Keystone Law Share Discussion Threads

[tkamp] 22/3/2022 16:19

Given how upbeat the last trading update was and that there have been no insider sales since then I am not very worried. I sold out of Keystone shares a year ago but have just bought back in. Shares now trade at the lowest valuation since years

[primarch1] 22/3/2022 15:37

The recent update was update was upbeat so shouldn't be anything to worry about,however the directors have been selling off lately so worth watching what comes up in the finals

[mrcwm] 22/3/2022 14:36

Profit warning from Knights Group Holdings (KGH) with a similar business model. KGH down 48% today.

[tkamp] 22/3/2022 14:09

Does anyone know what is up with the share price today?

[km18] 21/2/2022 18:26

...from last year...

Company overview:
Keystone Law was established in 2002 by a group of pioneering lawyers. The firm bases its business model on modern working practices and offers bespoke and dynamic service. KEYS is serving thousands of clients , including RBS, Siemens, Bosch, BBC, through its 350 lawyers and 45 support staff. In their latest report the company confirms its commitment to boost organic growth through recruitment with principles increase from 369 to 386 and pod members from 74 to 83 during the interim. This is further supported by a close look at the financials, as the last acquisition was in 2015. The goodwill has not been impaired during the last 5 years and should be observed with caution, but with a net income matching the whole goodwill amount, this should not drive the bottom line in the red.
Fundamentals of the company are a joy to look at. Revenue CAGR is currently at 21.4%, which is transformed to a whopping 51.1% on net profit level. EPS has grown every year in the past 6 years and ROCE is at 30.7%. The issue is that you pay for this outstanding performance. P/E for 2020 was at 55.4, which if they managed to meet the growth pencilled on Stockopedia will drop to 43 for this period and 38.3 in 2023
The interim report from today presents a growth in revenues of 37.6% compared to last year’s (H1 2021 for them as financial year ends in January) equivalent period, at £33.7m. PBT is 118% up from the H1 2021 at £4.3m and EPS of 10.8p is 109% ahead. Keystone saw strong cash generation and remained debt free. The firm is enjoying high activity levels across all practices and the outlook is for it to remain “buoyant”. With the restrictions relaxing and returning to office the management foresees performance will be “materially ahead of current market expectations” for the rest of the year.

Short analysis:

Cash increased due to strong CFO even in the presence of repayments of lease liabilities
CA/CL = 1.67
Cash ratio = 0.46
Interest coverage = 90.06
P/S TTM = 4.33, which is on the expensive side of the industry
BV ps (2020) = 53, growing at 94.8% CAGR
Operating profit
Gross profit Margin 26.5%, vs 25.8% H1 2021...

...from WealthOracleAM

[woodyjmw] 21/12/2021 16:40

Is the share price still alive? Flat lined.

[tomps2] 26/11/2021 08:37

Alexandra Jackson Interview with PIWORLD


Alexandra Jackson mentions Keystone Law #KEYS at 6m05s in the latest PIWORLD interview

Watch the video here:

Or listen to the podcast here:

[alphabeta4] 17/9/2021 11:29

Agreed, I have good value to £9.64 even if H2 is the same pbt as H1 and £10.51 if H2 revenue comes in at £36m.

[mpg] 17/9/2021 01:26

Quote "We are confident that we will deliver another good performance during the rest of this year which will be materially ahead of current market expectations". The PE maybe high but given the rate of growth, the scalability of the model and the complete lack of debt, I believe that it's justified.

[tkamp] 16/9/2021 11:05

Keystone is an absolute beast, stellar results today. Really kicking myself for selling earlier this year at 630p

[alphabeta4] 16/9/2021 09:28

Wow, 30% beat even if it does the same £4.6m adj PBT H2. The 8% rise today looks a bit of a bargain!

[tradertrev] 15/7/2021 21:51

Keystone is a fantastic business model, but on more than 40x forward P/E you'd be far better off buying GTLY which is also a great business on less than half the P/E multiple. DYOR of course!

[maddox] 15/7/2021 14:24

Thanks MPG for your insights, the legal services market does appear to be hot.

[mpg] 15/7/2021 09:19

Anecdotally.... activity levels appear to be extremely high. In the business sector I work in the call for solicitors is high with a lot of deals being done (transactional work) and disputes to resolve (litigation). The solicitors we deal with have said they are struggling with the level of demand. Combined with the Keystone way of working, tempting more solicitors to work for them, I anticipate that Keystone are trading strongly and managing to expand in a high demand limited supply market.Despite the significant rise the stock still seems to be flying under the radar.

[maddox] 10/7/2021 11:58

We've had a 19.5% rise from c.630p to 753p with little volume and no news or tips, that I can find at least. Presumably there is some accumulation going on.

[maddox] 07/7/2021 23:19

Interesting share price rise but on little volume. Anyone have any insights?

[maddox] 21/1/2021 17:34

We had a inkling that legal services were experiencing strong demand back in October when RBGP reported 'Rosenblatt Limited ("RBL") has continued to trade well with case value and volumes remaining significantly ahead year-on-year.'

KEYS in November were a bit more measured 'performed well throughout the second half to date' despite Covid-19, and 'now expects to deliver profits for the year comfortably ahead of current market expectations' This has now become the far more positive 'expects to report adjusted profit before tax for the period which will be materially ahead of current market expectations'

Always think it useful to understand how the results/updates narrative is pitched and how well performance correlates across the different firms and markets.

Does anyone have good insight into the drivers of this demand? Is WFH generating a lot of divorce cases for example?

[alphabeta4] 21/1/2021 08:40

Very impressive update, taking the usual 'materially ahead' to mean at least 10% then pbt forecast at least £5.61m. Would imply H2 pbt of at least £3.4m.

Cash at interims was £6.9m, £1m dividend paid since, £3.4m x say 80% is £2.72m. £4.4m cash on finals so now have c£4.22m extra cash vs then or c14p a share.

Last year pbt £5.8m so forecast now circa 3% under. Share price back then £6.20, implies (£6.20*0.97)+14p for £6.16 minimum target. Seeing as consensus forecast forward pbt was £6.41m back then and they have just done £3.4m H2 would imply there's a case prospects are more solid vs back then (presumably from underlying business growth from fact they've still been adding partners in the recession). If so then could be further upside on the £6.14. A cautious £6.8m pbt forecast (£3.4m*2) would add another 6% to this target (6.8/6.4) for a target price of £6.52.

All IMHO of course but enough for me to have added this morning, looks a quick 20% available and potential for positive surprises.

[tkamp] 09/1/2021 10:43

Keystone reported 10 new partners joining them in January, which is a great figure, especially on the back of many other sign-ups in H2 2020. I suspect 2021 will be a very strong year for Keystone.

[energeticbacker] 14/9/2020 15:38

Keystone’s platform business model has demonstrated terrific growth over recent years and we are impressed they still managed to attract a significant number of new lawyers during such a challenging period.

The shares trade on a mighty valuation (PER 2021: 31x) compared to other more traditionally structured AIM listed law firms but its platform model has evident appeal and could be increasingly attractive to lawyers in the remote working environment.

More on the Investor's Champion website.

[tkamp] 14/9/2020 12:28

Good set of results from KEY. Still managing to grow revenues when the economy (world) came to an almost complete step is impressive. Hopefully they can soon return to >15% growth rates

[tkamp] 29/8/2020 08:43

I doubt that's true. You're a day trader, I think you barely know what Keystone does.

[halfpenny] 28/8/2020 11:46

KEYS have a number of Partner/Virtual Lawyers who do the work for those who Outsource their legal work. Since Covid the demand has increased tenfold so results next month will be great news.

[tradertrev] 26/8/2020 23:18

This firm's clients are mostly SMEs - they don't have in-house legal teams/departments. It's not an outsourcing play. Good business nonetheless.

[halfpenny] 26/8/2020 12:50

Boozy, you are correct and now is the time to get in as the spread is very close... 600 my target