Interesting RNS this morning, that continues on the path to building their core growth initiative: ."As the UK carries out substantial construction and infrastructure upgrades within the nuclear, power and energy distribution, aviation, water, and rail sectors, Jacques joins as at an important time for Hercules."We are laser-focused on growth in our core sectors and look forward to Jacques' contribution to this team effort as we continue to expand and deliver value for our shareholders and clients." |
Appeared in Stockopedias Zulu growth screen..should get some attention. Ive bought in |
Tipped in the Midas column in today's Daily Mail. |
 "Divestment complete, refocused to enhance growth" - new research available here:
Hercules has completed the transformational divestment of its Suction Excavators business. This transaction was trailed in January as management made the strategic decision to focus on high growth opportunities within the Labour Supply business, particularly across the UK infrastructure sector.
The Suction Excavators business has been sold to SNC Holdings (NW) limited for a total cash consideration of £2.4m. The transaction will materially reduce the Company’s debt and lease liabilities by c. £9m. In FY24, the business generated revenue of £6.0m and a loss before tax of £0.4m.
The result is a more focused group with high growth characteristics, a cash generative business model, and a strong balance sheet. Hercules now has greater firepower to execute its ambitious organic and acquisitive growth strategy
Recent results showed an impressive track record, with a revenue CAGR of 48% in the last 3 years – despite the economic backdrop. We note the attractive valuation and reiterate our forecasts with a 70p / share Fair Value. |
I couldn't join Mello last evening - any feedback?.I see this morning's RNS that the excavators business is confirmed as sold. Accompanied by shareholder friendly commentary - certainly confirmed to have had a very skewed impact on the group financials - DYOR! |
The disposal of Suction Excavator unit has been completed by HERC
As CEO says ''This is a hugely positive development''
The sale materially reduces net debt and ongoing finance charges, enabling HERC to execute its ambitious organic and acquisitive growth strategy |
Just to let shareholders and prospective investors know that Hercules will be presenting on the MelloMonday webinar starting at 5pm on Monday 10th February 2025.
The programme for the evening is as follows:
5pm Keynote Speaker
5:30pm Company Presentation from Time Finance plc
6pm Company Presentation from React Group plc
6:30pm Educational Presentation
6:45pm Company Presentation from Hercules Site Services plc
7:15pm BASH (Buy, Avoid, Sell, Hold) Panel
These are very popular shows with company presentations, fund manager and investor interviews, and panel sessions.
Tickets are still available; for half price tickets enter the code MMTADVFN50. |
Nice write up to go with the nice results.
https://finance.yahoo.com/news/hercules-services-plcs-lon-herc-054320108.html
Edit. Do links not work anymore? I've pasted the article below, formatting is probably all wrong.
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Simply Wall St.
Hercules Site Services Plc's (LON:HERC) Intrinsic Value Is Potentially 98% Above Its Share Price
editorial-team@simplywallst.com (Simply Wall St)
Tue, January 14, 2025 at 5:43 AM GMT 6 min read
In This Article:
HERC.L
+0.79%
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Key Insights
The projected fair value for Hercules Site Services is UK£0.88 based on 2 Stage Free Cash Flow to Equity
Hercules Site Services' UK£0.45 share price signals that it might be 50% undervalued
Our fair value estimate is 20% higher than Hercules Site Services' analyst price target of UK£0.73
How far off is Hercules Site Services Plc (LON:HERC) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by projecting its future cash flows and then discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you.
Check out our latest analysis for Hercules Site Services
Is Hercules Site Services Fairly Valued?
We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
10-year free cash flow (FCF) estimate
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Levered FCF (£, Millions)
UK£8.87m
UK£4.40m
UK£4.54m
UK£4.67m
UK£4.79m
UK£4.90m
UK£5.02m
UK£5.13m
UK£5.25m
UK£5.36m
Growth Rate Estimate Source
Est @ 3.56%
Analyst x1
Est @ 3.13%
Est @ 2.82%
Est @ 2.61%
Est @ 2.46%
Est @ 2.35%
Est @ 2.28%
Est @ 2.23%
Est @ 2.19%
Present Value (£, Millions) Discounted @ 8.8%
UK£8.2
UK£3.7
UK£3.5
UK£3.3
UK£3.1
UK£3.0
UK£2.8
UK£2.6
UK£2.5
UK£2.3
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = UK£35m
We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.1%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.8%.
Terminal Value (TV)= FCF2034 Ã- (1 + g) ÷ (r â" g) = UK£5.4mÃ- (1 + 2.1%) ÷ (8.8%â" 2.1%) = UK£82m
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= UK£82m÷ ( 1 + 8.8%)10= UK£35m
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is UK£70m. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of UK£0.4, the company appears quite good value at a 50% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.
dcf
AIM:HERC Discounted Cash Flow January 14th 2025
Important Assumptions
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Hercules Site Services as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.8%, which is based on a levered beta of 1.380. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for Hercules Site Services
Strength
Debt is well covered by cash flow.
Weakness
Earnings declined over the past year.
Interest payments on debt are not well covered.
Dividend is low compared to the top 25% of dividend payers in the Construction market.
Shareholders have been diluted in the past year.
Opportunity
Annual earnings are forecast to grow faster than the British market.
Trading below our estimate of fair value by more than 20%.
Threat
Revenue is forecast to grow slower than 20% per year. |
Head scratcher |
5*
Hercules Site Services, a leading technology enabled labour supply company for the UK infrastructure and construction sector, posted impressive results for the year ended 30 September 2024 this morning. FY24 was a further record year with Hercules delivering ahead of market expectations, with growth achieved across the Group's Labour Supply and Civil Projects business. The continuing business saw a 28% increase in revenue to £101.9m, a 34% increase in Adjusted EBITDA to £4.7m, 43% increase in Adjusted pre-tax profit to £2.6m and 173% increase in EPS from 2023 reported EPS of 1.27p...from WealthOracle
wealthoracle.co.uk/detailed-result-full/HERC/1134 |
"Strong FY24 results, earnings momentum building" - new research and audio summary here:
Hercules’ FY24 results confirm another record year, with revenue now over £100m as the impressive growth trajectory continues.
The results are ahead of expectations, particularly at the PBT and earnings level. The planned divestment of the Suction Excavators business will allow the Group to focus on its core, capital light businesses, which have significant organic growth potential, demonstrated by our upgraded forecasts for FY25 and FY26.
With earnings momentum building, Hercules’ valuation looks highly attractive on a P/E rating of 12x for FY25 (based on our forecast for the continuing operations).
We retain our conviction in the investment case and our 70p Fair Value estimate. |
There lies the opportunity. It'll probably be trading 50p plus next week. Big investors were happy to load up at 49p....I think there's something major in the pipeline here. Imho |
Why the intense lack of interest here? Results in 2 trading days which have already been flagged as 'well ahead of expectations' while the shareprice is more than 10% lower than it was in September last year, and yet zero trades?
Also interesting that they pay a decent dividend, which they may well increase this time if results support it. |
After news of the proposed divestment of the suction excavator unit, Equity Dev's new analysis approves of the move to focus on its core labour supply business
As you can read / hear audio summary below: |
Disappointing drop from 49p. Good RNS |
"Trading well ahead of expectations"
Link to new research note:
A strong year end update from Hercules this morning confirms another period of impressive organic revenue growth, well ahead of expectations. This prompts 11% upgrades to our revenue and adjusted EBITDA forecasts, sustaining recent momentum into the new financial year. Hercules is led by an entrepreneurial and ambitious management team with additional firepower - following last month’s £8m fundraise - to take advantage of opportunities as they arise.
Hercules expects to report another record year, with revenue, adjusted EBITDA and adjusted PBT for FY24 all well ahead of market expectations. Revenue is expected to be over £105m, an increase of 24% year on year. For us, this prompts 11% upgrades to revenue and adjusted EBITDA forecasts, and a 55% upgrade to adjusted PBT, albeit from a low base.
Each of Hercules’ core divisions has delivered organic revenue growth. The Group’s markets (infrastructure and construction sectors) have been supportive but not without challenges. The performance has been underpinned by Hercules’ own growth initiatives (e.g. the launch of the Hercules Construction Academy) and an ability to respond to opportunities as they arise.
We share the confidence shown by recent supporters of the fundraise and see scope for further operational outperformance as FY25 progresses, with M&A being an obvious potential earnings and share price catalyst. We increase our Fair Value / share estimate from 60p to 70p. |
And still below placing price. |
"and to updating the market on material updates in due course" ....sounds like there is more news to come? |
CEO 'thrilled' as FY24 update expects a record year, with revs (up 24% and at least £105m), adj EBITDA and PBT all seen 'well ahead of market expectations'
Confident outlook too, with 'a lot to look forward to in FY25'
🙌🙌 |
HERC raises £8m to strengthen the Group’s balance sheet and support future growth ambitions.
With a strengthened balance sheet, it looks well positioned and Equity Dev raises their Fair Value from 55p per share to 60p - read/hear their new note: |
Very small director buy a few days ago.
Has only just popped up in my notices.
Funny no mention on any of the posts on here
I have to admit have taken my eye of the ball here |
Today's business update from HERC follows upbeat interim results in June: Labour supply (the largest division) reports more success; Civils Projects is an attractive sector too given need for huge investment.
Equity Development have new research out and retain a 55p/share Fair Value, and highlight a 4.7% dividend yield. Read full note here, free access: |
What's not to like, onwards and upwards, GLA |
"Excellent H1 performance, well on track for full year" (new research report)
Hercules’ H1 results confirm another excellent performance culminating in record revenues, EBITDA and PBT. The Group is on track to meet market expectations for the full year. All three businesses reported double-digit growth for H1, benefiting from underlying market demand, Hercules’ investment in new service lines and technology, as well as a maiden contribution from the Future Build acquisition.
Contract momentum continues, with over £5m in civil projects and new framework agreements signed with Costain and Hill Group. The integration of Future Build is progressing well, and the Hercules Construction Academy is already developing a reputation for first class training. Importantly, H1 was a period of strong operational cash generation, supporting an interim dividend of 0.6p per share.
The outlook statement indicates that Hercules is on track to meet market expectations and anticipates further strong demand for the Group’s services. We also take confidence from recent market indicators with April’s PMI survey highlighting the strongest pace of expansion since February ’23.
In our view, Hercules is a business with good trading momentum, an ambitious management team and a focus on the most attractive segment of the construction market. We see scope for forecast outperformance in the second half, note the attraction of a 4.7% dividend yield, and reiterate our 55p Fair Value / share estimate.
Link to research: |
"Further good growth in H1, in line with expectations"
Hercules’ H1 trading update confirms another period of strong growth, in line with expectations. Revenue in H1’24 is expected to be over £47m, an increase of c.27% over H1’23. This represents c.50% of our FY’24 forecast (£94.7m), suggesting the Group is well on track at the half year stage.
All income streams grew, underpinned by substantial demand from the infrastructure sector, as well as the Group’s own growth initiatives. Contract momentum remains positive, and we note an encouraging trend in recent industry data.
Recent contract successes included over £5m in civil projects and the significant new framework agreement with Costain. UK Construction industry data (PMI) was also positive in April for the second month running, suggesting a more supportive environment overall.
We look forward to further details in the interims on 3rd June and retain our Fair Value / share estimate of 55p.
Link to note: |
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