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Can growth in digital marketing buck wider risks affecting the business cycle? According to eMarketer, digital increased from 15% of UK marketing spend in 2007, to 47% in 2014, and most marketing services firms report their strongest growth in this segment. So it's initially odd how FTSE Small Cap-listed Creston (CRE), which in recent years derived just over half its revenues from digital and online, saw its earnings slip from 2013 (see table) and is not yet expected to regain such earning power. This is explained partly by investment for growth and client budget volatility early in the 2013/14 financial year, which admittedly points to downside risk should the global economy worsen. In its last financial year to end-March, 66% of group revenue derived from the UK, 19% from continental Europe and 15% rest-of-world. Digital and online revenues grew 7% to represent 55% of the total. Early stage of a five-year development plan More positively, and why Creston merits watching, it is one year into a five-year strategy involving a new brand - "Creston Unlimited", launched last November - bringing together a range of digital technology-based, marketing services to blue-chip global clients. Essentially, the aim is a fuller service offering with international capability, an interesting growth prospect for a circa £90 million company - it's big enough operationally to pitch at multinationals, while small enough financially for the gains to impact value. Mind the cheer-lead factor, but Creston's chief executive cites: "a real feeling of momentum and energy across our group...we are encouraged by the early successes in our new strategy which gives us a strong platform to deliver value to shareholders over the medium term." His words coincide with an 8% rise in the total dividend to 4.2p a share, and forecasts imply a prospective yield of 3%. While it's not exactly a prop, a reduction in earnings cover from nearly seven times implies the board is more confident about Creston's earnings and cash profile. (Mind how numbers in the Company REFS table along with other databases, reflect the actual timing of dividend payments.)
Rivaldo - you have confirmed my thoughts regarding the lack of any material change in Creston's trading since the last update. Good to see the share price rising again today now that perhaps any uncertainty is out of the way.
The AGM has come and gone. Good to see the share price inching up again. I e-mailed CRE again - it seems that the next trading news will be the interims in November "As there is no new information to update the market on since our last trading update on 9 June". This is good news. There can have been no material change in trading since that positive results outlook in June, otherwise CRE would have had to say something. So nothing has changed, and hopefully we can therefore expect good interim numbers.
AGM statement is this coming Monday, and should hopefully be good. Current consensus is 13.93p EPS and a 4.55p dividend.
CRE have confirmed to me that, in accordance with the new rules, they're no longer issuing IMS's. The AGM is soon, on 7th September, so hopefully we'll get an update on the positivity in the prelims outlook statement.
Going rather well...yet still on a P/E of only just over 10.
Only speculation but after today's announcement from Chime Communications of an agreed takeover from WPP perhaps Creston is seen as next in a sector that is showing signs of consolidation. DBay Advisors 24% holding may be of interest to potential bidder, let's hope so. Regardless the shares are still undervalued and as such I am not selling my holding yet.
What is the reason for today's big jump in the price?
New high today on thin volume. Hopefully an IMS tomorrow with further news of revenue growth.
I see there's a bid for Chime this morning. It values Chime at a current year P/E of 16. That would value CRE at around 225p per share given forecast 14p EPS this year.
Just read this mornings RNS, a load of words stating absolutely nothing useful, Creston, if any of you follow this site, please read what you've written and ask yourselfs, how useful is this commentary to your shareholders.
Some large trades of late, hope DBAY are continuing to add to their holdings.
.....before the upcoming trading statement.
N+1 Singer say Buy today and now have a 171p target price: Http://sleekmoney.com/creston-plc-given-buy-rating-at-n1-singer-cre/327626/
Last year's Q1 trading statement was on 31st July, so not too long to go. CRE were also mentioned as a good value small cap in IC highlights in the FT this weekend: http://on.ft.com/1LAumm0
New Edison report is out - they go for: this year : 13.9p EPS, 4.6p dividend next year : 14.8p EPS, 4.8p dividend Http://www.edisoninvestmentresearch.com/research/report/creston13 Interesting sections in particular about the incredibly long-term client retention, plus the revitalisation of the business following Elgie's departure with all the new partnerships, acquisitions etc. Plus there's plenty of Balance Sheet firepower for further acquisitions etc.
Wow. The RNS this morning shows DBAY bought WSE's 3m shares - and more. They're now up to 24.5% and 14.36m shares. The way they're going, they may well be buying all the way up to 29.99%: Http://www.investegate.co.uk/creston-plc--cre-/rns/holding-s--in-company/201506160700132257Q/
The financial websites are now showing the new forecasts for next year. They now show for this year and next year: N+1 Singer : 14p EPS, 4.7p divi, 15.3p EPS, 5p divi Sanlam : 14.2p EPS, 4.7p divi, 14.9p EPS, 4.9p divi
Tipped by Simon Thompson in the Investors Chronicle on 10/6 (cheers mate) - imo 165p-180p is on the cards soon if all goes well: "'On the crest of another run Shares in small-cap marketing communications company Creston (CRE:135p) have reacted positively to yesterday’s full-year results and have passed through my original target of 135p, a price level that was also achieved at the end of last year after I initiated coverage at 118p in the late autumn (‘Buy the break out’, 4 November 2014). However, I still feel that a run up to the 150p level is on the cards as I noted when I last updated the investment case (‘On the acquisition trail’, 23 April 2015). If this target is achieved the rating would still only be 10.5 times conservative looking EPS estimates of 14p for the fiscal year to end March 2016 based on forecasts from brokerage N+1 Singer. For the fiscal year just ended, the company delivered 11 per cent EPS growth and diluted earnings of 13p a share beat analyst expectations by around 4 per cent. In turn, this supported an 8 per cent hike in the dividend to 4.2p a share. A further hike to 4.7p is predicted this year to give a prospective dividend yield of 3.5 per cent. At the end of March the company had an £8.3m cash pile, since when the board have been deploying these funds wisely. In April, the company acquired a 51 per cent stake in How Splendid, a London-based digital design and development consultancy, a deal which I analysed in depth at the time (‘On the acquisition trail’, 23 April 2015), and has just announced another strategic investment alongside yesterday’s results: a 27 per cent stake in 18 Feet & Rising, a London based advertising agency. Established in 2010, 18 Feet & Rising works with brands including Allianz, Cuprinol, Nando's, House of Fraser and ŠKODA, for which they created the world's first ad campaign to use eye-tracking technology. Half of the £1m cash consideration will be invested in the business to help accelerate its growth. In 2014, 18 Feet & Rising grew revenue by almost a quarter to £2.7m, so the business is being valued on a reasonable 0.7 times’ sales. This means that Creston has now deployed virtually all its net cash after the period end, but with annual operating cashflow of around £8.6m and credit lines of £35m in place, the company is well funded. The bottom line is that with the company posting organic revenue growth for the first time in four years, and utilising its cash position wisely, then investors are likely to continue to warm to the strong investment case which I outlined when I initiated coverage at the end of last year. Offering a further 11 per cent share price upside to my new target price of 150p, and underpinned by a 3.1 per cent historic dividend yield, I continue to rate Creston’s shares a buy on a bid-offer spread of 133p to 135p."
Consensus forecasts going forward are now appearing on websites for the first time and emphasise just how cheap CRE is: This year : 14.1p EPS, 4.7p dividend Next year : 15.1p EPS, 4.95p dividend Over the next 15 months shareholders can expect 7.8p of dividends, around a 5.5% annual yield, from a company trading on a single-figure P/E....
N+1 Singer has just increased its target price to 171p from 152p, saying Buy: Http://www.lse.co.uk/AllNews.asp?code=pe1mf853&headline=BROKER_RATINGS_SUMMARY_HSBC_Upgrades_IAG_To_Buy_From_Hold
Consensus forecasts of 14.2p EPS this year may well be increased, given the 13.1p EPS last year which easily beat forecasts. Particularly with the boost from the HowSplendid acquisition for cash post year-end. I can see say 15p+ EPS being achieved now. Which could see a share price of 180p-200p later this year.
Excellent results which beat forecasts by some margin: - 13.07p EPS, compared to 12.5p forecast - 4.2p dividend, compared to 4.1p forecast - and another acquisition, announced separately: Http://uk.advfn.com/news/UKREG/2015/article/67200081 Note the fantastic client list which the rest of CRE can now exploit, i.e Allianz, Cuprinol, Kopparberg, Nando's, House of Fraser. The outlook is extremely positive - and the post year end acquisition for cash of How Splendid will mean that this year's results are strongly boosted. CRE is just far too cheap imo.
Sanlam Securities today reiterate their Buy and 165p target, prior to next Tuesday's prelims, which CRE have already flagged as in line with forecasts of: - 12.5p EPS - 4.1p dividend - £8.3m net cash Http://www.dakotafinancialnews.com/creston-plc-given-buy-rating-at-sanlam-securities-cre/191850/
Good to see a pre-open buy at 126p.