouraged by the performance of the business. Keep buying. (TS)"

[rivaldo] 13/7/2016 09:27

SOM have just been tipped as a "Brexit-proof small-cap with big growth potential":



""Significantly stronger" trading

Somero Enterprises (LSE: SOM) makes equipment that's used by construction firms to produce perfectly flat concrete floors for warehouses. Somero said today that trading in June was "significantly stronger" than both the previous month and the same period last year. Management now expects full-year results to be "slightly ahead of current market expectations".

Most of Somero's profits come from its home market of the USA. It's also working hard to expand in China, where the high-spec floors produced by Somero's equipment are relatively new.

Somero shares currently trade on about 9 times 2016 forecast earnings and offer a 3.5% forecast yield. The group has ample net cash and strong cash flow. I think further gains are likely."

[rivaldo] 12/7/2016 22:38

Canaccord say Buy today, and have a 200p target:

[rivaldo] 12/7/2016 14:01

Paul Scott has updated today with his views on SOM - Finncap have increased their forecasts (hope he doesn't mind me copying with the link):

http ://www.stockopedia.com/content/small-cap-value-report-12-jul-2016-asc-gfrd-nrr-beg-som-wjg-142184/

"Trading update - a pleasing update from this US-based global supplier of laser-guided concrete laying machinery;

(extract from RNS)...trading in June was significantly stronger than both the previous month and when compared to a year ago. This was led by particularly strong activity in North America; with China, the Middle East, and Europe each contributing satisfactorily to overall growth.

The strong performance in June and the continuation of the positive trading environment together with margin improvement and solid operating cash flow generation mean the Company now expects to report results slightly ahead of current market expectations for the full year ending 31 December 2016 (extract ends).

Good stuff.

Finncap has edged up its forecasts for 2016 from $18.9m to $20.3m at the adjusted PBT level. This translates into forecast adj. EPS rising from 21.3c to 22.5c. There's obviously a translation benefit into sterling too.

So at a rate of £1 = $1.315, I make that 2016 forecast EPS of 17.1p, so the PER is only 9.6.

Net cash was last reported at $12.6m, which is likely to have risen since then. There's also a translation benefit into sterling, so this is £9.6m, or 17.0p per share - quite useful. Strip that cash out, and the ex-cash PER drops to only 8.7.

My opinion - we have to remind ourselves that this is a highly cyclical business. So at some point, we don't know when, earnings are likely to fall. I doubt we'll see such a dramatic fall as happened in 2008-9 though. Also the company's balance sheet is now very much stronger than it was then.

It's good to see Somero making positive noises about other markets too, not just its core US market. I think there's considerable scope for Somero to grow its overseas markets, and it's that potential upside which is my main interest in the company, as the peak of the cycle this time could be a lot higher than the last peak, if they conquer new markets where they currently only have a toe hold".

[discodave4] 12/7/2016 10:29

Foreign exchange impact for year end 2015 was only a loss of $43k (2014 was a loss of $122k).DD

[cfro] 12/7/2016 09:44

Opened a new position this morning.

No mention of any currency movements in the trading statement but that is understandable given that we are only half way through the year. I suspect we will see some clarification on this on a much later TS.

[smallcapinvestor1] 12/7/2016 09:23

I've alway thought to myself if this company was 100 or 1000 times the size it would be exactly the type of business that Warren buffett would buy. It meets all of his criteria.

[rivaldo] 12/7/2016 09:12

Indeed - and the dividend in sterling terms will probably have increased to around 5.5p or more now at current rates.

Great to see China contributing to growth again now. Can't wait to start seeing the investment made over there start to take off as it will be a gamechanger.