Pace - value and momentum
Pace (LON:PIC) is in the telecommunications equipment sector – making STBs (set-top boxes), “gateways” (ADSL, fibre and other connecting devices) and “software” (user interface software for video content).
I have been a shareholder since 2009. Life as a PIC shareholder is never dull. But not always in the nice way necessarily.
PIC trades on a modest PE of 11.9 at 316p, has a market cap of £991m, and is in the FTSE250 index. Its 6-month relative strength is 32% – placing it well into the top quintile of momentum on a 6-month basis. Its price to 50dMA (50-day moving average) is 22% – which I would normally consider as a hold rather than a buy, and at a level where I might look be getting ready for an exit.
Having said that, on a PFCF (price to freeflow) of 8.2, that really does put it in bargain territory. PIC passes 7 Stockopedia (http://www.stockopedia.com/) screens in criteria for growth, value, momentum, quality and bargains. So there’s something for everyone to like.
Interims results were released on 30 July (http://is.gd/hyGv1T), with a strong H1 trading performance. Revenues were up 31%, adjusted EBITA was up 57%, adjusted EPS was up 73%, the interim dividend was increased by 27%, and net debt was slashed. “Trading in the first half of the year has been strong and the outlook for the remainder of the year has improved. As a result we anticipate that full year profits for the Group will be higher than previous guidance”
It is interesting to note that AKO Capital has a short position of 4.48% (http://is.gd/IiGgq9) – a position that must, almost certainly, be showing them considerable loss.
I am a holder.
315.90p
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10 comments
I would like to see a "bid situation" warning on Stockopedia, quite a few people have been caught out recently. I generally agree with the advise of selling as soon as the bid has been announced, then you have near bid price without any of the risks of the bid falling through or the price falling such as the £BG, deal.
One trick to look out for is sudden price gapping. Particularly when a price gaps up and then seems rock solid stable (although admittedly that didn't quite happen here with PIC).
On Stockopedia, you can hover your mouse over the plot to get an approximate fix on the date. By checking Investegate, you can then see what triggered the gapping.
Conversely, if you see a lot of Holdings in Company annoucements, or Rule 2.10 Annourncements, or Form 8's, it should alert you to the likelihood of some kind of corporate action underway, such as a takeover.
Hope that helps.
A lot of interesting toughts here. I have conducted an analysis of Pace just recently and its seems like quite good company for now. However, taking into consideration its business profile, the good performance in the very long-term horizon must be thinked more closely. In my opinion, the company still can generate return to an investor in the perspective of 3-5 years.
I would recommend starting all of your future analyses by reading the recent regulatory news on the company:
http://www.investegate.co.uk/pace-plc--pic-/rns/recommended-combination-of-pace-and-arris/201512171111534196J/
investegate is a good free source for this and will email alerts from a watchlist.
I don't want to be too hard on you since we all miss stuff in our analysis but this is a pretty basic error. You obviously put a reasonable amount of effort into your blog so it's a shame to waste your time on a write up and also give the impression that your analysis is not very thorough with such a basic oversight.
You may want to consider removing that write up from your blog since it detracts from your other write-ups.
Shareholders have had a very up and down ride during the last 12 months. Share price back to where it was and apparently offering good value. Any other thoughts welcome.
yes you're right it's a long time ago, they are big players in the freesat market in the uk, it just seems to me that they're a bit accident prone, and to be fair, often the problems are just contracts not closing within years etc, but it leads to lumpy earnings. There are good solid companies, and there are companies that have ups and downs, looking at the share price and from my experience I categorise these in the second category. That's not to say you can't make money trading them but I wouldn't long term buy and hold.
The stb market is lumpy in terms of demand, this impacts companies like PACE who only make these kind of products are susciptible to these ups and down. By this I mean there is a big demand for HD boxes as hd is adopted, then demand is lower until the next big thing comes along. I'm not sure when the next big thing will be in stb's
K
Kenobi,
I read your note thinking have I missed something recent, but Sky bought out Amstrad in 2007, so while I'm sure pace is not a major supplier to sky, I don't think it will have a major baring. Looking at their map of customers the big hole is china, india, Russia, where they don't seem to have any explicit presence. The interims update did how ever indicate, lower revenues with increased margin for rest of world.
overall the story seems to be one of consolidation, removal of debt and increasing margin, rather than massive step changes. So I must admit i'm wondering as to how Goldman sachs got to that valuation.
To me the challange with PACE is that they seem to be a bit accident prone,
I have invested in the past, but would be reluctant to in the future, I'm guessing sky won't be buying much from them now they've bought out amstrad, I'm sure this is just a small part of their portfollio anyway though,
K
MMs play games with this share!
For info
12 sep 13: Pace plc Price Target Raised to GBX 370 at Goldman Sachs Group Inc. (PIC)
source WKRB News