Good morning! This should be a fairly busy week, as March year end results are now coming through for smaller caps. GB (LON:GBG) issue their annual results today, and whilst the figures look good, especially the rise in adjusted EPS from 3.9p to 5.0p, at 100p the shares look fully valued to me. That's a PER of 20, a fairly rich rating, yet I notice that organic revenue growth was only 7%. The rest of their growth came from acquisitions. Their outlook statement is confident, and talks about growth in new geographies, which is probably why investors have been prepared to bid the shares up to this fairly high valuation.
They only pay one dividend per year, so at 1.5p the yield is nothing to write home about, at 1.5%. The shares have had a great run in the last three years, but I cannot see any reason to get involved now that the valuation is full, and the gains have already been had. I'd be more inclined to sell than to buy, at this price.
Fairpoint (LON:FRP) issue a trading update in advance of their AGM later today. It says that trading has been in line with market expectations in the first 4 months of the year. Although they do say that their market is quiet, with IVAs being commenced down 5% compared to last year. Fairpoint provide advice & solutions to help consumers deal with problem levels of personal debt.
The shares look great value on a PER and yield basis, with the forecast PER being only 7.6, and the forecast dividend yield being 5.5%. When I last looked at the accounts, the Balance Sheet and cashflow looked alright too, and I was impressed with management when listening in on a conference call some time ago.
My only reservation is that turnaround specialists Hanover Investors, sold their stake on 15 April. This makes me wonder if the smart money has already been made on these shares? That said, there is a lot of smart money still in Fairpoint, and a major shareholder list which has Giles Hargreaves' Hargreave Hale on 15% and Gervais Williams' Miton Group on 12% is enough to give any investor a warm glow.
I might buy back in here…
