Good morning! We say goodbye to Stamp Duty on AIM shares as from today, which is further good news for the junior market.
Crawshaw (LON:CRAW)
This is a small, Northern chain of about 21 butchers/hot food outlets. There is a useful explanatory video about the company here on their website. Results for the year ended 31 Jan 2014 have been issued this morning, and look very good. This comes on the back of a series of very strong trading updates, so is not unexpected.
Sales are up nearly 12% to £21.0m, and profit before tax has shot up from £0.3m to £1.0m. From what I can gather, this seems to have been driven by shrewd buying of meat from surplus available stock, and developing a range of hot food for takeaway, e.g. casseroles, curries, etc, on top of their traditional butchers products, such as home made sausages, and deals on multi-packs of meat. Aversion to supermarkets after the horsemeat scandal gave things a boost last year.
EPS of 1.42p puts the shares (currently 37p, up 3p on the day) on a very rich PER of 26 times. Yikes! However, with current trading also strong, broker forecast for the new year is EPS rising further to 1.8p, which puts them on 20.6 times. That looks an aggressive valuation to me, so the market is signalling that it sees further upside surprises on profits in the pipeline, which would be necessary to support this valuation, in my opinion.
With two new stores in the pipeline, there is roll-out potential, although that seems at too slow a pace to justify a hefty price premium. The Balance Sheet is OK - although there is small deficit on working capital, with current assets at 97% of current liabilities, that's a perfectly satisfactory position for a retailer, because retailers sell for cash, so there is not usually a debtor book. Hence less working capital is needed. I've seen retailers function perfectly fine with a ratio as low as 50% on that measure.
The final dividend has been more than doubled to 0.43p, giving 0.52p for the full year, so that's a 1.4% yield at 37p per share.
Current trading is very strong, with the first 12 weeks of the new year showing LFL sales up 19%, and gross margins…
