Avoid this digital TV software stock until we see some more contract wins
Marketing services play Creston scored a 130% profits leap for the year to March, topping forecasts from broker Charles Stanley. Pre-tax profits leapt to £2.1m, ahead of the £2m forecast, on a 58% sales hike to £29.5m, with each subsidiary performing well in tough markets. Margins were aided by Nelson Bostock Communications, the public relations firm acquired in October, and the withdrawal from lower margin printing work at its TRA and EMO businesses. MSL outperformed the market research sector with revenues rising by 16% - it is seeing good demand from the likes of Tesco and Unilever, and has added clients including Carlsberg Global, Danone and L'Oreal. TRA delivered 18% growth and has won new work from Stanley Leisure, Kerry Foods and Mates Condoms. Analyst Ben Archer has modestly upgraded his forecasts for 2005, but these ignore potential acquisitions. He suggests profits of £3.1m, earnings of 9.5p and a 2p dividend. On a forward p/e of 15.8, the shares aren't cheap but Creston deserves the rating after this, its third consecutive set of record results. Creston's model is robust. Chief executive Don Elgie believes 2004 is the first year of marketing upturn and the company is successfully cross-selling its services. Those who bought at the GCI recommendation price of 57.5p back in June 2002, should keep holding.
Market cap: £33.87m
PE Forecast: 15.8
Share price: 150p
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