The insolvency market is currently at its lowest level of activity since 2004. So how have shares in bankruptcy and business recovery specialist Begbies Traynor (BEG) held up? The answer, as we have noted several times since 2015, has been the group’s successful diversification into property services. So, while the core business recovery division remained damp, a 20 per cent rise in property-related operating profits meant overall margins were steady.
That was enough meat on the bone for the market, which pushed the shares up 7 per cent on the day after preliminary financials were published. Investors will have also seized on management comments that business recovery appointments are picking up since January. This follows a report by Begbies in April suggesting cost pressures and growing uncertainty over future trade with the EU had led to a 26 per cent rise in levels of “significant” financial distress in key supply industries in the three months to March.
Canaccord Genuity expects adjusted pre-tax profit of £5.6m and EPS of 3.7p in the year to April 2018, against estimates of £4.9m and 3.3p in FY2017.
| BEGBIES TRAYNOR (BEG) | ||||
| ORD PRICE: | 53p | MARKET VALUE: | £57m | |
| TOUCH: | 53-55p | 12-MONTH HIGH: | 54p | LOW: 44p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 265 | |
| NET ASSET VALUE: | 54p | NET DEBT: | 18% | |
| Year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 51.1 | 2.4 | 1.6 | 2.2 |
| 2014 | 44.1 | 4.3 | 3.7 | 2.2 |
| 2015 | 45.4 | -0.7 | -0.6 | 2.2 |
| 2016 (restated) | 50.1 | 0.9 | 0.4 | 2.2 |
| 2017 | 49.7 | 0.6 | 0.2 | 2.2 |
| % change | -1 | -26 | -50 | |
| Ex-div: | 12 Oct | |||
| Payment: | 08 Nov | |||
| *Includes intangible assets of £58.5m, or 55p a share | ||||
