Somero Enterprise Share Discussion Threads

[xajorkith] 25/3/2019 23:02

Yeah, me too I’m sad to say as this is such a great company.

US yield curve inversion pretty compelling evidence of a recession by end of 2020 & likely to limit the share price in the medium term.

Market signals hugely distorted by Central Bank intervention though, so nothing certain & this remains a world class business.

Will defintely be back here once the smoke clears.

[podgyted] 25/3/2019 19:39

I also sold my holding last week to protect profits.

Not convinced by Ardens argument (I think it will be a while before the US goes into recession) but the seed has been planted.

Comments like this in HL's market commentary today could be read across to Somero in these nervous times. "In equity markets, equipment rental firm Ashtead and plumbing products maker Ferguson - which both have a big presence in the US - were under the cosh amid worries about an economic slowdown Stateside, with the latter set to update investors the following day."

Hope to be back. GLA

[rivaldo] 25/3/2019 09:43

I sold my holding at the end of last week.

The company (and management in particular) is great. My decision was based on a simple risk/reward equation. I suspect that the cycle is indeed peaking now, or has already peaked. So there may be a little upside left here after a positive first few months of 2019, but not too much.

On the other hand any hint of stagnation in non-residential construction - which we may now be starting to see - or pessimism from investors, may see much larger downside.

I had a large holding here, so wanted to protect the 200% gain made to date.

Good luck to all here - now you'll probably see a bid at 450p!

[pireric] 22/3/2019 06:37

Absolutely, but the whole point of an analyst is to have an opinion. And if that's predicated on an external call, like an exchange rate moving and being +ve/-ve for a company, or a recession (and we all know stocks providing essentially CAPEX equipment for the construction industry would be hit far harder than utilities). Arguably if that's his true viewpoint then his target is actually conservative (as he has only reflected a multiple contraction, when the bigger component would probably be the earnings drop).

The fact the share price didn't really drop is because it's a well versed argument, and not necessarily one the market has agreed with (probably on the recession technicality). Much ado about nothing IMO, fair note, fair market reaction. Stimulates a bit of discussion which is nice (I used to hold here)

[pireric] 21/3/2019 20:41

Nothing wrong with Arden's comment IMO. It's fair based on the reasoning they've given. Merely a take it or leave it dependent on your view of the US economy which is why the share price has barely budged. Nothing revolutionary detail wise in it to scare people

Hoping more notes crop up in the new MIFID 2 world that actually stimulate discussion!

[mfhmfh] 21/3/2019 18:54

One of IC's Tips of the week:

'Somero’s offering is niche and the customer base is fragmented – bolstering its competitive advantage.'

[glaws2] 21/3/2019 14:01

I have had it confirmed by Somero's PR agency that Arden are not their corporate broker (it is Finncap) nor are they a client.

[mfhmfh] 21/3/2019 12:06

I'm going with Finncap - 465p target price.

dividend + special dividend to come.

[greyingsurfer] 21/3/2019 11:59

They say they are corporate brokers to SOM, and SOM is a research client.

I'm not quite sure what they mean by this. Somero do not list them as a broker, only finnCap

[watchlist1] 21/3/2019 11:14

dividend on the 4th of April of .252 cents

[xajorkith] 21/3/2019 11:12

Finncap are their corporate brokers as far as I'm aware.

Recent outlook statement takes a different view (see also post 1785):

"The Board believes the Company has numerous meaningful growth opportunities in 2019 across its broad portfolio of markets and products that is supported by positive non-residential construction market conditions and reinforced by customers reporting project backlogs that extend beyond 2019. Based on this positive environment and the momentum of the business, the Board is confident that Somero is poised to deliver another year of profitable growth to shareholders in 2019."

[barnesian] 21/3/2019 09:29

Sounds like they are planning a low priced placing.

[podgyted] 21/3/2019 09:21

Arden & Partners Dated 20/3/19.

"Investment thesis & valuation. At c.12.7x FY19E P/E, (pricing the shares in
line with their historical average and at a minimal 4% discount to the FTSE AllShare), we consider the current rating to be overly-optimistic given our stated
concerns over the impact of an economic slowdown and a possible US
recession. We see c.10x P/E (25% market discount) as fair value for the
shares, exhibiting a more balanced risk-reward profile for investors. Sell."

They say they are corporate brokers to SOM, and SOM is a research client.

Now for a detailed read.

[podgyted] 21/3/2019 09:15

Arden initiates with a sell TP 300p.

Going to read.

[rivaldo] 15/3/2019 07:16

Great to see the new Sky Screed high-rise product winning an industry award for Most Innovative Product in the Concrete Construction Equipment category:

[rivaldo] 14/3/2019 06:39

News from the USA last night - non-residential construction spending rose 4.8% in January year-on-year. And the backlog and positive sentiment appears to be in place until at least 2021:



“Construction of data and fulfillment centers also has created demand for nonresidential construction services. The recent moderation in construction materials price increases has helped support construction starts because more developers and their financiers are concluding that new projects make business sense.

“While there has been some reduction in business and consumer confidence, the nonresidential construction spending cycle remains firmly in place for now,” said Basu. “Despite the recent dip in ABC’s Construction Backlog Indicator, backlogs remain sufficient to support solid nonresidential spending activity through the balance of 2019. And while many economists remain concerned about economic prospects in 2020 and beyond, nonresidential construction’s outlook remains benign at least into 2021.”

[mfhmfh] 13/3/2019 15:55

positive write-up in today's stockopedia:

'This is a high-margin, high ROCE business with a Quality Rank of 99 according to Stocko.'

[mfhmfh] 13/3/2019 09:48

'Expansion Update' section is also interesting reading.

[mfhmfh] 13/3/2019 09:47

I agree India looks interesting, especially with the way the Indian economy is growing.

'2018 was an outstanding year for Somero and we are looking to build on that momentum as we enter 2019. Our business has positive momentum, supported by favorable market conditions across our geographic footprint and the broad range of opportunities in new and existing markets.'

'We are well prepared to enter the next phase of growth for our Company, to work to execute our strategy, and most importantly to deliver another year of progress for our shareholders.'

[scottishfield] 13/3/2019 08:42

A rather muted reaction to excellent results - added.

[greyingsurfer] 13/3/2019 08:12

Longshanks - the 2018 dividend quoted is payable on 26 Apr 2019 - it's in the para headed "Dividends"

[xajorkith] 13/3/2019 08:09

In the Chairman’s statement longshanks:

“the Board has approved a final 2018 ordinary dividend of 13.5 US cents per share and a supplemental dividend of 11.7 US cents per share, both payable on April 26, 2019 to shareholders on the register at April 5, 2019.”

Excellent results yet again :)

[rivaldo] 13/3/2019 07:53

Finncap have a 465p target, so plenty of upside.

The total 30.7c divi (incl. the supplemental) is far ahead of Finncap's expectations of 24c.

[longshanks] 13/3/2019 07:46

Doesn't look to me like they have stated any new dividend yet: is it my imagination or have they just reported what was done last year.Either way 50% of net cash above $15m means yet another bumper special dividend is due.The overall growth of the business is very strong. A great investment all round.

[podgyted] 13/3/2019 07:44

This just keeps on giving !!!

FinnCap:-

"Valuation. The shares have bounced from market-induced Q4 weakness, buoyed by
the positive January update. Nevertheless, the 2020E P/E of 11.4x is undemanding.
Forecasts remain very conservative, new products offer mid-term upside and the
group’s strong cash flow, ROCE track record and market position deserve a premium
rating. The total dividend yield now stands at 6.6%, over 2.4x its peer group. We
maintain our 465p PT, based on a 2020 P/E of 14.3x, giving a total yield of 5.3%."