RE: Dont undertand13 Jun 2017 19:09
Hi Matt, hope all is well.
Not had time to digest the results, checked first thing this morning (as usual) to see if hit consensus forvyear end in terms of top line numbers (Rev, pre tax profit and eps), and as you say they hit them all - so nothing too exciting!.
Growth in revenue and profit is a lot lower than last year, on a lfl it was high teens and +24% respectively whereas this years comparatives are low teens for Rev (+10%, +13% rental) and only +7%/+8% for pre tax profits.
That said they have spent nearly seven times more than last year on bolt on acquisitions (£437m) and my guess is the 15 businesses acquired have not yet bedded in and/or delivered on growth yet. Also, they generated a phenomenal amount in free cash flow, an extra £251m, plus the market seems to have overlooked the share buyback which was £48m. The buyback equates to circa 6p per share which in terms of eps would have meant +29% eps growth (110p underlying eps) compared to last year (don't know if that's allowed as not an accountant but guess it's reasonable as shares can only be bought back using profits from the business).
Just a bit disappointed in the way the numbers have come across, also they were a bit stingy with the increase in the dividend, that said they have bought shares back and still increased the dividend.
This is a solid well run business and continually beating expectations was never going to be sustained in such a cyclical market - it didn't last year either but I guess this year was buoyed by Mr T's infrastructure plans which have not as yet materialised.
GL
DD
PS with 104p underlying eps the PE is only 15, excluding the buyback the PE is 14x, either way it's good value IMO.
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