Learning Technologies Share Discussion Threads

[jeffian] 24/7/2020 11:05

One of the (the?) key element(s) in the RWS/LTG 'story' is cash generation. Many acquisitive companies build up significant debt on their balance sheets against the (nebulous) 'goodwill' asset of the company acquired but RWS/LTG have a habit of generating sufficient cash from each acquisition to pay down the cost in a fairly short time. Each acquisition, therefore, tends to be 'value accretive' rather than just buying an income stream with a corresponding debt.

[yump] 24/7/2020 10:54

Can't argue with the historic eps growth rate and not surprising the rating has been high based on that. The big jumps in price were the rating x the increase in eps giving a big rerating. But the reverse can happen.

The question is, is that golden period over ?

When companies have a rubbish history, people often say that its the future that's important. The reverse also applies.

Unless I've got it wrong, half year profit is looking similar to the last half.
So I'm not going to just 'believe'.

Are they going to keep growing eps at the historic rate - because surely that's needed to keep this rating ?

[buffetteer] 24/7/2020 08:28

Yump
If you cared to read the reasoning behind past acquisitions you would know that LTG buy under-performing businesses that they can either dramatically improve profitability (People Fluent) or gain cross-selling synergies etc. It is because 2+2 = 5 that the share price is high . When they say there are good opportunities for creating value by acquisition then you should believe them . The eps growth shows the value created thus far. It is not unreasonable to think the same management team can continue to do so . Their track record on wealth creation is excellent.

[jeffian] 23/7/2020 23:04

You have to look at RWS as the template. Same team, same model. You either believe or you don't.

[yump] 23/7/2020 20:45

Whether IC has been right or wrong doesn't change the fact that for the share price to rise on this rating seems a little unlikely. I've been watching this for a while, but if they're on the acquisition path, then they're focussing on revenue more than profit. That's understandable if organic profit growth is unlikely.

What would be interesting is whether acquisitions here can lead to efficiencies, because that is how profit growth can continue significantly.

Its often the case that businesses get on the acquisition trail, when their organic growth is slowing.

If its the case that you have acquire 2 more factories making the same stuff as your main factory and then rationalise the lot, then obviously that's a relatively easy growth path.

Perhaps someone can see how acquisitions can lead to profit growth here. Maybe the idea is just to build a much bigger business and see if it becomes 'tasty' for someone else to bid for.

[microscope] 23/7/2020 15:00

Absolutely aimingupward2, from memory Investors Champion has been negative for about as long a i can remember on this thread, from about 50p i think it might have been! Never did grasp the business model imho.

Consistent and consistently wrong :)

[aimingupward2] 23/7/2020 14:19

Well, yes it is highly valued but that's because it's a cash generative, high margin business in a growing and fragmented market and the well regarded directors are committed enough to hold around 30% of the shares themselves.

[phillis] 23/7/2020 14:04

yes indeed
continues to be richly valued, this despite underlying EBIT growth of a mere 2% and that includes the 2nd quarter contribution from LMS
Still the shareholders have coughed up
so lets see what they do with the money!

[microscope] 23/7/2020 12:47

Couldn't really have expected any more. These things are always relative, and LTG is clearly doing a lot better than most.

That alone should keep it high on investors' radar, together with the clear indication they are confident enough to look at further acquisitions with a strong, proven business model, in a sector where online learning for example is in real demand following Covid..

I'm pleased and more than happy to continue to hold.

[the runt] 23/7/2020 10:53

I agree with jeffian - the reaction is fine, and suggests a level of confidence in the company is already priced in, which in some ways is very reassuring. We need to see some substantive progress before share price moves up significantly.

[aimingupward2] 23/7/2020 10:52

Good point, Alphabeta. You're probably right. They're looking at several but will probably complete only one or two - although they've got plenty of funds available if the opportunities arise. The word 'pursue' rather than just 'looking at' suggests a certain level of intent though.

[jeffian] 23/7/2020 10:36

I thought the market reaction was pretty sanguine. Given the high rating the stock is on, the pedestrian growth doesn't justify it at this point. I accept that Covid19 has impacted on everyone and everything but unless and until they find some way of controlling it and returning to normal (that's 'old normal' not 'new normal'!) this could go on for some time.

[blackfoxtrading] 23/7/2020 10:29

Pretty poor market reaction. You would have thought the share price would gain some momentum. Very disappointing to see. Oh well let’s hope September doesn’t disappoint as they have set a certain level of expectation now.

[alphabeta4] 23/7/2020 10:16

Not trying to be awkward aiming but it could also be that they're highlighting the fact they are looking at several so have multiple ways to spend the money (i.e. because we're looking at several you can expect at least one, we're not just reliant on only one target coming to fruition).

[aimingupward2] 23/7/2020 09:58

I wonder what the suitably vague expression ‘a number of’ means in terms of forthcoming acquisitions by LTG. More than two, surely? Three probably, or four just perhaps. More than four extremely unlikely unless they’re pretty small. All very encouraging, anyway.

[gokarna97] 23/7/2020 07:23

Solid foundation going into H2. I'd be happy with EOD price above the recent placing price. The large MOD contract likely to be signed in November. Fingers crossed for aquisition(s) this calendar year.

[blackfoxtrading] 23/7/2020 07:18

Decent trading update.... let’s see how the market takes to it. GLA.

[christh] 23/7/2020 07:06

Trading update
Profits rise substantially, good results, business in high demand.

150p opening price heading to 170p



Imho

[phillis] 22/7/2020 19:31

LTG needs acquisition(s)

DD not really possible in these times
Draw you own conclusions

[multibagger] 22/7/2020 16:41

Due a TU tomorrow ? It's usually around these dates.

[christh] 22/7/2020 13:18

hi ho short ass

[phillis] 21/7/2020 11:54

Nay nay ramper

[christh] 20/7/2020 17:31

Phillis 20 Jul '20 - 15:58 - 2268 of 2270
There is confirmation from the horse’s mouth

you are impersonating a horse now??????????????

[blackfoxtrading] 20/7/2020 16:46

I can’t see that info on their website. What does it say? Even better... can you share a link?