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Severfield Share Discussion Threads
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|gswredland - perhaps a breakout of optimism?|
|Are my eyes deceiving me or does this look like it is to breakout!|
|I'd hope for a nice run-up in the period prior to the prelims given the excellent vibes in the year end trading update.
Results were ahead of expectations, net funds are also ahead, and the outlook is great:
With a good order book, continued strong operational performance and our ability to work across a wide range of sectors, including infrastructure, the UK business is well-placed to deliver further growth towards our objective of doubling profits by 2020. The Indian business continues to perform in a stable manner with the economic backdrop continuing to show signs of improvement following the government's demonetisation programme."|
|Not expecting any significant movement in the share price until June 14th.
I would be expecting the share price to hit 90 plus at this time.|
|Nice end to the week...|
|N+1 Singer today reiterate their Buy and 98p target.|
|More re Peel Hunt's upgrade:
"Severfield building towards growth target, says Peel Hunt
Structural steel specialist Severfield (SFR) is moving up the stepping stones towards achieving its growth targets, says Peel Hunt.
Analyst Harry Philips reiterated his ‘buy’ recommendation and increased the target price from 85p to 90p following a strong second half that means full-year results are expected to be ahead of expectations. The shares were trading flat at 83p at the time of writing.
‘Encouragingly, this performance has been matched in cashflow, with net funds at the year end similarly ahead of expectations,’ said Philips.
‘Less positive was the news that chief executive Ian Lawson has taken a temporary leave of absence due to physical ill health…[we] are confident that the remaining team will continue the excellent progress towards the June 2016 target of doubling 2016 pre-tax profit of £13.2 million within four years.’
He said the targets ‘are simply not reflected in a 2018 price/earnings multiple of 13.6x’."|
|Good old Peel. There was some decent buying today including the closing auction|
|Peel Hunt have today increased their target price to 90p and say Buy:
|CC2014 - central London is like a permanent building site with all the construction work. Walking past the Bank of England, the skyline is one of high rise cranes. Same for areas around Cannon Street, London Bridge and Liverpool Street. It's been like this for years - even the financial crisis in 2008 didn't stop anything and if anything the level of activity seems to be increasing every year. Makes you wonder just who they are building for? Just how many business tenants can the owners have lined up? Happy to carry on holding SFR in meantime.|
|The thing is I walk everywhere in London and I see stuff being chucked up everywhere in the centre.
At every zone 2 and 3 tube stop there's building going on.
I drive down the motorway and there's stuff being chucked up at every major junction.
What I see just doesn't match with the figures. I will have to be patient.|
|"A slowdown in growth was seen across the UK construction sector, led by a weaker rise in residential building activity, while a modest increase in new work contributed to employment levels slowing to a three-month low but remaining in growth mode.
Civil engineering was the sector's main growth engine in March, with data showing a slight rebound in commercial construction activity." H&L.
Let's hope there's good news from India.|
|You should be right CC. But the next move up may have to wait until the year-end results provide confirmation that the good news is a reality.|
|Price has stabilised above 80p now and should be getting ready for the next move up|
|And getting clearer :o))
N+1 Singer today reiterate their Buy and 98p target price.
They've increased their forecasts for the year ending tomorrow to 5.6p EPS, with a 2.1p dividend.
Forecasts for the coming year and 2019 have been left unchanged for now - presumably until after the results are out for more certainty.
They also note that SFR will have £29.7m net cash, rising to £40.1m by March'18.|
|Good to see a clear breakout|
|There was a mention of a special dividend back in FY 2016 RNS
"The Group's business model supports strong cash generation, as has been demonstrated by the rebuilding of a good net funds position over the past three years. This cash generation will support future investment in the growth and expansion of the business, whilst maintaining a strong return on capital discipline, along with the progression of the core dividend. It may also support supplementary dividends without diminishing the good net funds position which is being built up, a position which we plan to maintain to help manage the financial risks inherent in a contracting business."
This was what tipped me into buying in at that point|
Strong revenue growth in H2, margins also improve
Severfield’s UK order book began to pick up at the beginning of 2016 (from c £185m in November 2015 to £315m a year later) and this has progressively fed into its FY17 trading performance. H117 revenue was comparable y-o-y, but a marked EBIT margin improvement was the standout feature of results for the first half. We had factored in a good sales uptick in H2 and it appears that the run rate has exceeded our expectations with y-o-y progress approaching 20%. Importantly, this has not come at the expense of margin, which looks to be at or around 8% in H2 (and 7.5% for the year, +180bp). Additionally, good cash collection and receipt of advance payments give our new estimated year-end cash position of c £30m (vs c £19m at the end of FY16). Taken together, this provides persuasive evidence that the enhanced commercial procedures across project lifecycles introduced a few years ago have been rigorously applied. Elsewhere, the Indian JV trading performance has been stable, as has the local order book (at £40m).
Estimates raised for FY17 and FY18
We have raised our FY17 and FY18 PBT estimates by c 9% and c 5% respectively with increased revenue and margin expectations in both years. FY17 UK revenue throughput – especially on larger projects – has brought the year-end order book back down to £267m; we would like to see how the pipeline converts to new work over the next quarter before taking a stronger view on FY18 prospects. Also, at this stage, we have left our dividend expectations unchanged; firming earnings estimates and good cash performance could support an enhanced payout in due course. Lastly, Alan Dunsmore (group FD for seven years) will assume the duties of Severfield’s CEO during his period of temporary absence through illness and John Dodds (chairman since 2011) will act as executive chairman on an interim basis.
Valuation: Driving outperformance
Severfield’s share price has now outperformed the FTSE All-Share Index over 12 months, 2017 to date and one-month periods. We believe the company is still on track to double FY16 PBT by FY20 (implicitly, PBT c £26m) and the closing year P/E of 14.4x and EV/EBITDA of 8.2x compress meaningfully on this basis.|
|I recall talk about a possible special dividend being considered, can't recall though whether Lawson mentioned it in an interview or reading it in an article.
Or at my age imagining it!|
|New highs now.
N+1 Singer have left their 98p price target and forecasts unchanged at present, but expect them to rise as follows - note also the expected £30m cash pile:
"Impact on earnings & valuation
We expect to increase our revenue forecast for FY16 to just over £265m vs. our previous estimate of £260m, with an operating margin of 7.5% vs. our previous estimate of 7.0%. We expect this to drive a c.9% upgrade to our FY16 PBT forecast to around £19.5m vs. £17.9m previously. We expect net cash to rise to c.£30m in FY16 from £27.3m."|
|It's spotting them BEFORE they get tipped, that's the key thing.|
|Ha ha tell me about t Greenroom. I was trying to get clever and buy at the beginning of the spike and sell at the top. If I'd done it manually rather than trusting the lazy muppets at HL I'd have managed it as well... They spiked my existing Bacanora holding at New Years and I really should have sold the spike there too. Problem is I keep telling myslef I'm a long-term investor and thinking that makes me responsible, when the exact opposite is true... So I should have sold at 9am this morning and taken the (smaller) loss I suppose.
And, oh yeah, I'm stuck slightly in the red in INSE too, though I bought on Shares' recommendation rather than Midas's.
I must be the worst investor on ADVFN. Sell the tips and the news! Everyone else will!|
|SFR's UK order book was indeed £270m on 1.6.16 but had grown to £315m 1.11.16, and now £267m, still very healthy of course.
Whilst a little disappointed in this 'bare bones' update still confident SFR will provide good capital growth over the next few years. So will continue to add.|
|Hopefully you'll be in profit soon. I often find it best to let things cool down if you're following Midas. For some reason Midas tips spike a price 10-20% but they often sell back down again. INSE was another recent example, they have some good picks but chasing the price on the first day after the tip often leads to over paying IMO.|