Somero Enterprise Share Discussion Threads

[market sniper3] 13/1/2016 10:22

Cracking write up, this Thompson chap seems to have a big following.

[amencorner] 13/1/2016 10:19

Rivaldo, much as I like Somero, it happens to be a significant part of my portfolio, the market seems just afraid of the cyclical nature of the business.

Cannacord as you say, have made their forecasts since the excellent “ahead of expectations” trading statement. However, this forecast only estimates a growth 6.7% growth in eps for 2016 and that in itself is to my mind hardly enough to get the share price moving.

I think that SOM is really good value based on the numbers we have at present but like many holders, am a touch frustrated about how the stock is perceived by the market. You could of course argue that the share is simply overlooked.

Either way, I hope that when the full year results are released on 1st March the outlook statement will be enough to encourage the market to view the stock more favourably.

[3rd eye] 13/1/2016 10:01

Lifted from 111

Aim-traded Somero Enterprises (SOM:139p), a Florida-headquartered company that specialises in the design, assembly, and sale of patented, laser-guided concrete levelling equipment for commercial floors, has beaten market expectations handsomely for the 2015 financial year following a strong operational performance in the final quarter. In fact, sales hit at an all-time high in December, which is not traditionally the strongest month of the year, and with the benefit of an improved gross margin performance, the company now expects to report cash profit materially ahead of current market expectations for the 12-month period.

Demand in the second half of 2015 proved to be robust across the company's core product range, with North America and Europe contributing significantly to sales growth while performance in China was both healthy and stable. It's worth flagging up that year-end demand for its products in North America was predominantly driven by technology upgrades and fleet additions, highlighting lengthy project backlogs for the company's customers that extend well into 2016. Following the announcemnt, analyst Matthew Walker at Canaccord Genuity now expects 2015 adjusted pre-tax profit will rise from $14m to $18.6m (£12.7m), representing a 11 per cent upgrade, based on a 16 per cent increase in revenues to $69m, to produce adjusted fully diluted EPS of 14.9p. Mr Walker has also raised his dividend per share forecast by 11 per cent to 4.5p, up from 3.4p in 2014. And with management guidance pointing towards "another year of growth", and the company in a robust net cash position estimated to be around 14p a share, I feel that Somero's shares should be trading far higher than on a cash-adjusted PE ratio of 8. A forward dividend yield of 3.2 per cent is supportive too.

So, although the shares are trading in line with the level when I initiated coverage ('On solid foundations', 22 Apr 2015), and are just shy of the level at the time of my last update ('Switch on for gains', 9 Sep 2015), I still believe my 185p target price is both warranted and achievable. Trading on a bid-offer spread of 138p to 139p, I continue to rate Somero's shares a buy.

[paleje] 11/1/2016 14:09

ST has tipped these again today, target 185p

[m.t.glass] 08/1/2016 10:12

Possible contenders other than Caterpillar:



I think the likeliest bidder is more likely to be someone smaller than these corporate giants who are mostly into big outdoor machines - or maybe a specialist contractor rather than an equipment maker. Probably not RCR, who I don't think would want to be a manufacturer, but one of their peers or contacts


RCR do already work with Somero

[rivaldo] 08/1/2016 09:14

Nice 130,000 share buy at 139p this morning seems to have got things going.

[danzac39] 07/1/2016 16:49

Caterpillar would not be a likely bidder as they are in the earth moving business. A flooring or leveling company is more likely but there is no suggestion of any bid rumours that I am aware of.

[market sniper3] 07/1/2016 16:49

Superb Day and thanks to all posters for promoting in a collective fashion. cheers.

[rivaldo] 07/1/2016 16:09

Hi Davidosh - I took Jack's age (62) from here:



Quite happy to believe that he's now 68 anyway.

Another presentation would be great, but let's hope your "on the radar of the big construction giants and suppliers" comment is accurate - at a decent premium :o))

[davidosh] 07/1/2016 14:55

I totally agree on most of the points raised today and feel that SOM is still very cheap.

Note how good news travels much faster and the trading update is even earlier than last year plus the final results are going to be a month early as well. I will try to arrange a presentation if the guys are over but as the Agm will be here in April I will ask for a presentation then and try to get more than just the two of us that attended last year.

Incidentally Jack is very much a young looking 68 but he is certainly not 62 as mentioned earlier and his share selling may reflect the stage he is at



I am sure succession planning is a key issue that the Board are always looking at and it should be noted that the chairman is 80 and also sold a few shares I think.

Naturally a company that may need new introductions/changes at the top with strong margins and dominance in its sector is always likely to be on the radar of the big construction giants and suppliers.

Just my thoughts...

[sailing john] 07/1/2016 13:59

Added to existing position today
Failed attempt on the bell (no quote online) so left order at 130
Not filled so bought at 133 this morning
Presumably being held back by general market malaise
Pretty sure Mr Market will like results in March
GL - SJ

[market sniper3] 07/1/2016 13:52

WOW, we really are motoring now. Magninifico.

[shanklin] 07/1/2016 13:40

rivaldo, Adam et al

Thank you for your feedback. Very helpful.

Cheers, Martin

[owenski] 07/1/2016 13:31

'Installed bar' sounds more interesting ;-)

[danzac39] 07/1/2016 12:06

Installed base

[danzac39] 07/1/2016 12:05

Retail investors in this stock always assuming the next cycle will be Another 2008 for somero with all construction stopping banks going bust the global economy collapsing etc. It's very unlikely to happen like that again. That was a doomsday scenario and somero survived it. The next cycle won't be like that. The company will have cash and no debt and a global business with a much larger installed bar of machines.

[rivaldo] 07/1/2016 11:39

Good summary from Paul Scott today:

Http ://www.stockopedia.com/content/small-cap-value-report-7-jan-2016-oil-china-som-117169/

Extract:

"My opinion - this looks to me like a glaring pricing anomaly. I feel that the market is being excessively pessimistic about the company. True, it's highly cyclical - profits dropped off a cliff in the bad recession of 2008, but the company survived & moved back into profit thereafter.

It is now expanding into new markets (China, India, etc), so the next cyclical high in profits should be much larger than the previous one, as it's now a global (as opposed to US) company. Also, there is just more demand for its products, as perfectly flat floors are much more important these days, with more warehouse automation, higher stacking racks, etc.

In my view, the market is missing a trick with this company, and has fundamentally under-priced it. To my mind, the shares are worth 200p+, but as usual that's just my personal opinion, and of course I'm talking my own book - as disclosed at the top of this section."

[breaktwister] 07/1/2016 10:16

Should be the beginning of the next leg up as it is still undervalued at this price. My target 170 but who knows, China is spooking global markets and 2016 may well continue on a bearish path.

[adamb1978] 07/1/2016 09:26

Shanklin - even though they guide at EBITDA level, I don't think its takes a genius to guess the impact on PBT. We know historic D&A and capex so you can take a stab at this years' D&A and we know the balance sheet from Jun so projecting the interest change is simple.

This does still look very cheap at current levels

[rivaldo] 07/1/2016 08:54

Shanklin, Broker Profile Research's note on SOM from Sept'15 is on SOM's web site.

This shows $17.2m forecast EBITDA for 2015, so we can expect historic actual EBITDA to be say $18.5m-$19m at minimum.

This is against a £75m m/cap - also backed up by forecast $8m+ net cash.

[eezymunny] 07/1/2016 08:34

Great stuff from a great little company. My guess is it gets bought by CAT or similar one day...but you must remember that it's very cyclical. Profits will drop massively in any and every construction recession. Very difficult to value. I think I'll wait til it's 30p and everyone hates it ;)