Somero Enterprise Share Discussion Threads

[glasshalfull] 06/9/2016 08:10

Strong set of results.

finnCap reiterate guidance, tweaking earnings up slightly for FY16 due to a lower tax rate,

"No change to our trading forecasts that we upgraded recently in July.

We have marginally reduced the tax rate from 36% to 35.5%, increasing EPS from 22.5c to 22.7c, up 0.7%.

Following a better than expected interim dividend increase, we have raised the FY dividend from 7.2c to 7.6c, up 5.6%. The shares now trade on a P/E of 9.7x in 2016 followed by 9.0x, or – perhaps more importantly – an EV/EBITDA of 5.0x followed by 4.8x. This looks great absolute value for a group seeing structural and cyclical growth drivers, but also great value compared with its peer group.

Our recently raised TP of 205p is based on a fair value P/E of 12.0x in the current year and 11.0x in 2017 and offers upside of 24%. The strong interim results, positive outlook and attractive rating all point to the shares being well placed to continue to outperform."

Regards
GHF

[carcosa] 06/9/2016 07:49

Where do you get EPS of 10p? I see Basic EPS of 12c so they need to improve on that for the second half of the year to reach forecasts of 25c

[rivaldo] 06/9/2016 07:15

Terrific results - almost 10p EPS in H1 alone!

Plus on track for a 7.5c dividend, i.e around 5.7p. And SOM have an $11m cash pile.

And crucially:

"the solid activity levels from H1 2016 have carried over to July and August as we continue to see significant opportunities across our broad portfolio of markets"

China is improving nicely, the USA is roaring away and other weaker areas are seeing signs of growth.

SOM are managing expectations nice and conservatively, but forecasts of 17.1p EPS this year look like being well beaten imo:

[eggbaconandbubble] 06/9/2016 07:11

Very solid interims

[cockerhoop] 05/9/2016 09:51

Certainly in recent times SOM have 'under-promised, over-delivered' so hopefully that'll continue tomorrow.

[rivaldo] 05/9/2016 07:40

Results tomorrow - remember this from July's trading statement:

"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"

Egg, both Artemis and BlackRock presumably have very large profits - and shareholdings. Top-slicing is perfectly natural given that. In addition, there are always plenty of reasons why a fund sells shares, For example, their holdings in SOM may given the share price rise have exceeded their parameters for holding one stock in their portfolio, or there may have been a change of fund manager.

[cockerhoop] 03/9/2016 21:18

EBaB,

If you trust the judgement of Artemis and Blackrock over your own, perhaps you should just invest in their funds and save yourself the legwork :-)

[eggbaconandbubble] 03/9/2016 04:12

Hello Peeps,
I've had a good look at this one and my only question is: Why have both Artemis and Blackrock dumped shares recently?

[rivaldo] 02/9/2016 14:13

Cheers GHF.

Yesterday the USA announced that July was "the strongest month for non-residential construction on record". This has to be good for SOM:



"The advance in July was led by a 1.7 percent increase in spending on non-residential projects which rose to an all-time high of $429.5 billion at a seasonally adjusted annual rate. Office building and shopping centers both showed solid gains."

[glasshalfull] 31/8/2016 10:37

Thanks for the reminder that results next week Rivaldo. Missed this from my calendar.

Topped up this morning.

Adam, finnCap had this to say in July 2016,

"Following its encouraging earlier AGM trading update, Somero has experienced strong trading in June ending the first half on a high note, and now expects trading for the full year to be ahead of expectations.

Accordingly, we upgrade our forecasts. With a strong second half also expected from its underlying markets, plus better H2 cash generation, the shares continue to look good value. Today's news should be taken well by the shares and we continue to see strong upside over the next year.

The first half has ended strongly, with June experiencing good trading volumes in the US, Europe and China. The sales growth has been broadly based through its product range, aided by new products as well as growth in consumables revenues.

Margins have benefitted from this increase in sales. Management expects market momentum to continue through H2, with cash generation also stronger than the first half following the completion of major capex spend and also the payment of the dividend in the period.

We are upgrading our FY16 forecasts, increasing revenues from $75.1m to $76.5m. EBITDA is raised from $21.1m to $22.5m, giving adjusted PBT of $20.3m, up from $18.9m. This gives an increase in EPS from 21.3 cents to 22.5 cents.

The shares have been strong performers through this year supported by encouraging trading updates and momentum in its customers construction order outlook. Today's statement supports this trend and should give a further boost to investor confidence.

Today's upgrade places the shares on a P/E of 10x and reinforces our positive stance, and we continue to expect strong share price outperformance over the next year."

---

Kind regards,
GHF

[adamb1978] 31/8/2016 07:50

Fool.co.uk is showing 18.47p as the consensus so a 8.6x PE for this year even before you adjust for cash. It looks like their forecast jumped from 16.1p between 1 and 3 months ago, so assume one broker covering them upped their forecasts after the trading statement.

even allowing for some people taking the view that we're late in this economic cycle, the multiple is undemanding

[mfhmfh] 30/8/2016 23:02

Interim results on 6th September - received an email from the company

[rivaldo] 30/8/2016 13:43

Results will be out next Tuesday, so only a week away. We already know that they - and the outlook - will be good from the trading statement.

Latest Finncap forecast for this year is 17.01p EPS, with 18.6p EPS for next year, plus 5.44p and 6.12p dividends respectively.

And SOM has from memory around 17p per share of cash, so the current year ex-cash P/E is somewhere around only 8.3.

[cfro] 21/8/2016 18:00

Worth pointing out the US housing starts data out a few days ago with showed a healthy month on month improvement. In the chart in the link a clear uptrend can be seen that has developed since 2010:

[cfro] 19/8/2016 13:10

Bought some more myself today. As you say interceptor, not long till the results which we know for sure will be v good.

[interceptor2] 19/8/2016 10:29

Just noticed two delayed transaction just reported of 22k and 24k @ 162p which are fairly large for SOM and the reason for the share price advance.

If there is still a large seller in the background then this will help.

[interceptor2] 19/8/2016 10:20

Not long now to interim results 06th September.

Chart looks like it is readying for the next attempt at a breakout in the run up to the results imo.

It would seem that construction activity in the US is stronger where SOM enjoy 70% revenues, very good chance that interim results could act as the next catalyst to the next share price advance.

Looks rather cheap on a current year PER under 10, and this is company that pays a dividend and doubled its net cash to $12.6m last year.

[someuwin] 15/8/2016 10:09

Moving up.

[madmix] 12/8/2016 08:49

Some decent volume this morning though. Should help to clear any large seller.

[cfro] 11/8/2016 18:36

What a disappointing share price performance since last update.

I wonder if there will be another update in Sept - this time even better?

[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.