Somero Enterprise Share Discussion Threads

[rivaldo] 30/3/2017 10:23

A notably exact £1.5m of shares sold at 312.5p this morning - and an immediate upward turn. Despite being ex-div today :o))

[interceptor2] 29/3/2017 16:39

The dividend is for 8.6c equivalent to 6.88p and a special dividend will be decided later on in the year.

Appreciate the articles rivaldo, I think we are all agreed that SOM is a very attractive takeover candidate. I would prefer to not see a takeover, hopefully the share price will continue to re-rate much higher which might put off any bargain hunters.

[panic investor] 29/3/2017 16:33

7p I think

[saj3] 29/3/2017 16:26

Does anyone know how much the divi is? And if any special divi is getting paid tomorrow?

[saj3] 29/3/2017 16:01

I think it's ex divi tomorrow

[smallcapinvestor1] 29/3/2017 15:41

I imagine he means somero can build the market share of laser screed machines as a part of the overall concrete levelling market. In China for example 99% of concrete floors are leveled without laser screeds.

[cfro] 29/3/2017 15:27

Thanks again riv.

Pleased to see new highs today.

[rivaldo] 29/3/2017 14:26

Positive comment yesterday about SOM from Giles Hargreave, who holds it in the Marlborough Nano-Cap Growth Fund. I would only add that SOM already have a dominant global share in their market!



"SOMERO

Somero manufactures laser screed machines which ensures concrete flooring is laid absolutely flat, which is vital for the efficient operation of warehouses and distribution/ retail outlets. It is a leader in this niche market in the US and it is now expanding rapidly in a number of emerging markets. China, for example, has undertaken mass upgrades to their distribution and warehousing facilities to increase productivity and efficiency. We have a high regard for the existing management who continue to expand the Group carefully, monitoring cash flows and working capital carefully. As a result, we think that there is a good possibility that the Group will build a significant global market share over time. "

[cfro] 28/3/2017 13:48

Nice article riv. Thnks.

I think we are all left wondering how long it will be before the bids come flying in.. personally!

[smallcapinvestor1] 28/3/2017 12:46

Nice article. Only issue remember currently it has no direct competitors with our without deep pockets.I assume he means other flooring companies looking to expand into new areas such as concrete leveling.Private equity is likely but not desirable.I think a Chinese buyer is most likely once they become better known in China

[rivaldo] 28/3/2017 11:59

Newly tipped as a takeover target:



"Since Donald Trump’s surprise election win, shares in small-cap laser-guided equipment manufacturer Somero Enterprises (LSE: SOM) have been on something of a roll. Priced at 173p on November 9 — the day after the vote — they’ve since climbed to 300p (+73%) following encouraging comments regarding infrastructure spending from the new president. Given that the vast majority of sales comes from the US, this kind of reaction is hardly surprising.

But it’s not just political influence that should make Somero’s stock more attractive to deep-pocketed competitors. Its most recent set of annual results confirmed that 2016 had been an “exceptional year” for the company.

Thanks to six of its 11 geographic markets growing in 2016 (led by North America, Europe, Australia and China), Somero is heading towards achieving its five-year goal of becoming a $90m revenue business in just three years. In the 12 months to the end of December, revenue climbed 13% to a record-breaking $79.4m, with adjusted EBITDA rising 23% to $24.6m. Profits before tax came in 22% higher at $21.3m, with cash flow from operating activities rising 17% to $16.9m.

For those who like robust balance sheets, Somero won’t disappoint here either. It had $20.2m in net cash at the end of the year — a 60% increase compared to 2015. The massive 61% hike to the total dividend over the last year is just another indication of how financially sound this business is.

With its new product pipeline continuing to generate revenue growth and shares still trading on a fairly undemanding valuation of 13 times forecast earnings, I’m left wondering how long it will be before the bids come flying in."

[rjetrades] 27/3/2017 15:14

Is anyone struggling to buy? Unable to buy in my barclays ISA

[rivaldo] 27/3/2017 14:08

FYI, here's Simon Thompson's tip for SOM from last week (thanks mate):

"Aim-traded shares in Somero Enterprises (SOM:282p), a Florida-headquartered company specialising in the design, assembly and sale of patented, laser-guided concrete levelling equipment for commercial floors, have taken out my upgraded 275p target price ('Four trading plays', 16 January 2017), and doubled in value since I first recommended buying at 140p ('On solid foundations', 22 April 2015).

The operational performance fully supports the ongoing re-rating: the company has just posted a 27 per cent increase in full-year EPS to 26.2¢, better than analysts had expected, and the trading outlook prompted analyst David Buxton at brokerage finnCap to upgrade his current year EPS forecast by almost 5 per cent to 27.4¢. As I have pointed out before, not only is the business heavily exposed to the buoyant US market - the region accounts for three quarters of Somero's revenue - but trading activity is being boosted by a combination of new product launches and a healthy non-residential construction market, both of which are supporting demand for replacement equipment, technology upgrades and fleet additions. For good measure, the company is a likely beneficiary of the Republican administration's plans to grant US$137bn (£112bn) of tax credits to construction companies to leverage US$1 trillion of infrastructure investment, and proposals to cut corporation tax to further stimulate investment spend.

A key take for me in Somero's 2016 financial results was the robust cash generation which has boosted closing net funds by 60 per cent to US$20.2m, a sum worth almost 30p a share, and that's after taking into account US$4.4m of capital expenditure and the payment of US$4.2m of dividends. This has enabled the board to lift the dividend per share by 61 per cent to 11.1¢ and a special dividend is likely to be announced later this year. Mr Buxton predicts a 17.8¢ special payout in addition to the normal dividend announced, implying the shares offer a prospective dividend yield of 8.4 per cent. That's attractive as is a cash adjusted forward PE ratio of 11.

In the circumstances, I have raised my target price from 275p to 325p to value the company on a more reasonable cash adjusted PE ratio of 13. Buy."

[rivaldo] 26/3/2017 07:57

Cheers penpont.

Yesterday's Times had this quote from a robotics company CCO noting the requirement for flat floors in warehouses to enable the coming age of the robots. Another reason for SOM's products to flourish:



"In other areas dependent on European workers automation is already taking root.

“The area which is closest to market and where we’re seeing a lot of demand is for warehouse automation,” Mr Ensor said. Tharsus recently had its technology installed at Ocado’s latest, and most automated, distribution centre.

“There’s a lot of talk about the rise of robotics, which is going to happen, but it’s slow and steady. The warehouse environment is indoors, there’s a flat floor, it’s well-controlled,” he added. “Robotics can deal in those environments. It’s absolutely happening today."

[penpont] 24/3/2017 09:21

IC updated on 20 Mar:


Somero Enterprises (SOM) is the kind of corporation Donald Trump would love, assuming the US president hasn't already encountered the Aim-traded group through his hotel empire. Not only does the concrete levelling specialist develop high-tech construction equipment, but it is the dominant brand in its field. Better still, it even sells machines to China. And to cap it off, the manufacturer of concrete screed spreaders is based in Fort Myers, just a two-hour drive across Florida to Mar-a-Lago, Mr Trump's club and retreat.

The company also boasts a recent track record that any business figure would be proud of. In 2016, Somero again improved its profitability, increasing the operating profit margin for the sixth year in succession - this time by 168 basis points to 26.7 per cent - while boosting net income by nearly a quarter to $14.3m (£11.7m). The latter was done without much shrinkage in the tax charge, although proposals for changes to US corporate tax and infrastructure-focused fiscal policy could help earnings on two fronts. Elsewhere, good sales growth in Europe, China and Australia translated to operating cash flows of $16.9m in the period, another company record.
Broker FinnCap expects adjusted pre-tax profit of $24m and EPS of 27.4¢ this year, up from $22m and 26.2¢ in 2016.


IC VIEW
The shares enjoyed another 6 per cent bump on results day, as investors bought in on the prospect that the surplus cash on the balance sheet would translate into a special dividend in 2017. That helps explain a higher earnings multiple than previous years, although the momentum is still not reflected in a PE ratio of 12. As per our original advice (152p, 10 Mar 2016), we remain buyers.

[rivaldo] 24/3/2017 07:37

Good to see the Naked Trader buying in yesterday (and buying SCH too, which I also own):



"The other is the lovely Somero (SOM) . That just had to be bought - in the right area at the right time with great fundamentals.

One mag today has also written a story suggesting it could be a takeover target. If they are right, I wonder whether there could be substantial upside up to 450p?

Although a US share it is buyable in an ISA but some firms ask for a form to be filled out first."

[chashley1806] 23/3/2017 21:40

Hi saturn5I'm relatively new to investing, but have been invested in Somero since last July buying in at 168p, and am now nurturing a lovely profit!Smugness aside, I'm in two minds on where the share price will go next. For me, it will either continue going upwards, or will tread water. However, I can't see it going down any time soon. The main factor behind why it may continue rising is that the fundamentals are rock-solid. As I see it, this share has all the hall-marks of a classic "Buffett" moat as demonstrated by the fact that Somero has patented technology that is hard to copy accurately, consistently high return on equity and return on capital employed, a consistently high operating margin and no debt. In its final results, Somero offers an attractive dividend payout, plus the prospect of a special dividend later in the year. What however may keep the share price "treading water" is because Somero operates in a highly cyclical market. That said, its prospects under Trump look bright through his promised infrastructure boom. I see Somero benefitting indirectly from this because, whilst their specialism is selling machinery that creates highly-accurate level concrete floors (important for warehousing companies using computer technology to manage their stock), I can see that warehousing companies may seek to build new warehouses using Somero's products in geographic areas that benefit from Trump's infrastructure spend.For these reasons, I'm happy to stay invested in Somero for the time being - primarily to benefit from the dividend payouts, but also in the hope that, on balance, its sales under Trump will flourish over the next two years or so with a resultant rise in the share price.

[crazycoops] 23/3/2017 21:21

Saturn, if you have decided you want to buy in, maybe wait for a sell off day like Wednesday. Look how well SOM rebounded the following day.

[runthejoules] 23/3/2017 20:57

Dyor, not advice etc Saturn5 I only jumped on board last week and am 5% up already. I really really wish I'd bought in earlier! Naked Trader has bought more. I can envisage more flat, flat surfaces being needed not just in warehouses for racking systems but for robots, etc. I'll sell when the human population begins to drop.

[saturn5] 23/3/2017 19:41

I hope I haven't missed a bargain here
I am tempted to buy but
So many times I have been caught out in a sharp riser which
then collapses
I shall have to wait and see

[saturn5] 23/3/2017 19:41

I hope I haven't missed a bargain here
I am tempted to buy but
So many times I have been caught out in a sharp riser which
then collapses
I shall have to wait and see

310 and 317 important possible resistance points

[rivaldo] 23/3/2017 09:31

Many thanks gersemi. A takeover would be a nice short-term win, but imagine the upside if SOM's growth plans in China, India and elsewhere come to fruition - the upside from China alone must be huge.

Hopefully SOM's inherent cyclicality is not due to kick in for a while yet given European recovery, US infrastructure plans etc, so if China and India can build in the meantime, SOM will be in an incredible position as almost a monopoly supplier with a strong Balance Sheet which can support acquisitions and growth.

[smallcapinvestor1] 23/3/2017 08:43

Can anyone post the article here please?