Walker Greenbank (LON:WGB) shares have suffered much as predicted in the Stockopedia anatomy of a profit warning and continue to drift downward. Not helped perhaps by the recent announcement by John Lewis of a dramatic profits fall. I suspect the John Lewis partnership is an important customer for the company. Unfortunately I bought a small position in Walker Greenbank (LON:WGB) on the basis of the improved trading outlined in the AGM statement in late June, only to be floored by the profit warning one month later. I compounded this error by not selling on the profit warning, which I would ordinarily do. My reason for continuing to hold is that Walker Greenbank (LON:WGB) is trading according to broker's notes at a substantial discount to NAV of around 90 pence, with little or no value attributed to the various brands.

I am of the view that brands like Morrison and Sanderson have significant value and would be attractive to companies, such as Colefax (LON:CFX). Added to this Walker Greenbank (LON:WGB) remains profitable and based on current estimates has a dividend yield >6% twice covered by revised earnings. As for balance sheet strength I will defer to Graham Neary's recent commentary from the SCVR on 25th July

"Checking the most recent results statement, the company is in a net debt position after making an acquisition but still had £12.2 million of headroom as of January 2018. The balance sheet is heavy with intangibles but still has NCAV of £13.9 million (i.e. it still has positive net assets even if you write all intangibles and PPE down to zero)."

We hopefully will know more when the interims are released on 10th October.

All views and thoughts welcome.


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