Somero Enterprise Share Discussion Threads

[amencorner] 06/9/2016 16:25

Yes Blackrock are a law to themselves but still they have made good money.

[eggbaconandbubble] 06/9/2016 16:13

Blackrock appear to have dumped over 600,000. Seems strange thing to do.

[interceptor2] 06/9/2016 15:27

Seems to have been a healthy increase in buying since 13:00, and some larger transactions today.

77% of revenue in H1 was from North America, so agree that is America continue to do well then so will Somero, yet they are also making more positive comments about other regions now.

[flagon] 06/9/2016 15:23

Found this in the Investors Chronicle for today ...

Somero Enteprises (SOM) this morning posted the kind of results investors dream about. Almost every key metric was up in the six months to June, including revenue, operating income, earnings per share, net cash flow and investment. At the same time, management found sufficient free cash to reward shareholders with a 2.5¢ interim dividend, up nearly a third on last year’s payout. Our profitable recommendation is under review.

[rivaldo] 06/9/2016 15:16

Paul Scott holds and is very happy with SOM:

http ://www.stockopedia.com/content/small-cap-value-report-6-sep-2016-som-itq-149475/

Extract:

"Valuation - broker consensus is 25 US cents for EPS this year, or 18.7p.

So at 169p per share, the PER is only 9.0 for this year.

That seems a remarkably pessimistic valuation.

Balance sheet - this is in terrific shape, with a very strong working capital position - the current ratio is excellent, at 3.27 - for me, anything over 1.5 is strong.

There is $12.1m in cash sitting on the balance sheet, less a small mortgage of about $1m.

So the company is in a smashing position overall.

My opinion - this is a core long-term holding of mine, so today's results confirm my positive view of the company, and a very low valuation.

I think the market was traumatised by Somero lurching into losses in the GFC in 2008. But so did loads of companies. The entire banking system collapsed, for goodness sake. Personally I think it's extremely unlikely that such a severe downturn is likely next time we have a recession. Plus SOM is now in very much stronger financial shape than back then in 2008, so it should be able to withstand anything the economy can throw at it.

Essentially this share is a bet on the US economy. If you think it's going into recession, then SOM shares are probably best avoided. If you don't (and you turn out to be right), then this share could be a bargain.

Overall, I really like it. This company is the global specialist in a niche market, and given that concrete sets in about an hour, then support & service will always count for a great deal in this sector. Am tempted to buy more actually."

[grahamburn] 06/9/2016 14:33

In Investors Chronicle round up this morning, they emphasise that with every metric showing movement in the right direction "what's not to like".

[rivaldo] 06/9/2016 13:36

For the chartists amongst you this might be encouraging/meaningful:



"Somero Enterprises, Inc. breached its 50 day moving average in a Bullish Manner : SOM-GB : September 6, 2016

Indicator Signal

Closing Price above/below 50 Day Moving Average Bullish
Closing Price above/below 200 Day Moving Average Bullish
50 Day Moving Average above/below 200 Day Moving Average Bullish
RSI Reading Level (<30 or >70) Fair Value
MACD Compared to 9D EMA Signal Line Bullish"

[adamb1978] 06/9/2016 12:55

Forecasts of 6p / 7 cents dividend for this year look too low as well. 9 cents feels more realistic so around a 4% yield

[adamb1978] 06/9/2016 12:54

Motley Fool is showing 18.47p EPS for FY16 which based on 9p in H1 (12.6 cents converted at 1.4:1) looks achievable and slightly conservative. As others have said, this should be trading a good bit above 200p. I wonder whether they'll consider moving to a US listing if the multiple doesn't become fairer?

[rivaldo] 06/9/2016 09:41

860,000 shares traded already - looks like there's some institutional trading going on, perhaps removing sellers (Artemis etc) from the picture and leaving a clearer run from here.

[mfhmfh] 06/9/2016 08:54

now Somero need a website fit for 2016 to match the company's results.

[interceptor2] 06/9/2016 08:42

Thanks GHF and rivaldo, agree with your thoughts here.

Nice solid results which give a good probability of beating expectations to the full year, what is particularly encouraging is that they say the significantly strong trading in June has carried on into July and August.

There main markets of North America, China and Europe 91% of revenue increased by 24%, management are historically conservative in their outlook, but by raising the dividend by 32% gives a feel to their confidence going forward.

[rivaldo] 06/9/2016 08:27

Cheers GHF. Finncap's increased forecasts still equate to around 17.1p EPS at current exchange rates, and the 5.7p dividend is looking increasingly attractive.

New chart highs now - hopefully SOM will accelerate upwards from here.

[trier1] 06/9/2016 08:13

Large increase in stock compensation costs shuold be deducted from adj eps in my view which reduces that figure somewhat

[glasshalfull] 06/9/2016 08:10

Strong set of results.

finnCap reiterate guidance, tweaking earnings up slightly for FY16 due to a lower tax rate,

"No change to our trading forecasts that we upgraded recently in July.

We have marginally reduced the tax rate from 36% to 35.5%, increasing EPS from 22.5c to 22.7c, up 0.7%.

Following a better than expected interim dividend increase, we have raised the FY dividend from 7.2c to 7.6c, up 5.6%. The shares now trade on a P/E of 9.7x in 2016 followed by 9.0x, or – perhaps more importantly – an EV/EBITDA of 5.0x followed by 4.8x. This looks great absolute value for a group seeing structural and cyclical growth drivers, but also great value compared with its peer group.

Our recently raised TP of 205p is based on a fair value P/E of 12.0x in the current year and 11.0x in 2017 and offers upside of 24%. The strong interim results, positive outlook and attractive rating all point to the shares being well placed to continue to outperform."

Regards
GHF

[carcosa] 06/9/2016 07:49

Where do you get EPS of 10p? I see Basic EPS of 12c so they need to improve on that for the second half of the year to reach forecasts of 25c

[rivaldo] 06/9/2016 07:15

Terrific results - almost 10p EPS in H1 alone!

Plus on track for a 7.5c dividend, i.e around 5.7p. And SOM have an $11m cash pile.

And crucially:

"the solid activity levels from H1 2016 have carried over to July and August as we continue to see significant opportunities across our broad portfolio of markets"

China is improving nicely, the USA is roaring away and other weaker areas are seeing signs of growth.

SOM are managing expectations nice and conservatively, but forecasts of 17.1p EPS this year look like being well beaten imo:

[eggbaconandbubble] 06/9/2016 07:11

Very solid interims

[cockerhoop] 05/9/2016 09:51

Certainly in recent times SOM have 'under-promised, over-delivered' so hopefully that'll continue tomorrow.

[rivaldo] 05/9/2016 07:40

Results tomorrow - remember this from July's trading statement:

"The strong performance in June and the continuation of the positive trading environment together with margin improvement and solid operating cash flow generation mean the Company now expects to report results slightly ahead of current market expectations for the full year ending 31 December 2016"

Egg, both Artemis and BlackRock presumably have very large profits - and shareholdings. Top-slicing is perfectly natural given that. In addition, there are always plenty of reasons why a fund sells shares, For example, their holdings in SOM may given the share price rise have exceeded their parameters for holding one stock in their portfolio, or there may have been a change of fund manager.

[cockerhoop] 03/9/2016 21:18

EBaB,

If you trust the judgement of Artemis and Blackrock over your own, perhaps you should just invest in their funds and save yourself the legwork :-)

[eggbaconandbubble] 03/9/2016 04:12

Hello Peeps,
I've had a good look at this one and my only question is: Why have both Artemis and Blackrock dumped shares recently?

[rivaldo] 02/9/2016 14:13

Cheers GHF.

Yesterday the USA announced that July was "the strongest month for non-residential construction on record". This has to be good for SOM:



"The advance in July was led by a 1.7 percent increase in spending on non-residential projects which rose to an all-time high of $429.5 billion at a seasonally adjusted annual rate. Office building and shopping centers both showed solid gains."