Somero Enterprise Share Discussion Threads

[rivaldo] 03/6/2016 09:44

Good to see buys at the full 160p offer price now, prior to next Tuesday's AGM update.

Presumably as they're over here the directors will be touring the City and presenting their case, which should help interest in the shares.

[davidosh] 01/6/2016 17:48

Somero mentioned on the radio

[rivaldo] 01/6/2016 08:20

The AGM - and trading update - is coming up on June 7th, and there seems to be some buying interest coming in here in the run up.

Hardly surprising given the effervescent results and outlook in March.

[discodave4] 16/5/2016 17:40

grabster,Didn't intend to annoy anybody, apologies.DD

[discodave4] 16/5/2016 09:26

Typo - not inexperiencedAppreciate your views, this is the 21st century and IMV from a technical perspective the actual type of trade should be known, not guessed by a bit of software.MM's can use their orders such that the trades get registered incorrectly (by the guessed software) which in turn IMV can influence day traders decisions............not a day trader though and as a long term investor it makes not a jot of difference to me, thus not signed on a point of overriding principles but from a technical point and simply why not!.Do not see why it would impact detrimentally on liquidity.?No offence intended.DD

[discodave4] 16/5/2016 08:40

dangersimpson & grabster,Why aren't trades registered as exactly what they are?, the MM's know what each trade is?.Not every PI has L2.I'm not an unexperienced investor.DD

[grabster] 16/5/2016 07:21

Absolutely right. A wholly pointless petition drawn up by someone woefully ignorant of what the buy/sell indicator is; the indicator is a frivolous toy, about as reliable as tabloid horoscopes. No serious investor relies on it. It's just a gimmicky bit of software that some popular financial websites throw in for free. Serious investors view trades in one column - not jokily split into three guessed columns.

[dangersimpson2] 15/5/2016 23:24

That is the most pointless petition in the world. MM's don't report buys or sells. It is just a software guess done by data providers like advfn based on the bid-ask at the time the trade is published.

The people who think that their buy/sell being shown as a sell/buy is some kind of manipulation are usually so inexperienced they should be no where near financial market or have recently suffered an alien abduction.

Putting an extra reporting burden on MM's will just reduce the already woeful liquidity in small cap stocks. It is a good job that that petition will be ignored.

[lingy] 15/5/2016 18:29

Signed hope others follow

[rivaldo] 12/5/2016 11:36

A series of buys this morning, including £52,000 just bought at 155p - nicely above the published 154p offer price.

[rivaldo] 12/5/2016 08:38

Excellent new article tipping SOM:



"Smooth operator could beat expectations

Somero Enterprises is the dominant player in the market for using laser-guided screeding machines to produce perfectly flat concrete floors for industrial buildings.

The firm last featured in this column in December, when I raised concerns about the cyclical risks of investing at what might be a relatively late stage in the cycle. Ironically, I’m less concerned about this now than I was then.

There are several reasons for this. Firstly, I’m trying to break out of the classic value investing trap of buying too soon on the way down, and selling too soon on the way up. A second reason for my confidence in Somero is that the firm produced a stonking set of 2015 results along with very confident guidance for the year ahead:

“We see 2016 as an exciting year full of opportunity. We believe we are well positioned to capitalize on expected growth in our core US and other existing markets, extend our global footprint and grow revenues from new products. Most importantly, we look forward to delivering another year of superior results for our shareholders.”

I also gained confidence after reading the transcript of Small Cap Editor Paul Scott’s interview with Somero’s CEO and CFO, which took place in January. This really provides a lot more detail and colour on the firm’s competitive advantage and on how management sees the market opportunity in the US and overseas. It’s well worth a few minutes of your time (as of course is all of Paul’s small cap coverage).

A fine set of figures

Stockopedia continue to rank Somero highly, with a StockRank of 98. Last year’s figures have now been assimilated into the firm’s StockReport. Rather than analyse them from scratch, I’ve decided to compare them to the StockReport I used back in December. What’s changed?

Back in December, Somero traded on a rolling forecast P/E of 8.9. Although the shares have risen by 22% since then, rising earnings guidance means that today’s forecast P/E is almost unchanged at 9.3. Forecast yield is also unchanged, at 3.4%.

Somero’s earnings per share dipped in 2015, but it’s worth noting that operating profit rose strongly. The fall in net profit appears mainly to be the result of Somero spending around $4.2m on new building facilities. These are being funded out of free cash flow, which is currently very strong. Net cash doubled from $6m to $12.6m last year, despite this investment.

Last year’s rise in capex is nothing to worry about.

Somero’s ValueRank has fallen from 78 to 71 since I last looked at the firm, but I’m not concerned by this small change. The fundamentals remain solid and very appealing, in my view.

Solid quality

Somero’s QualityRank today is 96, a fall of just two points since December. Very little seems to have changed. The operating margin rose from 21.2% to 25.0% in 2015. Return on capital edged up from 42.5% to 44.7%.

Other metrics have also improved. As Somero’s 2009 results have dropped out of the QualityRank calculation period, Somero’s five-year average net margin has risen from 3.7% to 9.1%. The long-term average return on capital has risen from 0.4% to 17%. These numbers show the severity of Somero’s previous debt problems, and the strength of its recovery since then.

As management are keen to explain, a repeat of this calamity should be unlikely. The company’s policy is now to maintain a net cash buffer of $10m at all times, so that when the next recession does come, Somero will be able to ride out the storm in safety.

If you’re wondering why Somero’s QualityRank has fallen at all, I suspect the reason is that the stock’s Piotroski F-Score has fallen from 8 to 7. The reason for this is that last year’s lower post-tax profits resulted in a lower return on assets last year. This is simply the result of the money being spent on new buildings and is absolutely not a concern, in my view.

Big momentum gains

Perhaps the biggest difference between now and December is that Somero’s momentum has improved significantly. The stock’s MomentumRank has risen from 70 to 87.

Broker forecasts for 2016 earnings have risen and the outlook for 2017 suggests further progress is expected. Somero’s cash-backed dividend is also expected to rise and the forecast yield is 3.3% for 2016, rising to 3.6% for 2017. That’s quite high for a small cap.

Somero’s 2015 results made it clear that the firm should be able to deliver material ongoing growth from the US market. Growth elsewhere will be a bonus. In the case of China, it’s a long-term goal where the potential rewards are vast.

I’m happy to add the stock to the portfolio at this time, and look forward to the next trading update in the summer".

[rik shaw] 07/5/2016 15:24

RCN and CPX- see relevant BB for extracts

[grabster] 03/5/2016 13:21

Many thanks for that excellent report Rivaldo.

PS: What were the other two tips??

[rivaldo] 27/4/2016 07:49

Nice RNS this morning disguised under the bland title "Change of registered address"!

The new HQ and training facility have been completed on time and on budget, and in very quick time. Hopefully using SOM's own equipment :o))

[rivaldo] 19/4/2016 13:42

Climbing again - £44,000 of buys at the full 169p offer just reported.

EDIT - a further £25,000 just bought at 169p.

[rivaldo] 18/4/2016 08:43

New highs again, with continued small buying. Nice bounce too from the early markdown.

Given the terrific outlook in last month's prelims, hopefully this buying will continue into the forthcoming AGM statement.

[imranawan] 15/4/2016 15:15

Thanks Twonky.

[twonky] 15/4/2016 14:44

01/03/2016 – Somero Enterprises Inc. (DI) had its “CorporateR21; rating reiterated by analysts at FinnCap. They now have a GBP 185.00p price target on the stock.

01/03/2016 – Somero Enterprises Inc. (DI) had its “Buy” rating reiterated by analysts at Canaccord Genuity. They now have a GBP 190.00p price target on the stock.

[imranawan] 15/4/2016 14:03

What was the broker price target on SOM? From memory I recall it was around the 175p level....

[tromso1] 15/4/2016 13:42

Nice breakout.

"The chart looks poised to attempt a breakout, so it could get quite interesting."