Daily Stock Market Report (Wed 14th Oct 2026) - VTU, SCT, RWA(HAYS,PAGE), JHD, CNS, ASHM

The price of oil is up for the fourth day in a row after the Houthis from Yemen managed to hit Saudi Aramco’s headquarters in Dhahran, Saudi Arabia.

Yemen has a very complicated political situation: the (Iran-backed) Houthis have control over the majority of the population, while the (Saudi-backed) internationally recognised government controls the majority of its land mass.

The civil war between the two sides was reignited this summer after Saudi Arabia attacked the airport in Yemen’s capital.

If the conflict between the US and Iran was not enough, the Red Sea has now suddenly become another main stage for geopolitical uncertainty.

Overnight market movements:

• The FTSE is up 0.2% at 10,665

• S&P 500 is unchanged at 7,810

• Brent crude (December) is up 0.7% at $106.40/bbl

• Gold is down 0.3% at $4,145oz

• Bitcoin is unchanged at $83,300

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Mark Simpson joins me today.
All done for today, cheers! Spreadsheet accompanying this report: link.

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Companies Reporting

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Mark's Section

Vertu Motors (LON:VTU)

Up 3% at 84p (£252m) - Interim Results - Mark - AMBER =

The headlines here are all heading in the right direction with revenue, cash generation and PBT up, plus net debt down:

Shareholders are rewarded by a 11% increased interim dividend.

This is also another upgrade:

Full year results for the year ending 28 February 2027 are anticipated to be ahead of current expectations.

Momentum is clearly behind them as their AGM trading update in June also said they would be ahead of expectations. However, the broker upgrades at the time were relatively slight; Shore raised their EPS forecasts from 5.7p to 5.9p. Today, that jumps to 6.6p, a much more impressive 12% upgrade to the bottom line.

The problem is that this comes in a context of a huge downgrade earlier in the year:

FY27 EPS estimates are still some 10% below where they started the year.

For FY28, Shore don't make any changes, which means their 6.4p is 30% below the 9.1p they had in at the start of the year. Yet the share price is around 33% higher than back then. This means that the FY28 earnings multiple is close to double what it was.

This can be seen in the P/E ranges, which are much higher than recent times:

Of course, given recent upgrades to FY27 numbers, investors may be expecting that momentum to continue into FY28.

Historically, the company has been under-represented in the Chinese brands that have seen the biggest sales growth in the UK. The company appears to have responded to this, though:

The Group continues to reshape its portfolio to capture attractive growth opportunities, including automotive brands from China. We now have 20 Chinese automotive outlets, with more on the way.

It seems a further 11 Chinese brand outlets are planned in the next 9 months. However, it would need some pretty big upgrades to look like good value compared to normal multiple ranges.

Balance sheet:

Things look better on this front. Despite some further working capital outflows, they generated £32.5m of cash from operating activities, up from £16m in H1 last year. With lower net capex at £5.3m, and £10.9m of lease principal payments, this means free cash flow was £16.3m versus an outflow in H1 last year.

This cash flow has been directed towards £3.5m of dividends, £5.7m of share repurchases, and still allowed a reduction in net debt (excl. leases) of £54.2m, which they say is lower than expected.

The interim dividend is raised by 11% to 1.0p. However, it is worth noting that the payout hasn't risen as fast as the share price and the 2.5% forecast yield is below the typical range for the company, following a cut in FY25:

Part of this is a preference for buybacks over dividends:

The Group continues to repurchase its own shares as part of its Share Buyback programme. To date, 21.9% of the share capital of the Group has been repurchased since the commencement of the programme in 2018. £10.2m remains of the £12m buyback announced on 5 March 2026 and the Company will purchase shares up to 85p.

It is interesting that they have been so slow to buy back their own stock and also that they put a specific figure on the price they are willing to pay. It is tempting to think that this may put a floor on the share price in the near term. However, they have historically not given the broker a mandate to buy stock in close periods, so this isn't a given.

Part of their confidence in buying back their own stock is the strong asset backing of the shares. They report a further increase today:

Tangible net assets per share of 80.8p (28 February 2026: 75.9p) a new record level

Their calculation appears to include an IAS19 pension surplus, which would not necessarily be a surplus on more cautious Triennial assumptions, nor whether it will ever be accessible by the company if it is in surplus. This takes 1.1p/share off these numbers, but is obviously not particularly material to the investment case.

This means that the company still trades at a very modest premium to TBV where the vast majority of those assets are freehold property. However, that also raises questions about how productive those assets are.

In the Annual Report, freehold and long-leasehold property made up around 92% of PP&E, which would make it around £323m at the half-year, based on a similar proportion.

Freehold land isn’t depreciated, and freehold buildings are depreciated at 2% a year. If we guess that the split here is roughly 50-50, then this is a 1% charge to the P&L.

Lease yields on these types of properties are around 7%. So the P&L charge would go up by around 6% pa if they sold and leased back all of these. This would be an additional £19.4m charge.

This is 2/3rds of the company's ongoing PBT. So it would be possible for the company to split into a PropCo and an OpCo and return the vast majority of the current share price to shareholders, say 75p after costs. However, the remaining OpCo on a typical 9xP/E would only be worth an additional 20p or so, giving a 95p total valuation. This is above the current mid-80s share price, but perhaps not enough to make it obviously good value.

Mark's view

While everything in this report is heading in the right direction, and we have the second FY upgrade, this still leaves forecasts below where they started the year. It is difficult to feel there is further significnat upside in a stock where the FY28E earnings multiple has already doubled over the last 9 months.

That said, there does appear to be a modest undervaluation based on the scale of the freehold assets, and Tangible Book Value per share continues to grow. These assets limit the downside, and that may be an attractive quality to many investors. However, the upside from here also looks quite limited unless we see some very material upgrades in the, as yet unchanged, FY28 forecasts. In light of this, I am happy to keep our neutral view for the moment. AMBER

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Robert Walters (LON:RWA)

Up 7% to 139p - Q3 2026 Trading Update - Mark - AMBER/RED =

One of the big questions for the sector that I raised when I previewed the recruitement sector in The Week Ahead was whether the decline in Net Fee Income in the sector has now bottomed? And I think there are signs that it mostly has.

Today Robert Walters reports NFI for the third quarter up 1%.

Michael Page (LON:PAGE), which reported yesterday, had NFI up 1.5%, its first growth since Q4 2022. Hays (LON:HAS) NFI declined 3% LFL in their Q1 update on Monday.

However, the recovery is highly dependent on the type of recruitement. Robert Walters only grew NFI because its outsourcing arm saw fees rise 19%. Temporary Recruitment was flat and Permanent continued to decline by 5%.

Hays saw similar trends, with Permanent down 7% LFL and Temp down 1%. Only Michael Page managed to grow NFI here, with Perm up 1% and Temp +3%.

Regionally, for most of them, the UK and Continental Europe are the weak spots, with the US and APAC doing better.

Interestingly, for Robert Walters, the UK is a bright spot with NFI up 14% in Specialist Recruitment, and showing strength in permanent positions.

Profitability:

Hays didn't give any specific FY27 profit guidance, only mentioning their desire to achieve medium-term targets. With the shares trading at 30x forward earnings, you can see why the market may have been put off by this update, and the shares dropped 13% on Monday.

The Michael Page share price was largely flat yesterday, as they slightly increased their 2026 operating profit guidance to £29m (from £28m). However, this still puts them on a P/E above 30x.

So far, the market appears to have liked the Robert Walters update, as they have shifted from guiding “towards the upper end” in July to "at least in line with expectations". However, a quick check of the footnotes reveals that:

Current company-compiled consensus for 2026, being the mean average of three analyst estimates, is an operating loss of £(8.3)m.

Trumpeting an improvement in expectations, when those are still for large losses, and competitors are profitable, seems a bit like a company excited about a H&S improvement because fewer employees have been killed!

Cost-cutting:

In the current environment, it is perhaps unsurprising that any recovery in sector profitablity has largely been driven by restructuring rather than better NFI performance. I certainly appreciate the irony that all the major recruiters are firing staff.

Michael Page continued to reduce fee-earner headcount, Hays is exploring options for seven countries, and Robert Walters has its own review under way. It seems that the pace of firings will now moderate with them saying:

The Group considers existing fee earner headcount levels to be broadly appropriate overall, but will remain agile in positioning the business based on market conditions and fee earner productivity levels.

Balance sheet:

The bigger issue I see is that, while cost-cutting is the right thing long-term, the immediate cash cost still hits the company finances. Ongoing losses continue to hit the company's cash balance:

Net cash of c.£13m as at 30 September 2026 (30 June 2026: £17.2m). The Board continues to expect net cash at the end of 2026 to be stable versus the 2025 year-end position.

One of the problems with this measure is that it excludes lease liabilities. The StockReport includes leases and calculates a £42m net debt position:

We've seen £130m increase in net debt since 2020, including leases, which seems a huge shift in the state of their finances. Some of this appears to be due to paying an uncovered dividend in FY24, and there was a buyback in place from August 2022 to October 2023. However, given that the share price ranged from around £4-5 at that time, they apper to hav destroyed a huge amount of shareholder value with it!

I also have some big doubts around their ability to rebuild net cash (excl. leases) back up to the £26.2m level it was at FY25 year-end.

The half-year results showed a £4.5m operating loss, so based on current guidance we'd see at least a £3.5m operating loss in H2. Interest paid and principal paid on lease liabilities are likely to be at similar levels to H1, offsetting D&A.

This means they need to generate somewhere between £13-16m out of net working capital in Q4 to hit that figure. At the half-year, we had already seen NWC drop down to £35m:

While it is not inconceivable that periods of very weak trading lead to strong working capital in flows, the problems come when trading recovers.

The market appears to have priced in a strong recovery in NFI already, but if they were ever to return to 2021/2022 levels they would likely need another £100m of working capital to fund it. They seem to recognise this with an additional £20m of financing facilities secured in this quarter.

I can't see this being enough, though. Given the current balance sheet, I think they will need to either accept being a permanently smaller business going forward or secure additional funding.

This doesn't mean that there isn't a wider sector recovery play here, just that I think it will be hard for them to ever return to previous highs of trading or market cap.

Mark's View

While the return to growth in NFI is welcome, it is driven by their outsouring arm rather than growth in overall permanent recruitment. Still there are signs that things are bottoming for NFI accross the sector.

On top of this we have cost-cutting and headcount reductions across all the major recruiters, which should bear fruit at the bottom line eventually.

The problem with Robert Walters is that, despite these trends, H2 is forecast to be at least a £3.5m operating loss, and their once high net cash balance has been eroded by losses and one off cash costs associated with the cost savings.

Net cash/debt (incl. leases) since 2020 has declined by £130m despite net working capital dropping by £85m. They are guiding net cash to recover into the year-end, but with trading losses, that can only mean a further stretching of working capital.

I think there is a real risk that the company face a difficult choice of being a permanently smaller business, or requiring additional financing as markets recover. As such, the recent share price strength looks a little premature to me.

Roland considered this AMBER/RED at 99p in July when they released their Q2 trading update. With the share price now almost 40% higher, I'm just not sure that a shift of NFI being down 4% in Q2 to being +1% in Q3, while the company continues to be loss making is enough to change our view.

It is worth noting that the Stock Rank disagrees with me. As the algortithm's now rate it a Super Stock. However, the only substantive change appears to be in the Momentum rank, which has gone from 18 to 92. However, changes like this, which are entirely driven by increases in share price, tend to be far riskier than those backed by improving fundamentals in my experience. Those who bought in on the short-term momentum may want to watch carefully for any sign of mean reversion.

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Graham's Section

Softcat (LON:SCT)

Down 7% at £17.93 (£3.9bn) - Preliminary Results - Graham - AMBER =

Softcat is "a leading UK provider of IT infrastructure products and services", i.e. rather similar to Computacenter (LON:CCC).

Last month, I looked at Softcat's acquisition of GDT, a Texas-based IT company, for £785 million.

Through the use of some rather tortured back-of-the-envelope calculations, I estimated that GDT was expected to deliver in the region of £40-45m of after-tax profits in its first full financial year under Softcat ownership.

GDT's contribution to earnings per share would be offset by a higher interest bill and a higher share count, as Softcat both borrowed and raised equity in order to fund the deal.

Let's quickly review these full-years which are before the acquisition of GDT:

• Gross invoiced income +30.5% (£4.7bn)

• Gross profit +24.7% (£616m)

• Underlying operating profit +19.4% (£215m)

So far, so good. These results are "significantly ahead of our expectations at the start of the year". This chart shows how EPS forecasts evolved:

The total dividend for the year is increased by 7.5% to 31.5p, but there is no special dividend as there was last year (which makes sense considering the need to fund the acquisition!)

Net cash finished just shy of £200m.

Outlook:

Outlook: Looking ahead, and excluding the contribution from GDT, business momentum remains strong and the Board expects to deliver high single-digit underlying operating profit growth in FY2027, slightly ahead of gross profit growth following very strong two-year growth across FY2025 and FY2026.

After gross profit growth of 18% in FY25 and then nearly 25% in FY26 (mostly organic), it would be greedy to expect these growth rates to continue for very long.

So we'll have a softening of organic growth in FY27, but this will be combined with GDT's contribution.

CEO comment:

AI is one of several factors making IT infrastructure more critical, complex and strategically important for our customers’ operations....

Post year-end, we announced the acquisition of GDT, a leading US-based multi-vendor IT solutions provider. This is a significant strategic step for Softcat, giving us enhanced capability in the US and strengthening our ability to serve customers with international requirements. GDT will strengthen our foundations for long-term growth, alongside and in combination with, our existing UK and Ireland business. We are very encouraged by how well received the transaction has been by customers, vendors and employees alike.

Estimates: this is covered by 14 brokers and the latest consensus estimate is for EPS of 86p in FY July 2027, rising to nearly 100p in FY July 2028 (including GDT's contribution).

In September, I pencilled in 101p of EPS in FY28, so it looks like I may have been pretty close.

That puts the shares on a P/E multiple of 18x for FY28 - the financial year starting nearly a year from now.

Graham's view

I was neutral on this on valuation grounds last time, and I'm going to leave that unchanged today.

An earnings multiple of 18x would be pretty high, in my view, even if it was based on current-year earnings and even if the company had a net cash position.

However, that's based on next year's earnings. And the company is going to be carrying substantial debts for the next few years: nothing that would make me concerned for its safety, but enough to impact how much I'd be willing to pay for the equity.

I'd also point out that after a few years of very strong organic growth, the market may have been lulled into a false confidence here. With organic growth about to fall to a more sustainable level, investors may wish to reassess this one - with the shares down 6% today, they may already be doing so. This is especially true if any air comes out of the AI bubble.

In summary: I think Softcat is a fine business, but I also think that the market may be overvaluing it here.

The StockRanks consider it to be a High Flyer. In general that is a winning style, but it's also highly vulnerable to changes in Momentum.

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James Halstead (LON:JHD)

Up 3% at 131.8p (£549m) - Preliminary Results - Graham - AMBER/GREEN =

James Halstead plc, the AIM listed manufacturer and international distributor of commercial flooring, announces its results for the year ended 30 June 2026:

This family-controlled business has announced its "50th year of increased dividend" - a rare achievement indeed.

As noted by Roland (e.g. here and here, and he owned shares in JHD on both occasions), the company's recent growth numbers aren't great.

Today's FY June 2026 results were already previewed in a prior trading update, but let's take a look:

• Revenues eases back from £262m to £259.9m

• PBT falls 12.5% to £48.2m

• Earnings per share 8.5p (2025: 9.7p)

The total dividend for the year is 8.95p, slightly higher than last year. Unlike last year, it is not covered by earnings.

The company acknowledges this:

Our dividend cover in this year fell below 1 for the first time. However, the year saw several headwinds that took profit lower than the prior year. Notwithstanding dividend cover being reduced our cash inflows were very good and the final dividend payout is well within our cash resources.

The company's cash position finished the year at £75.9m, assisted by inventories falling by a few million pounds. So that cash pile can certainly help to subsidise the dividend for a while, as alluded to by the company.

I'm no expert when it comes to the manufacture of commercial flooring, so let's let the Chairman to the talking. Here are the market conditions in the UK:

The background is simple to describe: our core markets have seen a fall in new build activity and more importantly reductions in the quantum and regularity of repair and renewal activity. For the UK, education, healthcare and prison sector budgets for flooring have been much reduced due to increased spending elsewhere. Allied with this, hospitality has come under pressure, both new outlets and repair and renewal work, in part because of the degree of uncertainty/confidence across the sector but more immediately due to increased costs particularly on wages but compounded by energy and other material costs.

It's hard to find any bright spots here and poor conditions are compounded by the collapse of Headlam, which was "an important customer for many years". Hopefully the slack will be picked up by Likewise (LON:LIKE)?

The UK is responsible for 43% of JHD's turnover and has been a key focus, given the difficult conditions mentioned above - the result has been a very slight increase in UK revenue, despite the wider market shrinking.

Gross margins were about flat at 44.5%.

Outlook:

The ongoing concerns over energy costs and the upward cost pressure on other materials locally and in relation to global supply chains are key short term matters to contend with. Every year has its issues that need focus, experience and solutions but as in years past we formulate resolutions to the best of our abilities.

Graham's view

This type of stock isn't really in my wheelhouse but I understand that family-owned and family-managed businesses carry strong appeal. Chairman Mark Halstead owns 6% of the business, the "John Halstead Settlement" owns another 17%, and there are other family members on the register in addition to these.

CEO Gordon Oliver informs us that sales prices have increased at the start of FY2027 - so despite whatever poor visibility the company may suffer from, we should at least be able to expect gross margins to hold up. Roland previously explained that JHD had refrained from raising prices, and absorbed the higher input costs relating to the Iran conflict.

I have no balance sheet concerns: there is tangible equity of £180m and as we discussed previously, a very high cash balance. I do expect this cash balance to come under pressure from the dividend and perhaps also from inventories rebuilding.

Return on equity is very strong at 19% and that's despite having a rather "inefficient" balance sheet. I'm genuinely surprised that a flooring manufacturer can achieve this - suggesting to me that the company benefits from very clever management, highly differentiated products, or both.

The StockReport confirms high ROE, with 21% for last year:

So yes, I can see the attractions here. And I'm going to leave Roland's moderately positive stance untouched.