Somero Enterprise Share Discussion Threads

[grahamburn] 11/11/2016 15:12

Personally, given the company's prime focus is machinery for concrete slab floors for warehouses and supermarkets, I am not too sure that the present discussion about infrastructure spending is particularly relevant to its future success. OK, such spending may well have spin-offs as national GDP grows which are relevant, but, so far as I am aware, Somero equipment isn't used for roads, rail, and bridges etc. etc, though maybe a few public sector buildings (eg large halls in educational establishments?) will require their expertise.

In my opinion, the recent rise in the share price is simply overdue given the announcements of record trading for the current year with significant growth in most of its markets.

[cfro] 11/11/2016 13:57

It is not just the US that intend to spend on infrastrucure, it will also be a policy for the UK too. Central banks/governments are now coming to terms with the fact that monetary policy has probably gone as far as it can go..

Only problem is that any additional spend must be added to the nations debt which particularly in America's case is already way too high.

[rivaldo] 11/11/2016 12:47

Glaws2, just to point out that in addition to US earnings, the dividend is now worth a lot more in sterling terms to us UK shareholders.

[jimbobjames2002] 11/11/2016 12:09

Great to see new highs for SOM, such a good company.

Only caveat I would say is that for all of Trump's big words regarding infrastructure spending, who knows whether he will back it up or not. Everyone knows his tendency to lie and exaggerate! Many of his views and policies are deplorable (denying the existence of climate change, jeopardising the future of NATO etc.), but a huge US infrastructure spend would be great news for SOM.

[breaktwister] 11/11/2016 11:36

I bought back in here as soon as Trump won.

[glaws2] 11/11/2016 11:21

Thanks interceptor

[glaws2] 11/11/2016 11:00

Hang on - how does the sterling exchange rate help us given SOM reports in USD.

[interceptor2] 11/11/2016 09:39

You beat me to it rivaldo, was about to post very similar comments. :o)

Other investors now realizing the opportunities here if Donald Trump follows through with his infrastructure spending plans. As you have mentioned the PER is barely into double digits for the coming year and is still only on 11.4 for current financial year, and this a company with a strong net cash position of £12.6m at the last year end.

It is worth looking back at the last three trading statements released since June 2016, with each statement becoming stronger, the last statement released with the interim results said that strong trading in June has carried over into July and August, if this strong trading continues to the year end then they are likely to be ahead of expectations again.

And not forgetting that since the release of half year results in September, the pound has weakened another 6% versus the US Dollar.

[rivaldo] 11/11/2016 08:51

New highs now.

SOM are still barely on a double-digit P/E based on Finncap's 18.33p EPS forecast for the coming year (which may be increased substantially following the dollar's strength against the pound) - and that's even before stripping out the cash pile.

Given what we can assume is now reasonable certainty for the next 4 years about increased infrastructure spending in the core USA market - plus the likelihood of further inroads in the vast markets of China and India - it might now be a very interesting ride going forward for SOM.

[cfro] 10/11/2016 10:11

This should be excellent news for SOM that will be a major beneficiary of infrastructure spending in the US. Investors are starting to realise that this morning judging by the strong bounce back.

[rivaldo] 10/11/2016 07:29

Indeed - the Mail this morning emphasises this:

"Initially the clear winners appear to be US infrastructure and US businesses. Trump has already pledged to rebuild America’s roads, rail, hospitals and schools"

[pj 1] 09/11/2016 08:15

As long as they train up the additional millions of....immigrants? mexicans?.......errrr those who have not worked for decades? lol

[rivaldo] 09/11/2016 08:06

Almost the first thing Trump just said in his maiden speech as upcoming US President (God help us!) was:

"we’re gonna rebuild our infrastructure, which will become by the way second to none. And we’re going to put millions of people to work as we rebuild it"

Which should be good news for SOM.

[blueeyes13] 31/10/2016 03:00

Deanowls and Interceptor, thank you. I neglected to mention that I already hold AVS albeit only bought in recently when they divested the loss making unit. Better late than never. :-) I hope another long term hold all being well, looks a great company. Will take a look at AMO, SSY and SPE. FOUR was also on my radar but was waiting to see if price dropped back somewhat. Not all good, I lost on JIL from a Simon Thompson IC tip just after Brexit occurred. :-) Thank you once again and apologies for being off topic. Regards

[interceptor2] 30/10/2016 16:29

Hi blueeyes, I did consider a purchase of NFC in July, unfortunately I never did buy. Like deanowls I hold AVS, 47% revenue USA which is also performing strongly, they issued a trading ahead update 01st September, wouldn't be surprised to see another one before finals in January. AMO majority of earnings overseas, issued an ahead update 10th October, could issue another one before results in February.

SSY, over 50% overseas earnings mainly in Europe,last statement was inline but did say they expect to see positive impact from weak pound. SPE, Nearly all earnings overseas, USA 71% and Europe 29%, again I am expecting a positive update.

And then of course we have SOM :o)

Will take a look at BUR and MMX, Thankyou.

[deanowls] 30/10/2016 14:51

Avs blue eyes, big dollar earner

[blueeyes13] 29/10/2016 15:46

Interceptor I'd be interested to know which cos you own on the currency play. I have a few and looking to add a couple more. It's one of reasons I own SOM along with its economic moat among others albeit it's a cyclical stock. I can see myself holding this very long term all being well. BUR my best performing currency play so far, NFC decent too. I tendered my whole holding on MMX for 30% gain but plan to buy back in as think it will drift off a little more. I'm not a big poster and do they allow private messages as appreciate not solely SOM topic? Best wishes to all SOM holders, an excellent company and management in my opinion. Regards

[interceptor2] 28/10/2016 17:28

Appreciate the link rivaldo, There certainly are a number of small cap companies that will benefit from the strong dollar, holding a few that have delivered positive update so far, and few others that I am still awaiting with SOM one of the strongest candidates imo.

[paleje] 28/10/2016 16:08

Cheers rivaldo, makes good sense, there are one or two around like that where fx is going to impact favorably, nice as an extra but not to rely on long term. Good underlying performance comes first, this lot seem to qualify.

[geraldus] 28/10/2016 15:07

Thanks Rivaldo.

[rivaldo] 28/10/2016 12:33

Nice tip for SOM on Investors Champion just now as a dollar earner:



"With the pound struggling at a near three decade low against the US dollar we thought it was appropriate to cast a glance at a few ‘fast growing’ US businesses with lots of lovely US dollar earnings that have found their way across the water onto AIM."

"Somero Enterprises Inc. (AIM:SOM) has its HQ in Fort Myers, Florida and manufactures laser-guided machinery used in horizontal concrete placement, to “advance the productivity, concrete flatness and efficiency of the jobsite”. We last covered the Group in our Blog on 4th March 2016 (‘Where is the value in small caps’) since when the shares have climbed modestly higher to a current 170p having been as high as 188p in September 2016. Key end markets for the Group’s products are distribution warehouses which, due to automation and very high racking, demand perfectly flat concrete surfaces.

Much has been made of the potential growth in China and Europe for its products but, as we commented previously and reflected in the most recent interim results, for us this remains largely a play on the US economy, for the next few years at least.

Interim results for the six months ending June 30, 2016 saw revenue rise 18% to US$39.7m, pre-tax profit up 26% to US$ 10.4m and earnings per share up 33.3% to 12 cents. There are lots of horrible EBITDA references in the numbers but we like to focus on simple cash flow which rarely disappoints with this business with net cash provided by operating activities a commendable US$5.7m in the 6 months and free cash flow US$1.95m after significant investment in their new Fort Myers facility. Net cash at June 30, 2016 was US$ 11.1m.

North American sales represented 75% of the total at US$29.8m having increased 24% in the 6 months. Having disappointed previously, sales to China rose 15% but remain modest at US$3.8m, however this is evidently plenty to go for there.

Management commented how the positive trading momentum in North America has continued into 2nd half of 2016 reflecting a healthy non-residential construction market in the United States driven by demand for new products, replacement equipment, fleet additions, and technology upgrades. The ongoing construction growth and project backlogs their customers are experiencing point to continued solid performance in the North American market for the remainder of 2016.

With most of the big capital expenditure out of the way, free cash should start to flow gloriously again over the next few years. Free cash flow averaged US$9.6m for the 3 years to December 2015 and by our reckoning could be well above US$13m per annum going forward, equivalent to approximately £10.6m (fx 1.22). At the current market capitalisation of £96m that’s a free cash flow yield of approx. 11%. It will be interesting to see how they choose to deploy those lovely valuable US dollars!

We appreciate the cyclical nature of the sector but this little business has weathered plenty of storms before and is a true leader in its niche sector."

[cfro] 25/10/2016 12:00

A little disappointing to see the share price drift but that seems to be the nature of the share price judging by the chart.

We need some more good news on trading to get the share price moving higher again. Hopefully not too long to wait for that.

[pj 1] 25/10/2016 11:00

Not too concerned imran. It seems to like 'arching up'. Long term moving averages still trending up

[imranawan] 25/10/2016 10:16

Any reason for the share price fall in recent days, based on very little volume.