Good morning. I've come down with a cold overnight, so feel pretty ropey this morning, so will do as much as I can then go back to bed. Luckily it's very quiet for announcements anyway.

 

 

Utilitywise (LON:UTW)

This company is a utility consultant for businesses, so think along the lines of a more sophisticaed price comparison service. It is paid commissions by the energy companies, and the arrangement works because they generate savings for the clients, thus incentivising people to use this service. I know this space reasonably well, having used a similar company for years in my days as a retailing FD.

We saw the company present at a Mello Central investor evening a while ago (late 2012 I think?), when the shares were well under a quid each. I liked the concept, but the Director who presented struggled with the questions asked, and some questions were really left hanging about a potential conflict of interest between the clients best interests, and UTW receiving the best commissions. Combined with massive Director selling (usually a bearish sign) - Directors sold £17m of shares at 100p! So this made me cautious about the share.

That was a mistake on my part, but an ever bigger mistake on the part of the Directors selling, as their shares would now be worth over £30m more. Ouch. Still, a £17m windfall is more than enough for anyone. The shares have since rocketed up to 288p in the past six months, and have been further helped by two substantial recent Director purchases - £337k at 204.5p, and an astonishing £3m at 260.2p. It's a different Director to the ones who sold at a quid though.

The reason I'm mentioning Utilitywise is because it has issued a trading update this morning for the six months to 31 Jan 2014. The key part says;

 

The Board is pleased to announce that the Company has performed slightly ahead of management expectations for both revenue and adjusted profit before tax in the period.

 

Figures are also given for the increase in order backlog. So it all looks positive. However, the valuation already factors in a strong performance, and with a forward PER of 20, and a dividend yield of only 1.6%, it's not…

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