Somero Enterprise Share Discussion Threads

[ragehammer] 16/1/2017 13:04

Tipped by Simon Thompson again in the IC. Target price upped to 275p

[interceptor2] 16/1/2017 08:16

Noticed that there was strong buying on Friday no doubt partly caused by a positive mention by Robbie Burns to his followers.

Such a good update last week with positives on many fronts and unexpected news about high cash levels and the possibility of a special dividend. And SOM is likely to see major benefits from the anticipated infrastructure spending in the US where they receive 70% of revenue.

Agree with others here that 300p is a realistic target price and could reached rather quickly, because SOM still look priced at a low valuation for a company with such strong growth prospects.

[cfro] 13/1/2017 16:17

Fantastic finish here....

[rivaldo] 13/1/2017 08:16

Thanks chaps, good news. 300p would be nice....

And to make it a hat-trick of tips, it looks like the IC is very positive too:



"Upgrades for Somero Enterprises

Whether or not Donald Trump ultimately proves to be a boon for US infrastructure, trading is already looking very strong for Florida-headquartered concrete levelling equipment specialist Somero Enterprises (SOM)......"

[tanneg] 13/1/2017 06:18

And by The Naked Trader

"I picked up some more Somero (SOM).

Already in a nice profit with this one but what a fantastic trading update on Tuesday.

Results are ahead of expectations and significantly cash has gone well ahead of expectations. It is also on a real roll which could see the price push on up to the 300p area - a really lovely top up and hold for me. Could be a massive winner in 2017."

[someuwin] 12/1/2017 21:57

Tipped in Shares today.

Article concludes with...

"SHARES SAYS:

We tipped this stock a year ago and it has since risen by 68.5%; a superb result. We remain big fans of the company as the stock isn't overly expensive and there is a supportive backdrop amid implications that Trump wants to bring manufacturing back to the US."

[croasdalelfc] 12/1/2017 17:36

And they are costing about $1.5m for the new HQ in the 2nd H

[grahamburn] 11/1/2017 19:28

That deduction is not necessarily correct, bestace. Indeed, it is demonstrably incorrect.

The statement yesterday said:

"In addition, the strong cash generation of the business has built up cash reserves in excess of the Board's targeted net cash level of US$ 10.0m. The Board plans to review its cash position alongside cash requirements for current business needs and future investment during the first half of 2017. The Board will then assess the level of excess cash that may be subject to distribution back to shareholders through a special dividend later in 2017."

The reference to the targeted net cash level of US$10m became company policy in the light of the difficulties which the company faced in the last major recession. During that time, the company almost hit the buffers because it had hardly any cash resources to ride out the downturn in its highly cyclical business. In effect, that figure should be regarded as the company's "rainy day fund" which is tucked away for the next downturn.

The next sentence in the paragraph above indicates that the board also requires additional cash resources for "current business needs" (eg working capital, marketing etc) AND "future investment during the first half of 2017" (ie R & D).

Now, the Board itself doesn't know right now what those two figures might add up to - could be a $2M or $5m or anything between or above. So, come the 2017 half year, there may be $1m spare or $5m spare or any other figure, depending entirely on the Board's assessment of cashflow at the time and future investment requirements.

In short, you cannot simply subtract $10m from (the projected) $18.7m to arrive at the possible size of the special dividend, if any. The wording of the statement implies that there WILL be a special dividend, but it might well be quite a modest one. IMO there's a reasonable possibility of, say, doubling up the projected annual dividend, or something close, but I wouldn't bank on your 15.5c prediction - or even my own guess, for that matter.

[bestace] 11/1/2017 14:23

A cash balance of $18.7m implies a potential special dividend of 15.5c (12.6p) if they retain $10m, if I've done my sums right.

[rivaldo] 11/1/2017 11:24

FYI Finncap have a forecast cash pile now at $18.7m - 12% of the m/cap.

They also go for 26.1c EPS this year. If you strip out the cash SOM are still only on a single-digit ex-cash P/E.

Plus the forecast divi is now 11c, i.e around 9p. Finncap summarise:

"The group has announced a positive year end update, with a stronger finish
to the year delivering sales slightly better than expectations. Operational
gearing results in a 7.5% increase in EPS. Cash generation is significantly
better than expected. As a result, we increase our price target from 205p to
254p, based on a fair value P/E of 12.0x for 2017. With healthy growth set to
carry on, the shares should continue to show robust momentum, with the
potential for a special dividend an additional positive."

[ggbarabajagal] 11/1/2017 09:07

looked at it, didnt buy. My bad

[rivaldo] 11/1/2017 07:25

SOM are positively viewed here FYI:



"Beating expectations

Shares of laser-levelled concrete floor specialist Somero Enterprises (LSE: SOM) rose by 8% this morning after the group advised investors that full-year earnings before interest, tax, depreciation and amortisation (EBITDA) should be “comfortably ahead of current market expectations”.

Cash generation has also been strong. Somero’s year-end net cash balance is expected to be “significantly ahead of market expectations”. As a result, Somero has increased its dividend payout ratio from 30% to 40% of earnings, and is considering whether to pay a special dividend in 2017.

Somero’s speciality is making the equipment required to produce perfectly flat concrete floors for large warehouses. Modern high racking systems require a level floor, and this is a growth business. The group said trading was “solid” in core markets, with Europe, North America and Australia all contributing to growth. Trading in China — a huge potential market — remained “healthy”.

The company’s share price has now risen by an astonishing 2,500% over the last five years. Somero went into the last recession with too much debt, and narrowly avoided disaster. The risk of another cyclical downturn is real, but the group’s management have been much more conservative with financing this time round. Somero has almost no debt, and management plans to maintain a $10m net cash buffer to protect against the costs of a future slowdown.

After today’s gains, I estimate that Somero shares trade on a forecast P/E of about 11, with a prospective yield of about 3.1%. If I was lucky enough to hold the shares, I certainly wouldn’t sell."

[3rd eye] 10/1/2017 16:24

Somero lifts expectations for revenue, EBITDA
Tue 10 January 2017 11:50 | A A A

Hargreaves Lansdown.

(ShareCast News) - Somero updated the market on its trading for the financial year to 31 December on Tuesday, saying that in the six months since its first half update, the company continued to deliver profitable growth and cash generation.

The AIM-traded firm said that due to a strong finish to 2016 combined with continued margin improvement, the board now expected to report revenue slightly ahead of current market expectations and to report EBITDA comfortably ahead of current market expectations for the full year.

In addition, given the strong cash generation of the business, Somero now expected to report net cash as of 31 December significantly ahead of market expectations.

"Demand in the second half of 2016 remained robust across our core product range with particularly strong interest in recently launched new products, the large line S-10A and small line S-940 Laser Screed machines," Somero's board said in a statement.

"Also contributing significantly to growth during the period were sales of large line S-15 Laser Screed machines, STS--11M spreaders, 3-D Profiler Systems, and parts driven by the high utilization of our installed base of equipment by customers."

Geographically, second half performance in the company's core markets was said to be solid, with Europe contributing significantly to growth, North America contributing satisfactorily to growth and trading in China remaining healthy.

Trading in Latin America and the Middle East improved considerably in the second half of 2016, as expected, with Australia also contributing "solidly" to growth during the period.

"In Southeast Asia, India, Scandinavia, Korea, and Russia, while trading levels were in line with or down somewhat from the prior year, interest levels in our products remain encouraging in each of these territories and we see considerable growth opportunities going forward."

Following record results in 2016, the board said it remained confident in the company's ability to deliver another year of profitable growth in 2017 based on healthy market conditions in its core markets, and encouraging growth opportunities in our other territories.

"The board's confidence is further supported by encouraging pro-growth corporate tax reform and fiscal policy proposals in the United States.

"In recognition of Somero's financial strength, strong cash generation, and our confidence in the 2017 outlook, the board is pleased to announce that it has approved an increase to the company dividend payout ratio to 40% of adjusted net income."

Somero confirmed that increase was from the previous 30% payout ratio in effect for 2015.

It said the change would become effective with the final 2016 dividend to be announced with Somero's final results for the year ending 31 December 2016, which were scheduled to be released on 15 March 2017.

"In addition, the strong cash generation of the business has built up cash reserves in excess of the board's targeted net cash level of US$ 10.0m.

"The board plans to review its cash position alongside cash requirements for current business needs and future investment during the first half of 2017.

"The board will then assess the level of excess cash that may be subject to distribution back to shareholders through a special dividend later in 2017."

[rivaldo] 10/1/2017 13:56

Canaccord also being rather cautious, again presumably leaving room to upgrade their target price further after the results:

"1237 GMT Somero Enterprises Inc shares trade 10% higher at 240p. The manufacturer of laser-guided equipment expects 2016 earnings to exceed current market expectations and has raised its dividend payout ratio to 40% from 30%. This prompts Canaccord to lift 2016's Ebitda expectations by 6.5% to $24M. Somero also said cash reserves has exceeded the targeted net cash level and adds that it will review its cash and consider a special dividend later in 2017. In addition to the potential payout, Canaccord expects the group to review its needs for further investment and has raised net cash expectation to over $18.4M from $16.2M for FY16. Keeps a buy rating and 250p price target on stock"

[grabster] 10/1/2017 13:01

Exactly 3 years ago today, this thread began after an exceptional upward run that some might have thought was as far as it might go. It did take two years to convincingly pull away, but the share price has doubled in the past year. Congratulations to all who bought into this story and stayed onboard.

[3rd eye] 10/1/2017 12:36

Investoirs Chronicle.

Whether or not Donald Trump ultimately proves to be a boon for US infrastructure, trading is already looking very strong Florida-headquartered concrete levelling equipment specialist Somero Enterprises (SOM). This morning, shares in the Aim-listed company jumped 8 per cent after a trading update suggested full-year net cash, cash profits and revenues would all be ahead of expectations. The chief contributors to growth in the latter half of 2016 were the European division, and China, while domestic growth was described as “satisfactory”. Our successful buy call is under review.

[pj 1] 10/1/2017 11:39

One hell of a Purl this one............ :-//

[cfro] 10/1/2017 11:28

That would have been one helluva sized jumper if you had have done hpcg! :0))

[hpcg] 10/1/2017 11:22

Wearing the cap of captain hindsight, I have wasted my time the last 5 years. Jan 2012 I should have just lumped everything in here and taken up knitting. That is some chart.

[my retirement fund] 10/1/2017 11:00

That's some volume isn't it

[cfro] 10/1/2017 09:59

Brilliant trading update this morning, just what we were all looking for. :-)

30% increase in divi let alone a potential special divi later this year.

Pe still less than 12 and US growth prospects all to play for...

[nfs] 10/1/2017 09:40

I bought more todayUsa is their biggest revenue generator and we know that clown in the White House from Jan 20 will be enabling big spending

[hpcg] 10/1/2017 09:12

Dollar earnings too. Lovely announcement. Just the payout ratio change lifts the dividend by a third, never mind the net income. Having said that the ROCE they produce means I'm happy for money to plough into the business, though not at the expense of eating our own margin. AdamB1978 - I have to agree this is still far too cheap. Time to average up.

[smallcapinvestor1] 10/1/2017 08:50

Finncap upgrade Increase price target from 205 to 254At 254 p/e of 12 for 2017F/c sales for 2017 are upped to $83.6m2017 Eps upped to 26.1c or 21.5p2017 yield f/c 4.2%

[rivaldo] 10/1/2017 08:49

Finncap have lifted their target price to 254p (from 205p).

I suspect this is an initial reaction which will enable them to further lift their target price once the prelims are issued.