Small Cap Value Report (20 Mar 2014) - MJW, WAND, RBN, PMP, LTHM, TFW

Thursday, Mar 20 2014 by

Good morning! It's busy for results statements today, and next week looks extremely busy too, so let's crack on.




Majestic Wine (LON:MJW)

At £331m market cap (506p per share) it's not really a small cap, but I suspect that valuation may drop today. This wine emporium usually puts out decent trading statements, but not today. In this morning's update the company says that trading conditions in calendar 2014 to date have been challenging.

It has a 31 March 2014 year-end, so with two weeks to go, LFL sales and profits are now expected to be flat against last year. The last update on 8 Jan 2014 indicated that LFL sales were up 0.8% for the first 40 weeks of the year, so it's not a disaster, but by my rough calculations, I reckon that probably means Jan-Mar this year is likely to have been negative by say 3-4% on a LFL (like-for-like basis). LFL strips out the impact of new shop openings, and closures, thereby being the best measure of underlying sales performance.

It looks to be an undershoot of about 10% on profit expectations, which is surprising coming so late in the year, and I think could knock the shares by 10-20% today, at a guess.

So that means EPS has been flat at about 26p for three years. It's difficult to see why the PER should be much more than about 10-12, if this is now going to struggle to make any headway, which would imply a share price around 260-310p. Therefore it hardly looks a bargain even at this morning's current price (at 08:08) of 425p. I'm not tempted to catch this falling knife, although have added it to my watchlist.

Increased costs are expected in 2014/15 for various reasons, and the outlook sounds hesitant;


...the Board now anticipates a flatter profit growth profile in the 2015 financial year.


Maybe the supermarkets are squeezing Majestic? Although I note they claim to have maintained market share.







This seems to be a fashionable technology share, where usual conventions on performance and valuation don't seem to apply. The company cheerfully reports what they describe as a "highly…

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Majestic Wine plc is a wine retailer. The Company acts as a holding company for its subsidiaries. The Company is engaged in the retailing of wines, beers and spirits. The Company operates through four segments: Retail, Commercial, Naked Wines and Lay & Wheeler. The Retail segment is a customer based wine retailer, selling wine, beer and spirits from stores across the United Kingdom, and online, and also incorporates the Company's French business. The Commercial segment is a business-to-business wine retailer selling to pubs, restaurants and events. The Lay & Wheeler segment is a specialist in the wine market and also provides cellarage services to customers. The Naked Wines segment is a customer funded international online wine retailer. Its subsidiaries include Majestic Wine Warehouses Limited, Lay & Wheeler Limited, Les Celliers de Calais S.A.S., Majestic Wine Employee Share Ownership Trust Limited, Naked Wines International, Inc. and Vinotheque Holdings Limited. more »

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WANdisco is a distributed computing company. The Company, provides a LIVE DATA platform, WANdisco Fusion, powered by its patented Distributed Co-ordinated Engine, DConE, technology. WANdisco Fusion enables the replication of live data to the cloud and on-premises data centers with guaranteed consistency, continuous availability and no business disruption. The Company offers a range of products, which solve critical data management challenges prevalent across cloud computing, big data and the source code management markets. The Company’s geographical segments are North America, Europe and the Rest of the World. Its products are used for disaster recovery, migration to cloud, hybrid cloud, analytics infrastructure, multi cloud, Internet of things and security and compliance. more »

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Robinson plc is a United Kingdom-based company engaged in the business of manufacturing plastic and paperboard packaging. The Company provides packaging solutions that specialize in injection, blow and stretch-blow molded plastic, and rigid paperboard. It serves the food, drink, toiletries, cosmetic and household markets. It operates through plastic and paperboard packaging segment. The Company has over five manufacturing facilities, which include Kirkby facility, Stanton Hill facility, Lodz facility, Chesterfield facility and Madrox facility. Its subsidiaries include Robinson (Overseas) Limited, Robinson Paperbox Packaging Limited, Robinson Plastic Packaging Limited, Robinson Plastic Packaging (Stanton Hill) Limited, Robinson Packaging Polska Sp. z o.o., Walton Mill (Chesterfield) Limited, Griffin Estates (Chesterfield) Limited, Robinson Industrial Properties Limited, Walton Estates (Chesterfield) Limited, Madrox Spolka Akcyjna and Walton Mill (Chesterfield) Limited. more »

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  Is LON:WINE fundamentally strong or weak? Find out More »

6 Comments on this Article show/hide all

Ramridge 20th Mar '14 1 of 6

Hi Paul. Re.Wandisco. Revenue up 33%, operating expenses up 83%. That's a company running backwards. I sold my remaining shares whilst the share price is up 2.5%. I love the story though. May come back when management can demonstrate better financial control.
Regards. Ram

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stockandy 20th Mar '14 2 of 6

Paul thanks for your thoughts on PMP.A good solid hold.

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laurie89 20th Mar '14 3 of 6

looking forward to Brighton

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valueman 20th Mar '14 4 of 6

I find Paul's updates excellent .His common -sense approach using the basic financial ratios should be a lesson to all. Just bought Accumuli ,having first learned about it here.

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apad 20th Mar '14 5 of 6

RBN you describe as a packaging company. In my opinion it is better described as a specialist toolmaker and injection moulding company.
Bigger barrier to entry with that description.
It is also a "family" firm that has made poor acquisitions that have since been dumped.
The current acquisition, however, is in the middle of core competences.
Agree with the rest of the article.

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jashunter 20th Mar '14 6 of 6

F W Thorpe is clearly a sound company. Negative aspects are that it is fairly illiquid and spread of over 8% currently.

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 Are LON:WINE's fundamentals sound as an investment? Find out More »

About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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