Senior Share Discussion Threads

[medieval blacksmith] 25/8/2022 11:42

15 years is irrelevant.

[imastu pidgitaswell] 25/8/2022 10:49

Not really my point - it was that no matter what they do, or the external events, they are not generating any increase in free cash flow. Research back a little - and go back 15 years, not just the last 'few years'.

The earnings and growth and dividends you mention - compare them with cash generation. As above, there is a lot of (legal) acquisition and provisions accounting masking going on. You mention that people are too short term and don't focus on long term value - Well I do and I know what I see.

At 30p they were certainly worth buying, and they were worth selling at 300-odd. At current levels, in the current macro-economic environment - they are reasonably priced, no more, imho. You say yourself that "Forward forecast earnings consensus for 2/3 years forward puts it on a PE of circa 14". With all of the global uncertainties, and needing to go forward 2-3 years to see the earnings that give a multiple of 14 - these are not cheap. Never mind the free cash flow...

I'll leave it there - been following for over 15 years, and nothing is changing.

[medieval blacksmith] 25/8/2022 10:40

I'm not judging the business over the last few years for obvious reasons. The pull back in share price has given us opportunity to buy in at value. If you look at the performance of the company over the last 7-8 years non-COVID they had a decent record of retained earnings growth and dividends and intangibles were falling. If everything was great today you'd be buying at a much higher PE with less chance of supernormal returns. You can't have your cake and eat it.

[imastu pidgitaswell] 25/8/2022 10:16

Well it helps - if after 15 years it is not getting any higher and net debt remains at elevated levels then something isn't right...



free stock charts from uk.advfn.com



What wealth creation are you seeing here - share price? Net assets? Cash generation? Pricing power?

They are not a bad business - but they do a lot of accounting wheezes and acquisition accounting which conceals the underlying (lack of) performance.

Cash matters.

[medieval blacksmith] 25/8/2022 10:05

imastu

Wealth creation is not measured by free cash flow.

[castleford tiger] 25/8/2022 09:58

i will be buying more should we test 120
till then i am full
tiger

[imastu pidgitaswell] 25/8/2022 09:58

Except, as posted in years gone by, I still don't see value being created here. Their Free Cash Flow remains, come hell or high water, Brexit or pandemics, stuck at £50m or below. Confirmed again at the half year interims - £20m for the half year.

And yet headline earnings swing around manically, disappear, revive. Yet no additional cash being created.

🧐



and the links in that link - going all the way back to before 2010 and earlier.

[medieval blacksmith] 25/8/2022 09:52

Yertiz

I remember going through exactly the same argument on AstraZeneca only a short while back.

Personally, if I can invest in a stock that grows its earnings and NAV, and with it grow shareholder returns of some form over many years, I'd rather have that than buy a share for a small short-term gain. Every time a PE group takes a listed entity off market it means less choice for us. We then get trapped into a game of short-termism. Knowledge that we have gained about a company and sector is lost in a second and we have to start all over again. I don't want investments to be continually all time consuming. Yes, we have IPOs, but many are now already overpriced before listing and the venture groups just like to push out the leftovers of the meal they have already had. PE groups also have had the meat and spit back the leftovers full of debt.

[roguetraderuk] 25/8/2022 09:21

i am having a hard time getting past the winter recessions coming in the uk and europe. yes some of these industrials do a lot of business away from those regions but for many they are also key markets. i just dont see the point in chasing higher prices here. i having been looking for a pound in snr and it did look like it was going to slog along there until the summer short covering rally began in the states and fed thru to other mkts.

[yertiz] 25/8/2022 09:18

Surely that is exactly the point of investing? Making, and more importantly, realising a profit to be able to utilise your gains? SNR management haven't exactly set the world on fire with their control, have they?

[medieval blacksmith] 25/8/2022 08:56

"Megitt, ultra etc all got buyouts and accepted giving holders a nice return."

Short term profits and then what?

Less long-term investments to choose from.

Listen, Meggitt and Ultra are bought because the PE mob etc.. see the long-term benefits.

It is a shame that the general community of amateur investors can't see past a small profit that'll but them a holiday or a new kitchen refit.

[bldm] 25/8/2022 08:35

I bought this in the 30s when it crashed. Sold it for 149. My worry is the management who rejected an offer of 200 I believe only to linger around 120. Surely, it was in the interest of investors to accept the offer or vote on it at least? Megitt, ultra etc all got buyouts and accepted giving holders a nice return.

[disc0dave45] 04/8/2022 17:53

Fair points.Will keep watching.I'd imagine some will be out at around 165 having made their 25%, so let's see.

[medieval blacksmith] 03/8/2022 19:25

Forward forecast earnings consensus for 2/3 years forward puts it on a PE of circa 14. As earnings are expected to increase in line with forecast aircraft builds etc.. you are buying this stock for where it is expected to be in 2/3 years time. If you believe some form of normality will return this stock is reasonably cheap. If you don't believe some form of normality will return grab your tin of beans and go and sit in your cellar.

[gargoyle2] 03/8/2022 19:06

According to Sharepad, 2022 earnings forecasts have been upgraded since the interims on Monday -- to 3.85p from 3.27p (an increase of 18%). That would put it on a current year PE of 39, but still set to pretty much double EPS next year imo. Analysts playing catch up imo. Rating high, but not unduly so, given that IP and technology that SNR has and the anticipated growth rate imo. As CT says, Lone Star thought 200p would represent good value for them.

[castleford tiger] 03/8/2022 18:20

the bidder at 200p saw value?

[disc0dave45] 03/8/2022 10:48

On a forward PE of 45x, even if their H2 weighted earnings matches the highest in the last 5 years or so it's still on a PE of 32x.FY23 eps forecast to be 7p, still a fairly high rating of 21x (FTSE250 index current PE is 13.8), that's if commercial air miles and Capex recovers to normal levels....which doesn't appear to be the case.Held this some time ago and it is a quality business, but IMO too expensive.Will keep watching though and hope holders do okay and I'm wrong.

[castleford tiger] 01/8/2022 10:55

The easy pickings at 120 May now of gone but this is still very cheap.
My buys look well timed in a difficult market
Keep buying
Tiger

[mackie] 01/8/2022 08:40

This one seems to be well off peoples radar.

[netcurtains] 29/7/2022 07:30

quite large-ish trades after hours at quite high-ish prices. Is that normal for this company?

[medieval blacksmith] 28/7/2022 15:37

:)

Yes, you are right though. The Lone Star valuation still helps provide confidence in the company's forward prospects. The company's value to private equity is still different from that of our own because they would have greater flexibility and more meaningful contribution to final outcome. Buying at these levels and remaining patient I'm sure will deliver good results for shareholders regardless of whether PE remains interested.