I wrote up Connect Group (CNCT) recently as a value idea you'll probably hate. They have reported final results today which are pretty much in line with forecasts as suggested by their previous year end update, although the earnings were slightly ahead of forecasts and the dividend just slightly behind. In summary the News side did well, books were poor but being addresses with management changes, while the Education & Care division continued to make good progress. They also highlighted a new Jack's Beans premium vended coffee service, live in 120 independent retailers serviced by their existing infrastructure. I'll not go into more detail on the results as they seem fine and you can read the detail at the link above if you wish.
The share have responded spectacularly this morning being up by over 15% to 160 pence first thing. This is probably down to a second announcement they have made today concerning another new venture This is a new click and collect service they have launched which utilizes their distribution network and relationships with retailers. They have signed up Amazon as a launch partner for this Pass My Parcel service which seems like a good way to start and it has gone live with 500 independent retailers.
Summary & conclusion
So an in line set of results as expected, but with the added and unexpected bonus of the new click and collect venture with Amazon. This seems like a sensible way of further utilizing and making more profits from their existing assets which is all part of their strategy of diversifying the business away from news distribution. Not sure about next years numbers yet so will be interesting to see if it gets some upgrades or downgrades on the back of today's announcements. Nevertheless it still looks good value on the just reported numbers with a historic P/E of 7.4x and a Yield of 6% so I'd be happy to hold and would still be hoping to see the shares up to 180 pence in the not too distant future.
Website: Compound Income
Twitter: @CompoundIncome
