Sanderson Group
HOLDGrowth Company Investor flagged up the growth and income attractions of software and IT services business Sanderson at 52.5p last year and, while disappointed to see the shares lower at 36.5p, we remain supportive.
Interim figures to March are set for release on Thursday and should provide a good indication as to where the business stands in terms of its full-year numbers.
Back in February, Sanderson, originally known for its strong positioning in the manufacturing market and more recently for its acquisitive moves into the high-growth multi-channel retail sector, heralded a good start to the financial year with first-quarter trading surpassing that of the previous year.
Chairman Chris Winn said the company’s strengthening position in multi-channel retail, together with its profitable and well-established manufacturing division, offered investors a good platform for growth. The news came hot on the heels of annual numbers offering up much promise, with improved figures reflecting recent acquisitions and a second-half trading flourish.
Forecasts in the market for September 2008 point to strong profits growth from £1.93m to £3.9m pre-tax, on revenues increased dramatically to £32m (2007: £18.17m). From earnings of 5.9p, analysts expect the total dividend to increase from 2.7p to 2.8p, underpinned by the strong cash generation and good recurring revenue base of the business. Trading on a prospective multiple of 6.2 and offering investors a forecast yield of 7.7%, the shares are well worth sticking with. Hold.
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Market cap: £15.84m
PE Forecast: 6.2
Share price: 36.5p
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