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I am expecting a bid but Amazon AWS partnership is even bigger news. Transformational. £10 is getting nearer folks!!
I predict either the price will be around 700p in 6 months or there will be a bid and the company will be taken private. It is a great IT business generating huge cash piles every year. Debt is manageable for a cash cow business like this. In any case, at this price it's a no brainer! Plus c.4% dividend yield is a bonus!
For me the concern is only the declining revenue..if that’s is sorted then debt is not a big deal. A company generating >0.7b net cash flow can easily manage the debt if revenue is sorted
Most plc companies have debts this one is generating cash and reduced the debt last time at the expense of dividends. Its technology is world renowned. £5 is easy and some brokers have forecasted £6 plus!
I agree with AKGold, as long as MCRO manage the debt slowly down over time it is not an issue given the level of cash being generated from basically a company with a long term order book in place. Investors keep forgetting that the majority of MCRO's business is locked into long term service agreements with 40,000 customers. The fact that MCRO can go to the banks and finance all the debt out to 2024 should be an indicator of confidence and I am quite sure that whatever debt remains will be refinanced prior to 2024 deadlines. It should also be remembered that as debt is paid down, hopefully interest and financing costs will reduce and help offset or grow profits. Nice little rise this morning - happy to hold medium to long term.
I am not to worried about Debt as the debt is in balance sheet from last 3-4 years or more. The main thing is revenue and cash generation.
They are moving it from 3.7x to 2.7x which isnt exactly terrible and they have till 2024 but in 2024 they can just refinance it. The debt isnt the problem its the bad news stream of last 3 years. Fair value is £8+ and when the news turns good it can return to a reasonable valuation. Chriss why are you even here?
Debt should always be considered....but MCRO have a bit of time on their side as I think the bulk of the debt matures in a few years. But agree you should never ignore debt as it can catch up with you. But MCRO is generating FCF and that has supported the dividend payment. So short term (next 12 months or so) then there is no reason why SP shouldnt perform well. Medium term, they will need to build revenue in order to make the debt more manageable. But there are loads of things which could happen between now and then!
I am hoping if we have another Final Dividend, with good RNS coverage, We will be touching 8 - 10 Pounds by the end of the year. Gl All.