Somero Enterprise Share Discussion Threads

[rivaldo] 21/6/2018 09:35

Thanks re the above useful posts.

I note Ashtead produced good results yesterday, with its Sunbelt division (the relevant comparator for SOM) being exceptionally positive:

"Sunbelt US's revenue growth continues to benefit from cyclical and structural trends "

The outlook statement was also very confident.

Hopefully all this bodes well for SOM too.

[cfro] 14/6/2018 15:08

Some nice info there, thanks IC2,

Also worth noting that GBP/USD continues to work in our favour meaning higher reported profits and divis when converted back into Sterling.

[interceptor2] 14/6/2018 08:11

On the Somero website they provide a link to the Portland Cement forecast USA, which gives a good indication to construction activity in the USA and which Somero values as relevant to their sector.

68% of revenues are still from the US.





US Forecast - Spring 2018

The economy is strong. The performance of the job market and real GDP growth that has materialized over the past several months signals stronger near-term growth momentum. This momentum is reinforced by a supportive fiscal policy in the form of the relaxation of some federal spending caps, and the likely additions to infrastructure spending contained in the budget.

[rivaldo] 14/6/2018 07:19

Tipped here FYI:



"Super flat, super profits

Construction equipment firm Somero Enterprises (LSE: SOM) makes machines which lay perfectly level concrete floors for large buildings. The market for this type of floor is big and it's growing. As well as warehouses and factories, the company is now developing new machines for concrete levelling in high-rise buildings.

In a trading statement today, the firm confirmed that performance so far this year is "ahead of the comparable prior year period" and that full-year results should be in line with market forecasts.

Why I'd buy this business

Somero is the leader in this sector in the US and a number of other markets. As well as designing, selling and servicing its screed-levelling machines, it provides training and support to customers. The whole package forms a premium offering in a market where the cost of failure is very high. In my view, this firm's customers are unlikely to switch to cheaper rivals, because the risks would outweigh any modest savings.

This is also an extremely well-run company. After entering the financial crisis with too much debt, Somero's long-serving management team has learned its lesson and built a net cash buffer that should enable it to ride out a market downturn without any drama.

This process has been made easier by the group's high profit margins and strong cash generation. Last year saw the firm generate an operating margin of 30% on sales of $85m. Net cash was largely unchanged at $19m, despite $13.9m of dividend payments in 2017.

Looking ahead, the stock trades on 14.5 times 2018 forecast earnings, with a prospective yield of 2.2%. If the performance remains strong, I think there's a good chance this payout could be boosted by a special dividend.

Although the group is exposed to cyclical risks in the US construction market, I'd keep buying after today's news."

[mfhmfh] 11/6/2018 14:11

Graham Neary on today's Stockopedia:

'An excellent US-based company with limited competition, a great StockRank of 94 and reasonable value'.

[slopsjon2] 11/6/2018 10:11

finnCap reiterate 465p no change to forecasts.

[cfro] 11/6/2018 08:16

I am very pleased with the AGM statement also. You do get the impression the company is trading strongly so i suspect the 'inline with market expectations' wording is management just being cautious at such an early stage in the year.

[interceptor2] 11/6/2018 07:53

Very good AGM statement with all regions trading well, particularly pleased to read about robust trading in USA and Europe, it feels that we are set to enjoy another successful year.

Reading back at the previous years AGMs, this one is certainly much more positive then 2017 and even slightly more upbeat then the strong statement in 2016.

[rivaldo] 11/6/2018 07:28

Very pleasing AGM statement, with everything going smoothly and ahead of last year. And unlike last year, every region and every product category is contributing well.

Great to see the encouragement of participation in the AGM via webcast too.

The conclusion is nicely confident:

"In summary, the Company feels comfortable with the positive trading environment across our footprint, and the growth opportunities visible in North America, Europe, China, Middle East, Latin America and our Rest of World territories. This constructive environment combined with solid margin performance and healthy operating cash flow generation means the Company's trading to date is ahead of the comparable prior year period and in-line with market expectations for the full year ending 31 December 2018."

[rivaldo] 06/6/2018 13:33

Newly tipped here:



"Profits surge

Since mid-2014, shares in construction equipment group Somero Enterprises (LSE: SOM) have produced a return of 525% for investors, excluding dividends. This means the stock has beaten the FTSE 250 by a staggering 470% over the same period.

Surging profit is the reason why the company has been able to produce such impressive gains for investors. Since 2012, net profit has jumped a staggering 1,740% from $1m to $18m, a rate of around 80% per annum according to my figures.

Unfortunately, growth is expected to cool this year. Analysts have pencilled in earnings growth of 14% for the year ending 31 December. Still, in my opinion, the shares continue to offer value for investors.

The stock trades at a forward P/E of 14.4 that’s excluding cash on the balance sheet of $19m (£14m). Cash generation is one of Somero’s best qualities. Despite $14m of dividend payments in 2017, its cash balance only declined $1m for the year, as inflows easily covered shareholder distributions.

Somero’s cash balance is worth around 24p per share according to my figures, indicating that the stock is trading at a cash-adjusted P/E of 13.7. The shares currently yield 3.6%.

As the company continues to churn out cash, I believe its growth is only just getting started."

[cfro] 30/5/2018 15:52

Perfect intra-day drop to top-up on and recovering now...

Worth noting that they should be in the process of moving into new facilities here in the UK. AGM on June 12th and i am expecting an accompanying bullish statement.

Also worth pointing out that GBP is currently trading at 1.33, a drop from 1.43 earlier this year which should give H1 numbers a further boost.

[rivaldo] 20/5/2018 10:28

Nice mention for SOM here (I also hold XLM and WJG which are mentioned favourably) :



"Somero Enterprises SOM

I hold SOM and I know a lot of Readers do as well. The Chart below is showing a lovely Uptrend and I have used the ShareScope ‘Toggle the Trendlines’ Button to put those Lines in. SOM made a new All Time High last Week and this is Bullish Behaviour. With an AGM on Tuesday 12th June I am expecting SOM to keep moving higher in the run up to that - “Better to Travel than to Arrive” and all that.

On a Forward P/E of 14 and a Forward Divvy of 4.7% it still looks cheap to me (Note, I have taken the Forecast Numbers from ShareScope of 40 Cents EPS and 27 Cents for the Dividend for 2019 and converted them into Pounds/Pence using 1.35 as the Exchange Rate)."

[glaws2] 18/5/2018 09:37

It is indeed, thanks Rivaldo

[smallcapinvestor1] 18/5/2018 09:32

Actually that's a good point

[rivaldo] 18/5/2018 09:21

It's been reported that Kroger's new contract with Ocado to use their technology implies a nationwide rollout across the USA of e-commerce warehouses furnished with advanced robotics, with substantial capital spending.

This is a very good indication of where the world is heading - and why SOM's products, which are globally dominant for this type of warehousing, are so in demand.

[cfro] 16/5/2018 14:04

A new high.

[fredfishcake] 15/5/2018 15:15

'consolidation' - meaning price going nowhere.

[rivaldo] 15/5/2018 08:57

Great to see new highs here - the AGM statement is less than a month away now.

[ali47fish] 14/5/2018 18:23

sorry matt to labour the point- what do you mean here by consolidation!

[matt123d] 14/5/2018 17:38

Has greater potential for higher prices now than it did a few weeks ago after the period of consolidation.

[ali47fish] 14/5/2018 17:08

i was watch ing the price and it was much lower a few week ago so do you think now is the time to add- anyone who knows these things please!

[cfro] 14/5/2018 16:14

Breakout here. Added a few more.

[cfro] 04/5/2018 13:47

Thanks chaps. the numbers do look rather conservative.

[interceptor2] 04/5/2018 11:56

Watching closely at the moment with a view to top up if we can close over 409p.

Lots of reason to favour SOM at this time, I think companies that have most of their earnings outside of the UK should be back in favour, sterling is certainly weaker particularly versus the dollar which is handy for dividends and conversion of earnings. The pound broke a ket support area of $1.36 this week, so perhaps more weakness to come.

[interceptor2] 04/5/2018 11:52

The last estimates I have are from March, can't remember where I picked them up from but they look rather conservative.

2018, PBT 19.92, EPS 27.11
2019, PBT 20.64, EPS 28.76