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I closed my short a couple of weeks ago out of boredom for a tiny profit but I saw the spike today and opened the position again. After a dividend cut and CEO resignation I wouldn't be a comfortable holder but we shouldn't have long to find out.
Starved of news here (and want some capital for other things). But the last 2 years at least there has been a trading update 1st October, so I suppose it's worth waiting for that. Not been very exciting recently - till today. Maybe the rise is due to the news soon.....
Looking at the finer details this is far from going backwards. Time will tell
I've put a small short on. Results were poor and it looks very expensive for a business going backwards. The investment in sales has delivered nothing.
That's understandable though - on the other hand they may have their sights on a large acquisition as well so are being cautious. The more recent acquisitions were quite small. There hasn't been a larger, more significant acquisition (£10+ million) since Sonassi in 2017 and SystemsUp in 2015. What is apparent is they aren't just focusing on other hosting businesses. I think Sonassi was a great move and it broadens the groups "skillset".
In typical Iomart fashion, and this seems to happen every year for as long as I can remember, the share price dips after results day and then slowly regains momentum.
Final dividend cut by 22%. I did not see that coming. I had assumed a maintained dividend. Given the recurring nature of iomart revenues the Board must be worried about future sales and customers going bust.
So as always good old dependable Iomart gains momentum again. Not far off the pre covid price now and its still business as usual from the Iomart Towers in Glasgow. Watch this space - this company has a lot more to bring to the table in the coming months.
This is a very strong business and has been year on year over the last decade. Always pursuing new profitable acquisitions and capitalising on them.
IMO this is a hidden gem and has been one of my favourites over the last 5 years, have done very well in the short term on most of the most profound dips. The recent drop due to covid-19 was way over the top given what the company does. Compared to most businesses Iomart is ideally placed to withstand the current lockdown by remote working and is also a supplier of those types of services which enable remote working and other associated infrastructure.
I had already took advantage of the recent slump - for a change quite near the bottom and have watched it rise again quite nicely. Yet the share price is still substantially lower than its peak during February and nobody seems to have taken into the equation the high probability that they have secured a lot of extra business due to the high numbers working from home.
This business has to be one of the few to have done well out of this covid-19 fiasco and I believe that will be strongly reflected in the next set of results. In fact, a lot of firms have probably realised that home working has many benefits in productivity and may well after all of this start allowing more employees to do a few days a week from home.
Had a change of heart and sold.
Finncap have reduced their estimates for this and next year to 18p and 19.2p EPS.
It's trading on quite an expensive P/E, and there doesn't appear to be a catalyst for a re-rating for a while yet.
There may be another acquisition, but you can't hold shares on that rather speculative basis.
On the other hand, without a catalyst the share price may drift down to 300p-320p, which would offer better value.
This was only an exploratory holding anyway, so I'll sit and wait for a while.
A reasonable set of interims today. Revenues are up nicely, contract wins and cloud growth mean H2 looks good, the dividend is up and there's much confidence going forward. Adjusted EPS was down slightly, but this was due to increased investment costs written off which will come to fruition later, and IOM had already flagged an H2 weighting.
The huge recurring income and growth in the cloud mean that this remains a hold for me, but I'll top up if there's an opportunity at the right price.
This week's update was promising overall, especially the visibility going forward and the confidence "for the full year and beyond" given the global transition to cloud.
There will be an H2 weighting in respect of margins. H1 revenues will be good though net numbers may not be so impressive, but these are expected to catch up in H2.
Peel Hunt retain their Buy and 520p target:
Https://investing.thisismoney.co.uk/broker-views/
Nice plug earlier this week:
Https://www.fool.co.uk/investing/2019/09/11/2-booming-growth-stocks-i-need-in-my-stocks-and-shares-isa-right-now/
"Shares on a tear
Cloud computing provider Iomart (LSE:IOM) owns and operates 12 UK datacentres connected by its own dark fibre network, as well as operating a growing number of server farms in Europe, the US, Japan and Australia. I used to work in telecoms so I know a bit about this sector: if you switched off when the words ‘cloud computing’ appeared, then perhaps this stock isn’t for you. But I think Iomart has plenty of space to grow.
Pre-tax profits and earnings per share are rising and 10 years of consecutive dividend growth has always had more than 2.5 times earnings cover.
Management has refreshed the board recently and has invested in buying out the competition, including datacentre providers Bytemark and LDeX. This strategy, says Chairman Ian Steele, proves Iomart’s “ambition to deliver the same long-term pace of growth achieved over the last five years which saw the business double in size.”
The huge recurring income and strong cash flows and Balance Sheet provide big reassurance in current markets. And hopefully IOM will be making more acquisitions soon.
Tipped here by Andrew Hore:
Https://www.ii.co.uk/analysis-commentary/six-aim-100-stocks-worthy-attention-ii508926
"Iomart (IOM)
331.5p
Cloud computing and hosting services provider Iomart (LSE:IOM) has a strong track record in a growing sector. The group has shown it can grow organically and via acquisitions.
Iomart offers managed hosting, consultancy, business continuity, colocation, security and cloud computing services. It owns its own network infrastructure, including data centres. Recurring revenues are more than 90% of turnover and there is only a small exposure to the public sector. Revenues have doubled to more than £100 million in the past five years and the aim is to head towards £200 million revenues.
Iomart generated more than £30 million of cash from operations, but spent more than that on capex and acquisitions, plus dividends. Net debt was £39.2 million at the end of March 2019 and that could fall to nearer £30 million by next March.
The share price is barely changed from the start of the year. Pre-tax profit is forecast to improve to £27 million this year, putting the shares on 17 times prospective 2019-20 earnings with a forecast yield of 2.4%."
Apparently IOM is on Techinvest's 2nd Half Best Buys list as of last Saturday.
Plus the Naked Trader has been topping up again here late last week:
"Iomart (IOM) a long term hold fell, again for little reason and I topped up there"
Peel Hunt reiterate their Buy and 520p target, whilst Finncap have a 450p target:
Http://investing.thisismoney.co.uk/broker-views/
Surprised this isnt going up but I'm back in.
Solid results. PBT of £25.5m is slightly ahead of forecasts, whilst the core 19.1p adjusted EPS is slightly behind (probably tax, though I haven't checked yet).
However, with over 90% recurring income the most interesting section is the outlook, which reads very, very nicely:
"These results represent another year of strong performance by the Company, with increased revenues, profits, cash flow and dividend levels. The demand for the products and services we provide continues to grow. Over the last 12 months we have reinvigorated our sales and marketing function which delivered a strong finish to the year with March, the final month of our financial year, recording the highest month of revenue in the year. We enter the new year with confidence, underpinned by a significantly larger pipeline of prospects than this time last year.
"The journey to Cloud adoption remains a long term trend and, as a result, our market opportunity is large and widening. We continue to invest in our cloud product offering, skills and organisational platform to ensure we are positioned to capitalise on this opportunity, and the Board is confident that strong growth will continue for many years into the future."
Octopus Investments have been buying - they're now above 14% with 15.235m shares.
They've bought almost 1.1m shares since their last disclosure:
Https://www.investegate.co.uk/iomart-group-plc--iom-/rns/holding-s--in-company/201906050756331995B/
Typo alert! Peel Hunt reiterate their Buy and 520p target today:
Http://investing.thisismoney.co.uk/broker-views/
Peel Hunt reiterate their Buy and 500p target:
Http://investing.thisismoney.co.uk/broker-views/
And sold out here. Hopefully will free up some funds to buy back later. Good luck all! Great company. Hope it comes good.
IOM are on a current year P/E of only 16.9 based on forecast 21.4p EPS (with a 2.4% divi yield).
One of the other reasons for IOM to claim a higher rating is that recurring income is hugely reassuring at over 90%.
With further acquisitions likely from existing resources on a sound Balance Sheet the analyst target of 450p looks reasonable to me at present.
Finncap's update summarises as follows:
"Full-year trading update
iomart has reported a full-year trading update indicating EBITDA of £42.2m (£43.3mE) from revenue of £104m (£105.5mE). The consistent combination of organic and acquired growth continues to deliver EBITDA margins of 40% and adj PBT margins of 25%, with recurring revenue in excess of 90% – and yet a free cash yield above the norm, at 5.1`% for FY (March) 20. Target 450p reiterated....
....Given the visibility of recurring revenue, the balance sheet remains strong and continues to offer potential for further acquisitions, with free cash flow of £19m into FY20. Forecasts are fundamentally freehold, any mild change to revenue offset by the LDEX contribution. Target 450p reiterated."
Good year end trading statement yesterday. PBT is just slightly less than Finncap's forecast by a mere 2% or so, so EPS should be around 19.5p, with 21.4p EPS forecast this year.
This sounds most promising:
"The early benefits of this effort started to flow through in the second half of the financial year with an increase in new lead generation from both new and existing customers. This has delivered a strong finish to the year with a significantly larger pipeline of prospects than this time last year and we enter the new financial year with confidence."
And the outlook is similarly confident:
"iomart has delivered yet another year of growth with strong profitability and cash flow underpinned by our recurring revenue business model, diverse customer base and attractive market position.
"The Group's large and building sales pipeline, combined with high levels of visibility and a significant market opportunity, leaves the Board very confident in the outlook for the new financial year, as well as the long term prospects for the Group."