Companies: WGB   

Growth Company Investor suggested shares in the designer, maker and distributor of mid- and upper-end wallpapers and furnishings were worth a flutter last August, with the shares changing hands for 17.25p.

Our instincts were sound, with Teather & Greenwood having now raised its stance to a strong buy on the back of forecast-busting annual figures to the end of January. In a landmark year of dramatic turnaround, chairman Ian Kirkham reported pre-tax profits of £2.62 million, reversing the previous year’s £800,000 loss, and marking the group’s first full-year pre-tax profit since 2000 after 5 long years of hefty losses.

The figures reflected the benefits of the total integration of ‘internationally recognised’ rival brand Sanderson within the group, investment in product over the past two years, the full-year effect of savings coming from restructuring, and an exit from low-margin non-core business. Net debt during the year fell by the best part of £1.4m to £9.4m.

Encouragingly, all parts of the business traded profitably, including the group’s UK fabric printing and wallpaper factories. Fabrics and wall coverings brand Harlequin, which is actually John Lewis’ best-selling interiors brand, achieved 10%-plus sales growth, and the Zoffany brand has refocused on its ‘core values’ of traditionally inspired designs following flirtation with more modern models.

City number-crunchers believe Walker Greenbank’s recovery will continue this year and next, with earnings of 1.86p and 3.63p on the cards over the next two years. That places the shares on a forward p/e of 13.7, dropping to only 7 the following year. Despite the vagaries of the wallpaper, textiles, and furnishings market, the shares still look worthy of a speculation.

Walker Greenbank	AIM	£9m	15.25p	-0.25p
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