Ramsdens Hldgs Share Price (RFX)

Replaced its third-party credit provider in March. Analysts predict full-year revenue from this activity will rise almost 5 per cent to £35mn to drive up divisional gross profit from £12mn to £13mn.

Potential for more earnings upgrades

Factoring in a slightly higher interest charge in its financial models, Panmure increased its full-year pre-tax profit estimate by £0.7mn to £11.2mn. On this basis, expect earnings per share (EPS) to rise from 24p to 25.6p to support an 8 per cent hike in the dividend per share to 11.2p. Analysts upgraded their closing net cash forecast to £6.6mn to reflect the higher level of profit, too.

With the shares trading on a prospective price/earnings (PE) ratio of 8.1 and offering a 5.4 per cent prospective dividend yield, investors are taking an overly cautious approach and one that is at odds with the strength of trading. Importantly, the current level of record earnings is not only sustainable, but I suspect that analysts will have to upgrade their 2024-25 earnings estimates materially in due course as current expectations of a flat performance are too conservative from my lens.

Ramsdens’ shares have delivered a 58 per cent total return (TR) in my 2021 Bargain Shares Portfolio, during which time the FTSE Aim All-Share TR index has shed 32.7 per cent of its value. At the current rating, they are priced for further outperformance. Panmure Liberum’s raised target price of 305p (from 290p) is not unreasonable. Buy.

"The gold price has been on a tear this year and is driving up profits for a diversified financial services group

middlesbrough-based financial services group Ramsdens Holdings (RFX:207.5p) has issued an unscheduled trading update and upgraded full-year earnings guidance.A key driver has been precious metal buying activities as customers look to sell items of jewellery to raise cash. The gold price has increased 9 per cent from £1,755 an ounce at the end of the first-half trading period (31 March 2024) to £1,914 an ounce, so increasing demand for this service as customers look to mitigate cost of living pressures. The items purchased are either sold through Ramsdens’ chain of 169 retail stores, or smelted and sold to a bullion dealer for their intrinsic value. Such is the strength of precious metals trading that house broker Panmure Liberum has increased its divisional revenue contribution estimate by 10 per cent to £31.1mn for the 12 months to 30 September 2024 and raised its gross profit estimate by 11 per cent to £11mn, representing a fifth of the group total of £50mn.

Moreover, with the outlook for the gold price remaining bullish as major central banks start to ease interest rates, so reducing the opportunity cost of holding a non-yielding asset, while at the same time continuing to increase the supply of fiat currency, then I wouldn’t bet against the gold price breaking out to new highs imminently. Demand for gold is also being underpinned by geopolitical uncertainty in the Middle East, and the ongoing conflict in Ukraine.

Benefits of a diversified business model

The strength of precious metal buying activities has been offset by slightly softer trading in foreign currency exchange during the peak summer trading period, prompting analysts to trim their full-year gross profit contribution from that activity by £0.2mn to £14.3mn. That outcome would still be well ahead of the gross profit of £13.6mn reported in the 2022-23 financial year and highlights the benefits of a diversified business model as weakness in one area can be mitigated by strength in another.

Furthermore, although Panmure Liberum lowered its foreign currency exchange gross profit estimate by £0.6mn to £14.7mn for the 2024-25 financial year, the downgrade was more than offset by the £1.5mn upgrade to their precious metal profit estimate in the same period.

As one would expect, Ramsdens’ pawnbroking pledge book continues to grow incrementally as customers look to raise cash by pledging valuable items as security against short-term loans. Analysts at Panmure Liberum are comfortable maintaining their divisional full-year gross profit estimate of £13.4mn, implying 34 per cent year-on-year growth.

It’s reassuring to note that jewellery retail revenues continue to perform well, reflecting investment in stock, growth in the retail estate and a recovery in premium watch sales over recent months after Ramsdens’ replaced its third-party credit provider i

Https://www.londonstockexchange.com/news-article/RFX/director-pdmr-shareholding/16608547

Melo crowd are supposed to be sophisticated. 11% avoid!

Ramsdens Holdings, a diversified financial services provider and retailer, has provided a robust trading update for the current financial year ending 30 September 2024, continuing the positive momentum seen in the Group's interim results for the six months ending 31 March 2024, announced earlier on 5 June 2024. The company's strategic focus on multiple income streams—including precious metals, pawnbroking, foreign currency exchange, and jewellery retail—has positioned it well to weather economic fluctuations, which is precisely what the Company has done well since it became one of our pandemic recovery plays at 125p February 2021. The Company has never let us down, demonstrating consistent progress, which sees the share price growth from 125p to 203p at 62.4%, plus accumulative dividend payments total of 20.6p Per share.

https://smallcompanychampion.substack.com/

A refreshingly clear and succinct RNS, giving both the previous and the current projections. Well done Ramsdens.