Small Cap Value Report (24 Oct 2014) - FOUR, ODX

Friday, Oct 24 2014 by

Good morning! A shorter & earlier report than usual today, as I've been roped into doing a talk this afternoon, on the Stockopedia stand, at the London Investor Show at Olympia. I think registration is still open, here is the link. So perhaps see some of you there? I'll do my usual thing of running through how I use Stockopedia, and talking about current small cap investing themes, stocks I do & don't like, etc.

4imprint (LON:FOUR)

Share price: 727p
No. shares: 28.0m
Market Cap: £ 203.6m

This is such a good company, it's been filed in my "kicking myself that I didn't buy any, but it's a bit too expensive now" tray. The recent dip on general market sentiment, was with hindsight a buying opportunity. The company has today put out another positive update, and the shares have shot up about 10% this morning.

Interim Management Statement - this is a calendar Q3 update. Strong performance is continuing, and remember that this is essentially an American company, as that's where the bulk of turnover & profits come from;

The Group continues to report strong organic growth. Revenue* for the third quarter was £66.13m, 16% ahead of last year. Year to date revenue* was £181.79m, 15% ahead of last year. The average year to date USD exchange rate was 1.67 (2013:1.55).

North American revenue* in US dollars for the third quarter was $106.14m, 25% ahead. Year to date revenue* was $291.24m, 24% ahead.

That's clearly an excellent performance, 25% revenue growth (which I think is all organic) in constant currency means that the company has shrugged off the adverse move in sterling:dollar. The reporting currency is being changed to US dollars for 2014 results and beyond. That's a sensible move in my opinion, as it will eradicate big currency translation moves within the accounts, helping investors to better understand underlying performance.

Outlook - again, sounds positive;

The Group has continued to achieve strong revenue growth, leaving it ahead of management expectations at this stage in the year and underpinning the Board's expectation that the Group will achieve a good result for the year as a whole.

Valuation - broker consensus is currently for 37p EPS this year. I'll stick my neck out here and say it looks as if they might get to 40p. That puts the shares, at 727p on a PER of 18.2, which looks about…

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4imprint Group plc is a direct marketer of products in the United States, Canada, the United Kingdom and Ireland. The Company supplies products under the brand name 4imprint. The Company sells a range of promotional products, which are purchased by a range of individuals within various types and sizes of businesses and organizations. These products have a range of uses as an integral part of sales and marketing activities; recruitment and recognition schemes; health and safety programs; and other initiatives to make a connection between the customer's organization and the recipient. Its promotional products consist of basic giveaways, such as pens, bags and drinkware to more exclusive products, such as embroidered clothing, business gifts and full color trade show displays. The Company's subsidiaries, 4imprint Inc. and 4imprint Direct Marketing Limited, are engaged in direct marketing activities. more »

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Omega Diagnostics Group PLC is a medical diagnostics company. The Company's segments are Allergy and Autoimmune; Food Intolerance; Infectious/Other, and Corporate. Its product categories include allergy, anemia, autoimmunity, fertility and growth hormones, food intolerance, infectious disease, inflammation, quality control, thyroid hormones and tumor markers. For allergy, it offers Allergodip, which is an enzyme immunoassay for the semi-quantitative determination of Specific immunoglobulin E (IgE) in serum or plasma. For anemia, it offers ATHOZYME Ferritin, which is an enzyme-immunoassay (ELISA) test for the detection and quantification of Ferritin in human serum. It offers a range of products for Rheumatoid Arthritis, Systemic Lupus Erythematosus (SLE), Antiphospholipid Syndrome (APS), Connective Tissue Disease, Gastrointestinal, and Vasculitis and Renal Disease. Its Fertility Hormones products include PATHOZYME-LH (Luteinizing Hormone), PATHOZYME-Prolactin and PATHOZYME-Oestradiol. more »

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

2 Comments on this Article show/hide all

dasv 24th Oct '14 1 of 2

FOUR - Dividend cover is low, Rolling PEG is 1.23

Free cash flow is greater than EPS.

Operating margin is pretty low at 4.9%

It looks fully valued to me at this sp

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MrContrarian 24th Oct '14 2 of 2

The Mello Derby event site is

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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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