Stockopedia - last part of a long article by PAUL SCOTT2 Mar 2022 13:45
Valuation - many thanks to Zeus for publishing an update note this morning, on Research Tree. It has pencilled in 15.8p for FY 2/2022 - a PER of 3.6! This is best ignored though, because it’s a one-off.
Next year, Zeus has profit more than halving, to £35.4m, anticipating sales conditions normalising, and higher overheads. This is the more relevant figure to value the shares on, in my view. So at 7.5p, this is a forward PER of 7.7 - which looks highly attractive to me.
Particularly when you also factor in that the balance sheet has net cash, and is full of freehold property.
My opinion - as shown above, even if we adjust out current extremely positive market conditions, VTU shares still look very cheap.
The current share price is at a discount to NTAV, which doesn’t make any sense to me. That implies that the company is making unproductive use of its assets, which is clearly not the case. So I think the market price for Vertu shares just looks wrong (ie. too low).
The dividend yield is about 3%, plus VTU is buying back its own shares, thereby enhancing EPS, with another £3m buyback announced today.
There has also been takeover activity in this sector, so further upside could come from that.
There’s so much to like here, so I remain a firm holder.
Looking at the chart below, I might usually consider banking some profits. However, the fundamentals are so good, that it doesn't make sense to sell a share which is this cheap.
https://app.stockopedia.com/content/small-cap-value-report-wed-2-mar-2022-placeholder-943615?order=createdAt&sort=desc&mode=threaded
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