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Joke of an RNS, did they expect the forecast to change within a month?
FY results presentation given by Jack Cooney (CEO), Howard Hohman (EVP Sales) and John Yuncza (CFO) (final results to 31st December 2018.)
Forward order visability now 1 year (previous 6 mths). Clear strategy. New market: high rises, being developed.
I sold my holding at the end of last week.
The company (and management in particular) are 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!
Great to see the new Sky Screed high-rise product winning an industry award for Most Innovative Product in the Concrete Construction Equipment category:
I've been invested here for about a year after a investigating further the fundamentals following a 'Buy' recommendation from IC. It amazes me that this company is not invested in more favourably. Its a great company with little competition in its field and I look on it as a sound 'buy and hold' offering a decent dividend return
Good news from the USA - 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.”
Results here seem rather better than the market reaction indicates.
Once again. Revenues and EBITDA are above even the recently increased forecasts from Finncap.
And the total 30.7c dividend is way above the forecast.
SOM still have $28m net cash in the bank to play with!
The outlook is extremely confident for 2019, and we have the introduction of the SkyScreed and Line Dragon's new products to look forward to.
It would be perfection if China finally came to the table, but I'm sure that will happen. In the meantime it seems that India is starting to pay off nicely, in which case China can remain on the backburner...
"Searching for income? I’d take a look at these small-cap dividend stunners
Laser-guided product manufacturer Somero Enterprises(LSE: SOM) impressed the market last week with an encouraging update on trading.
The company reported strong growth in the second half of 2018 and, as such, expects full-year revenue to be “moderately ahead” of the $90m previously expected by the market. Positively, this will also be higher than the five-year target set by management in 2014.
To make things even better, earnings and net cash are also likely to be “moderately” and “more significantly” ahead of market predictions, respectively.
Somero reported growth in three of its six regions with operations in North America leading the charge. Efforts to crack China are “yet to gain full traction” but it continues to see “meaningful growth opportunities” in this and other territories. Decent progress has also been made on its push to innovate new products with one launch, the SkyScreed 25, scheduled for later this month.
As a result of all this, Somero confirmed that it has no plans to change its dividend policy. It still intends to pay out 50% of adjusted net income for the full year, and a special dividend equating to 50% of excess net cash over the target of $15m.
Having done so well over 2018, investors were no doubt also pleased to learn that management was bullish on the £190m-cap’s prospects over 2019, particularly in North America where it currently has a “strong pipeline of construction projects.”
Despite a storming double-digit percentage rise to the share price on the day, Somero still looks cheap to buy, on a little more than 10 times earnings, in the new financial year.
Taking into account the seriously-high operating margins and returns on capital it has achieved over the years, not to mention the 6.2% yield, and I’m sorely tempted to take a position."
Some detail on and a picture of the new high-rise product:
"Somero Sky Screed 25 Works on Structural High-Rise and Slab On Grade
Somero says its knuckleboom Sky Screed is the first laser screed in the world to allow screeding on structural high-rise and slab-on grade applications
January 25, 2019
Somero Enterprises introduced the Somero Sky Screed 25, the first Knuckle Boom Laser Screed machine in the world to allow screeding on structural high-rise and slab-on-grade applications. The Sky Screed's lower frame rests on three stabilizers while the upper frame and screed head rotate 360 degrees, providing the flexibility to screed around columns and other protrusions.
Worth pasting here extracts from Finncap's new note:
"Trading ahead of expectations, 5% EPS upgrade
The company has announced a positive trading update signalling a stronger than expected H2, with sales and EBITDA moderately ahead and cash more meaningfully ahead of expectations. We upgrade our 2018 EPS forecast by 4.9% and raise 2019 by 4.6%, confirming robust trading continues. The company has also announced a small bolt-on acquisition of Line Dragon for $2.0m, which looks an ideal close fit. The shares have significantly derated and the trading update confirms robust trading continues, thus providing a strong buying opportunity. The 7% dividend yield and single digit P/E in 2019 highlight strong value – this quality stock is one of our favourites."
We upgrade 2018 sales forecasts by 4.2% to $93.8m, resulting in EBITDA of $30.4m and adjusted PBT of $29.0m, up 4.9%. EPS therefore rises to 39.6.. Similarly, in 2019, we rais e s ales by 4.8% to $98.5m, with EBITDA of $31.4m and adjusted PBT of $30.0m up 4.6%, giving EPS of 41.9c. Our 2018 cash forecast rises to $28.1m (up $3m). We have not altered our regular dividend forecast of 17c, but there should be some upside to our supplemental dividend forecast of 7.0c.
The announcement confirms a strong trading outcome and positive outlook statement, which is in contrast to recent weak share prices. The shares have weakened to stand at very attractive levels. Strong cash returns support a premium dividend yield of 7.0%, while a P/E of 9.0x in 2019 is based on conservative growth parameters. Somero is a high quality stock and currently remains one of our favourites; we retain our PT of 465p, which provides plenty of upside following recent underperformance."
Ignore previous post. Seems to have corrected itself. Hopefully just a glitch
Anyone know why the share price is showing at 69.00 i.e. 80% crash?
Been there so often, Trek!
Finncap have a 465p target price.
They now see historic 39.6c EPS, i.e around 31p. They've left their dividend forecast at 24c, i.e around 19p - almost a 6% yield - but note there should be "some upside" to that with another special/supplemental dividend.
It would be interesting to see some potential sales numbers for the new Skyscreed high-rise product. Anyone here with industry knowledge - I haven't got the foggiest! Given SOM's expertise I'd have to say that the potential must be pretty large.
Been on my watch list for ages this one. Was going to buy yesterday sub £3. Hey ho! GL to holders. Trek waiting for retrace.
Terrific stuff once again from SOM:
- revenues and EBITDA ahead of expectations
- the $25m cash pile is well ahead of expectations
- bumper dividends
- very confident outlook, with "buoyant" markets
- China slightly down last year but prospects and outlook looking good
- innovative new product being launched this month
And also a new $2m acquisition today in the concrete sector which should slightly enhance earnings this year.
Can't ask for much more than all that :o))
Well, if SOM's sector comparator Ashtead are anything to go by, their news this week - particularly from Sunbelt - indicates that SOM should be continuing to thrive:
"Ashtead Group PLC (AHT.LN) said Tuesday that profit before tax increased in the second quarter of the fiscal year on higher revenue, and that it expects full-year results ahead of prior expectations.
The company said pretax profit for the three months ended Oct. 31 was 335.6 million pounds ($424.8 million), compared with GBP264.2 million in the previous-year period, on revenue that rose 18% to GBP1.11 billion.
The equipment rental company said that the business was performing well in supportive end markets. Its Sunbelt Canada business was a particularly strong performer, with rental revenue increasing 90%, buoyed by the impact of an acquisition.
The FTSE 100-listed company declared an interim dividend of 6.5 pence, up from 5.5 pence.
"We expect full year results to be ahead of our prior expectations and the Board continues to look to the medium term with confidence," said Chief Executive Geoff Drabble"
Glad I bought in on Friday!
"Considering all of the above, and with analysts expecting earnings to increase by 17% this year, I believe Somero’s valuation of 10.3 times forward earnings significantly undervalues the business, and its prospects."
"When it’s considered that its stock now trades on a P/E of just 11 for the next financial year, I think Somero looks great value right now."
Lastly, check out £217m market cap Somero Enterprises (LSE: SOM), which produces laser-guided equipment that assists in the installation of concrete slabs, and has operations in the US, Europe, China, the Middle East and Australia.
Somero shares have had a good run recently and are up more than 20% since I last covered the company in 2017. But with the stock trading on a forward P/E of 13.8 at present, I believe there’s plenty more to come from this exciting smaller company.
Recent interim results certainly looked solid, with revenue rising 6%, cash flow from operations jumping 31% and diluted adjusted earnings per share surging 20%. A 100% increase in the interim dividend was another highlight. It’s also worth noting that Somero has practically no debt and has generated an average return on equity of 35% over the last three years.
Overall, I see a great deal of long-term potential in Somero Enterprises."
H1 results presentation by Howard Hohman, Exec Vice President and John Yuncza, CFO (for period to 30.6.18).
Introduction and summary of results – 00:20
Sales by territory – 00:45
Sales by product – 03:55
Financials – 06:26
Current trading and outlook – 13:47
Strategy update – 17:29
New highs now.
The non-exec chairman has sold half his holding, which is hardly surprising as he's 83 years old. At that age I'm surprised he retains any shares at all :o))
The other way of looking at it is that the market took on almost £200,000 of shares without blinking, suggesting decent demand for the shares out there.
Newly tipped in the IC as follows:
"Somero Enterprises (SOM) had already disclosed that four of its six geographies enjoyed growth during the half year to June – up from three geographies 12 months earlier. But the official interim numbers helped flesh out the details – revealing particularly strong contributions from the high-tech, concrete-levelling specialist’s dominant regions: North America and Europe.
Indeed, these grew by 7 per cent to $30.5m (£23.7m) and 24 per cent to $6.7m respectively. North America’s momentum was underpinned by strong sales of boomed screeds and ride-on screeds. Optimism about this market isn’t without foundation: non-residential construction activity was solid, and customers’ project backlogs "extend well into 2019". Meanwhile, Somero sold equipment across 14 European countries, with the UK, Germany and France among the top contributors.
Sales in China fell 7.4 per cent to $2.5m, following a 14 per cent dip here at the full-year stage. But the group has launched sales and marketing initiatives there and employed a China national sales director.
The shares’ decent mark-up on results day was no doubt supported by a doubling in Somero’s dividend. While this might reflect management's confidence in the future strategy, it also stems from the decision to pay out a greater proportion of the full-year dividend at the interim stage, entailing a one-off rebasing.
Broker FinnCap forecasts adjusted pre-tax profits of $27.7m and EPS of 37.7¢ for 2018 ($26.2m and 36.5¢ in 2017).
The shares are up 48 per cent on our tip (279p, 28 Dec 2017), but still trade on 14 times adjusted forecast earnings, which seems undemanding for the growth and income on offer. Buy."
Newly tipped here - the share price should now go on to fresh highs imo given the confidence going forward:
"Since I first became bullish on the stock back in November 2016, laser-guided equipment manufacturer Somero Enterprises (LSE: SOM) has done very well, up 70% in value at yesterday’s close.
When something rises this much this quickly, it’s easy to assume that it’s now become too expensive and/or that dividends would be fairly meagre. With Somero, this simply isn’t the case.
Before this morning, you could pick up the shares for a decent 13 times forecast earnings. These very same shares were also predicted to yield a little more than 4.8%. While today’s “in line with expectations” interim results for the six month to the end of June — and the market’s overwhelmingly positive reaction to them — mean the stock is now more expensive, I think Somero looks a great buy for most small-cap enthusiasts.
The US and Europe continue to prove fruitful for the company with sales growth of 7% and 24% respectively contributing to a 6% rise in revenue (to $45m) compared to over the same period in 2017. While these territories represent 83% of total revenues, it’s encouraging to learn that Somero saw “balanced growth” across its footprint and product categories. Pre-tax profit increased by 13% to $13.6m.
In addition to reflecting on how new products were expected to support Somero’s long-term growth ambitions, CEO Jack Cooney stated that current market conditions and momentum in its business should translate to “another successful year of growth” for the company.
And those dividends? Today, the company saw fit to double – yes, double – its interim payout to $0.055 per share. While its connection to the construction industry means that the share price certainly isn’t immune to political and economic shocks, this kind of confidence on the part of management is hard to ignore.
Growing profits, solid finances (net cash increased 13% to £20.7m by the end of the reporting period) and a fast-rising dividend — I remain a fan."