Daily Stock Market Report (Mon 28th Sep 2026) - KLR, LIKE, CCT, TRB, CKT

Good morning!

• Iran: The proposal from Iran to immediately reopen the Strait of Hormuz has been rejected by President Trump. Their proposal is said to be similar to the MoU that the two countries signed back in June. Trump expects new concessions, but the Iranian Foreign Minister has said “we have no reason to come back to diplomacy and engage with this administration once again”. The price of oil has risen overnight.

• Flawed housebuilding: there was negative publicity for the housebuilding industry over the weekend as the BBC reported on first-time buyers in Leicestershire who found 150 defects in their new home. The home in question had been built by Countryside, which is owned by Vistry (LON:VTY). The article does acknowledge that all of the issues were covered by warranty and were fixed. Edit: Vistry shares are doing well today (up 10%) thanks to...

First-time buyer boost: Andy Burnham's new "Your First Home Scheme" has sent the shares of consctruction firms flying this morning. Here's the official announcement.

Key points:

• An equity loan scheme "to get more people into homeownership"
• Only a 2.5% deposit required.
• Initial interest free period.
• Will include a household income cap and local property price caps.
• Further details to be announced at the Budget next month.

The announcement has predictably been welcomed by the Home Builders Federation and slammed by the Conservatives.

MJ GLEESON (LON:GLE) is up 18%, Persimmon (LON:PSN) is up 14%, and Taylor Wimpey (LON:TW.), Crest Nicholson Holdings (LON:CRST) and Bellway (LON:BWY) are all up 12%.

Overnight market movements:

• The FTSE is up 0.3% at 10,720

• S&P 500 is down 0.4% at 7,715

• Brent crude (December) is up 1.8% at $99.10/bbl

• Gold is down 2.4% at $4,180/oz

• Bitcoin is down 1.6% at $83,200

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Spreadsheet accompanying this report: link.

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Companies Reporting

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Graham's Section

Tribal (LON:TRB)

Up 18% at 98.6p (£211m) - Increase in Price for the Recommended Acquisition - Graham - TAKEOVER

It’s a nice bonus for Tribal shareholders today.

Earlier this month, we reported on an “agreed sale” of the company’s operating subsidiaries for £189m.

The buyer is Main Capital, a software-focused PE firm based in the Netherlands

Tribal itself provides Student Information Systems to the education sector (including many different types of institutions: higher education, further education, etc.). We had been moderately positive on it.

The news is as follows: Main Capital is increasing the amount it’s paying to £231m. I make that a 22% increase on the previously agreed price. £231m equates to 105p per share, which is a 66.7% premium to Tribal’s prior share price.

I should highlight what Roland did: that 105p per share is not being paid directly to Tribal shareholders. It’s being paid to Tribal plc. And then it will be up to Tribal to distribute funds to shareholders. They are planning to distribute the funds and liquidate.

Harwood Capital is involved, with a 15.7% stake. Over the past few years, they have proven to be very strong at finding companies where a takeover might be arranged.

In total, there are irrevocable undertakings from 52.7% of shares. This is not a takeover via Scheme of Arrangement, but merely a sale of subsidiaries, and so I think only 50% of votes are required to get it over the line.

Distribution to shareholders: today’s announcement includes the following (emphasis added by me).

The Board, having reviewed and analysed the cash consideration, the cash resources available to the Company and the Company's costs and liabilities and potential costs and liabilities, is highly confident that following Completion of the Proposed Sale, Cancellation and taking into account the expected costs of the MVL, Shareholders will receive Increased Net Cash Proceeds which will total not less than £231,219,773.

This amount is not guaranteed. But if I was holding these shares today, still trading below 99p, I could be tempted to hold on for the full 105p potential payment. The sale is expected to go through in Q4 2026, with the distribution to shareholders happening in two tranches - one in Q1 2027, and one in Q2 2027. So even compared to the current share price, there’s the potential for a decent return over the next 9 months, assuming it all goes through with no problems.

Well done to anyone holding this. It’s only right that a successful software company should achieve a decent premium and a high earnings multiple at takeover time: this new price gives a P/E multiple of c. 22x based on 2026 forecast earnings.

Let’s hope that generous takeover premiums can become a little more common, rather than the c. 25% premiums that we’ve seen so many times in the past!

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Checkit (LON:CKT)

Down 32% at 15.25p (£16m) - Interim Results & Termination of FSP - Graham - AMBER/RED ↑

The termination of the sale process has overshadowed the interim results here.

Back in March, the company said “there is a disparity between the Company's improving performance and its valuation on AIM.”

The share price at the time was 14.25p, with the company saying that its enterprise value was “approximately 1.0x ARR”, which was “materially below levels observed by the Board in certain precedent transactions for businesses with scaled, verticalised subscription platforms.”

Today, they have cancelled the sale process, after receiving three non-binding offers.

• One at 22p (they rejected it)

• One at 25p (they rejected it)

• One at 30p (the buyer walked away, “having concluded that an acquisition of Checkit did not fit closely enough with its existing business.”)

There were other “verbal indications” at various prices, including 40p, but I don’t know if any of those can be taken seriously.

So in the end, nothing happens.

Looking at today’s interim results, the company reports ARR of £12.8m, up 5% year-on-year.

It also reports cash of £3m.

That gives an enterprise value of £13m at the current share price, i.e. the valuation has fallen right back to the level which the company said was materially below its takeover value.

Unfortunately, at its current scale, the business isn’t profitable: adjusted EBITDA is only marginally positive (£0.3m), and there’s a £1.2m operating loss for H1.

Graham’s view

I think a sale at 25p might have been a reasonable course of action for management to take. But value is in the eye of the beholder, and the Checkit board clearly believe that their company is worth 30p+. And so they rejected an offer 75% higher than the prior share price (25p offer vs 14.25p).

Hopefully their strong conviction will turn out to have been justified. It is risky, of course. Checking the cash flow statements, I see that they had a net cash outflow of over £2m in FY26. No dividends were paid. Cash flow was then slightly negative in H1 this year.

They will need to turn their corner to cash generation before too long, or else one of the parties they turned down this year might approach them again, when their position is much weaker.

It’s been a while since I last looked at Checkit: I was RED on it last year. Despite the alleged interest in the company at 25p, I’m inclined to stay RED on it today simply due to the lack of profitability. But that would be a little harsh: the cash burn in H1 was only slightly negative, with the operating loss (£1.2m) mostly down to the amortisation charge (£1m). And it sounds like acquirers were very interested in a 20-25p range. So let’s take a more optimistic stance: AMBER/RED.

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Roland's Section

Keller (LON:KLR)

Up 4% at 3,452p (£2.4bn) - Contract variation for I-40 - Roland - AMBER/GREEN =

(At the time of publication, Roland has a long position in KLR)

Today’s update from this geotechnical engineering (groundworks) specialist is short but positive, improving revenue visibility for the next few years.

Contract extensions: Keller has secured a further $650m of work on the I-40 highway reconstruction project in the US.

This takes the total value of work secured on the I-40 project to c.$1bn, of which around 10% has been completed so far.

Including this latest contract variation, Keller expects the work to extend over the next three to four years.

This latest contract amendment increases the value of the group’s order book to around £2.4bn. That’s a 21% increase from the £1.9bn reported at the end of June 2026.

Outlook: due to the multi-year nature of this contract, there is no change to 2026 full year results expectations.

Current consensus forecasts suggest FY26 adjusted EPS of 247.5p, putting Keller on a P/E of c.14x.

Roland’s view

This contract variation should be good news for Keller and its shareholders, providing improved revenue visibility for the next few years.

The only potential concern I’d point out is that this project has now assumed outsized importance for this business. I estimate that c.28% or c.£670m of the company’s order book is now accounted for by the I-40, which is also the company’s largest ever project.

If problems emerge and the profitability of this project falls below expectations for any reason, we could see a big adjustment to profit expectations. We might also speculate about whether the company will be able to replace such a large project within its order book quickly enough to prevent a dip in earnings.

I’d be more concerned about these risks if Keller was a regular construction company. However, Keller is a recognised market leader in a specialist sector, so I am generally inclined to be tolerant of this kind of concentration risk. I think it’s also fair to say that there is no shortage of major infrastructure projects in the US, so if Keller is successful with I-40 it may be in a strong(er) position to win further work.

As things stand, Keller is turning into a good example of a company where strong momentum is persisting for longer than might have been expected. I can’t be sure without access to broker forecasts, but I wouldn’t be surprised to see 2027 earnings estimates nudged higher after today, extending a run of upgrades:

The stock has now regained the record highs seen following July’s earnings upgrade, reinforcing the positive price momentum – there are clearly still buyers here:

This situation is reflected in Super Stock styling and a strong overall StockRank, albeit with weaker ValueRank:

While I’d normally view the stock’s forward P/E of 14 as being up with events, I’m inclined to be more flexible on valuation than I usually would be, given the strong earnings momentum and high returns on capital being achieved at the moment.

For these reasons, I’m going to leave my previous AMBER/GREEN view unchanged today.

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Likewise (LON:LIKE)

Up 0.4% at 35p (£128m) - Interim Results - Roland - AMBER =

I flagged up Likewise’s results in The Week Ahead on Friday, commenting that the company is likely to be benefiting from the problems at rival firm Headlam (LON:HEAD).

For those not familiar with the story, Likewise CEO Tony Brewer previously ran Headlam successfully for many years. However, since Brewer’s departure, Headlam has suffered a series of strategic missteps (in my opinion). These culminated with the appointment of administrators at the start of September.

Returning to Likewise, we’ve previously commented on this company’s increasingly demanding valuation and wafer-thin profit margins. Fortunately, today’s results suggest trading momentum is still with the firm, with both an upgrade to full-year profit guidance and a notable improvement in margins.

Let’s take a look.

Half-year results summary

Today’s headline numbers cover the six months to 30 June 2026 and suggest the business is continuing to grow comfortably ahead of inflation and the wider economy:

• H1 revenue up 15.4% to £89.9m

• Gross margin up 0.8% to 32.1%

• Underlying pre-tax profit up 79.5% to £1.32m

• Earnings per share of 0.31p (H1 25: 0.09p)

Sales growth continues to gain momentum, too:

Sales increased in Q3 by 29.1% with YTD sales up 20.7%

Trading commentary: Likewise says that recent investment in infrastructure has paid off this year, with a new hub for palletised goods in Leeds providing improved stock availability and limiting the impact of Middle East shipping disruption.

Further operational capacity is being added, with a second cutting shift recruited at Derby and “additional distribution and cutting capacity” added in Wales this year.

Management is now confident of achieving £200m in revenue in 2026. To support further growth, Likewise acquired a new 60k sq ft distribution hub in Corby in August (in the UK’s golden triangle for logistics) and has recently agreed terms for a 47k sq ft hub in Manchester:

Together with the Leeds investment, the Newport extension and increased cutting capacity at other locations, the Corby and Manchester facilities provide substantial additional headroom for the Group's continued expansion as it heads towards its renewed £300 million target.

Profitability & Cash Flow: digging a little further into the company’s financials suggests an improving picture.

• H1 operating margin: 2.1% (H1 25: 1.5%)

• Trailing 12-month return on capital employed (ROCE): 5.1% (FY25: 4.3%)

While this level of ROCE is likely to be below Likewise’s cost of capital, the numbers are moving in the right direction and may improve further as volumes continue to grow.

Cash generation is also relatively good, with operating cash flow before working capital movements up by 22% to £5.1m in H1. This additional cash was swallowed up by a £1m working capital outflow to support higher inventories and sales growth, but the underlying picture still looks fine to me.

Net debt & £32.5m fundraise: although today’s half-year balance sheet suggests a net debt position of around £12m (excluding lease liabilities), the picture has changed since the 30th of June.

Likewise raised £32.5m through a share placing and retail offer in late July, strengthening the balance sheet and providing improved headroom to support growth investments.

Updated forecasts from house broker Zeus today suggest a year-end net debt position of £6.6m in 2026, which looks manageable to me.

Outlook

Reflecting the strength of trading in the first half and the continued acceleration in the third quarter, the Board now expects underlying profit before tax for the year ending 31 December 2026 to be materially ahead of current market expectations at not less than £5.0 million (FY25: £3.1 million).

Turning to today’s broker note from Zeus, I can see that FY26 adjusted pre-tax profit was previously expected to be £4.0m – so today’s upgrade is a 25% increase, fully justifying the “materially ahead” tag.

Investors expecting a corresponding increase to earnings per share forecasts will be disappointed, though. Likewise issued c.100m new shares in July’s equity raise, increasing the share count by c.40%.

The resulting dilution means that Zeus’s updated FY26 EPS estimates are only “broadly flat” (i.e. slightly lower), while FY27 estimates suggest the pace of growth could ease next year:

• FY26E adj EPS: 1.3p (-5.1% vs 1.3p previously)

• FY27E adj EPS: 1.4p (+7.7% vs FY26E)

Roland’s view

I think Likewise was wise to raise fresh equity while there's strong investor appetite for the company’s stock.

The growth story here appears to be on track and it’s worth remembering that CEO Tony Brewer has a 7.7% holding, so his interests are well-aligned with those of shareholders.

Scaling up the business appears to be delivering positive operating leverage (improved margins) and presumably reflects continued gains in market share.

Despite this, the immediate benefit to shareholders from today’s upgrade may be limited, due to the dilution involved and the shares already changing hands for 28x 2026 forecast earnings.

While I remain positive about the medium-term growth story, I would argue that at least some of this growth is already priced in.

The StockRanks reflect this view, with a high MomentumRank offset by a low value score:

Likewise retains its High Flyer styling, but the limited share price gain today reflects the significant dilution to earnings from the recent fundraise. I think it’s fair for us to retain our neutral view today, especially given the slower rate of EPS growth forecast for 2027.

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Character (LON:CCT)

Up 3% at 319p (£55m) - Trading Update - Roland - AMBER/GREEN ↑

Today’s full-year trading update from this toy manufacturing includes a 20% upgrade to full-year profit guidance.

Let’s take a look.

FY26 trading update

Character suffered weaker sales during the first half of the year, which I thought could be a risk to full-year forecasts. However, it looks like I should have paid more heed to May’s ahead of expectations outlook guidance.

In today’s full-year update for the year ended 31 August, management says that sales in July and August (i.e. retailers ordering for Christmas) were “very encouraging” and have “reversed the drop in sales” reported in H1.

As a result, full-year sales are expected to “be broadly similar” to the £100.5m achieved in FY25.

While this doesn’t sound all that impressive, the kicker here is that Character was able to maintain the improved gross profit margin reported in H1 during the second half of the year. This has driven today’s material upgrade to full-year profit guidance:

As a result, the Board now expects the Group's profit before tax and highlighted items for FY26 to exceed current market expectations by approximately 20%.

Revised forecasts: with thanks to Panmure Liberum, I can see that forecasts for both 2026 and 2027 have been upgraded quite significantly today:

• FY26E adj EPS: 26.3p (+19% vs 22.1p previously)

• FY27E adj EPS: 31.9p (+15% vs 27.6p previously)

Outlook

Despite the current economic challenges, overall trading remains positive as we lead up to the Christmas 2026 season. The Group's product ranges are selling well, and the higher margin is being maintained. With a strong product portfolio, backed by a robust balance sheet and a healthy cash position, the Board looks to the year ahead with optimism.

Cash return? The company also reminds shareholders today that it recently completed the sale of a warehouse in Lancashire for £9.8m. This deal “significantly increased” the group’s cash reserves, which currently stand at over £20m.

This has opened the door to a possible one-off shareholder return:

The Board is assessing the Company's capital requirements and the potential to return any excess cash to shareholders.

Roland’s view

Character’s high volume, low margin business model means that small improvements to gross margins can drop through to significant improvements in the bottom line.

We appear to be seeing that this year. Following today’s upgrade, FY26 EPS forecasts (y/e 31 Aug) have more than doubled in four months:

Today’s forecasts put Character shares on a FY26 P/E of 12, falling to a P/E of 10 in FY27.

Although I’m not sure whether we’re likely to see any more upgrades, I don’t think the shares look too expensive for this business.

The main concern I would highlight is that revenue growth remains sluggish, at best. FY26 sales are expected to be broadly flat year-on-year, at £100m.

Panmure’s latest estimates for FY27 only show revenue rising by 3% to £103m. The remaining uplift to profits is coming from higher operating margins.

While higher margins are good news, there’s usually a finite limit to what’s possible. When this is reached, earnings could level out if sales growth doesn’t improve.

I took a neutral view on Character in May. With hindsight that looks too cautious, so I’m moving our view to AMBER/GREEN today, in line with the StockRanks