8 February 2012

Mears Group

HOLD

11/03/2009 Robert Tyerman

Social housing and domiciliary care specialist Mears Group boasts a £1.6bn order book after increasing annual pre-tax profits 8% to £16.6m.

The Gloucester-based company, steered by entrepreneurial chief executive Bob Holt, lifted turnover 38% to £420.4m last year, helped by strong organic growth in social housing and the impact of domiciliary care acquisitions made in 2007. Earnings, before amortisation and share option charges, rose 18.8% to 20.12p a share and the proposed dividend is increased in line with that to 4.75p a share.

Fully listed Mears says it has won contracts worth more than £460m over the past 12 months and has secured 89% of City-forecast revenue of £460.5m for this year and 54% of forecast revenue for 2010. The company ended the year with £6.6m cash, lower than analysts had expected because of stepped-up investment in work in progress and slower payments from customers of the company’s mechanical and engineering division.

Holt argues convincingly that Mears’ key sectors are defensive, powered by spending that is mostly non-discretionary and thus immune to the recession, unless, presumably, it becomes much more severe. House broker Investec sees 15% earnings growth this year, with further improvement in 2010.

Mears Group shares, which hit 377.75p in early 2007 and were recommended by Growth Company Investor at 272p in February last year, fell to 195p in October, but have rallied since then on the company’s defensive appeal. That should stand them in relatively good stead.

Save 50% off your first year’s subscription to Growth Company Investor magazine, and gain immediate access to all the recommendations online. Click here.

Sector: Support Services

Companies: Mears Group

Market cap: £178m

PE Forecast: 11p

Share price: 241p

Subscribe today


Subscribe today and save 50%. Receive company watch recommendations and extensive company profile tips, released two months ahead of the market.

Sign up here

Spread Trading. New from Halifax Share Dealing

£100 credit when you open five trades within 60 days – terms apply. Spread Trading is not for everyone please ensure you understand the risks as you may lose more than your initial deposit. Click here for more information.

Institutional Investors in AIM 2011 - New Report

This unique study analyses the shareholdings of companies listed on AIM, extracting trends including rankings of the value and number of their investments.
Please click here to order your copy of the report or call 0207 250 7056.

Coverage of AIM, techMARK and PLUS Markets

Informative features and research on fast-growing companies, small-cap and growth stocks, penny shares, stock market tips and share recommendations, directors' dealings, company news and analysis, new issues and upcoming IPOs.

If you're interested in business tax updates visit our specialist tax guide website.

Share recommendations and small-cap stock picks

Small-cap and growth company share recommendations on AIM- and PLUS-listed companies. Latest analysts' stock tips and advice on which are the best shares to buy on London's junior stock markets.

Popular Recommendations

Latest Recommendations

Homeserve 08/02/2012

Home maintenance and emergency repairs concern Homeserve has warned that its reduction in customer numbers is 3% higher than expected.

Tags: Full list, Home repairs, Support services sector

Sector: Support Services

Companies: Homeserve

Low & Bonar 07/02/2012

Performance materials specialist Low & Bonar (LWB) reported a 26% rise in profits amidst considerable growth in its yarns business.

Tags: Increase in profits, Performance material specialist, Yarns business

Sector: Construction & Materials

Companies: Low and Bonar

Avon Rubber 02/02/2012

A trading update from gas masks to dairy products specialist Avon Rubber (AVON) has confirmed it is on track to meet current year expectations, but it is likely to be second half loaded.

Tags: Dairy products, Filter products, Main market, Masks, US DOD

Sector: Aerospace & Defence

Companies: Avon Rubber

More Recommendations

Sectors