Connect Group – the directors

PUBLISHED: 04 Oct 2017 @ 11:59 | Comments (0) |

Connect (LSE:CNCT), despite standing on a cyclically adjusted price earnings ratio of only 7.6, has a senior management team which receives praise from longstanding shareholders on bulletin boards; even after failing to raise profits for many years.

Shareholders accept the managers have been dealt a very difficult hand, but have played it well. Typical comments:

“Exposed to moribund markets perhaps, but management are clearly managing the business accordingly….free cash flow generation is compelling and the dividend looks both perfectly affordable and secure for the foreseeable.”

“In the past Connect has promised many efficiency savings, and as far as I know has delivered them very well”

“Overall a conservatively managed company that has delivered consistently over many years.”

“Still happy holder as they are well managed.”

“Well aware that this is a dull old fashioned logistics business and the horizon in traditional markets is limited. But at over 8% the regular dividends are plenty attractive already and I consider future free cash flow to be a reasonably stable prospect.”

“Connect has obvious competitive advantage in available synergies. Most of their acquisitions have had a rationale of improved efficiencies. They also have long experience of parcel distribution and, to some extent, of pushing out other smaller players…run pretty cannily for a long time.”

Some worries

There are some real concerns:

“Big question for me is operating margin at less than 3%. In spite of that profits have been incredibly stable.”

“The problem is the main business is in structural decline and Bertrams didn’t really perform and Tuffnells has lots of competition.”

“Connect is trying to reinvest itself in distribution, leveraging its knowhow and existing network, but that market place has got crowded which seems to put a dampener on earnings. Also not convinced that Pass My Parcel is really going to take off……Whatever, this still looks cheap.”

The directors

Mark Cashmore, CEO

Joined WH Smiths News in 1999 after working at Pernod Ricard and Unite……………………………………To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.