Somero Enterprises (SOM:AIM) 276.86p
Gain to date: 6.5%
Original entry point: Buy at 260p, 24 September 2020

Shares in construction equipment specialist Somero Enterprises (SOM:AIM) have burst to life after a very strong trading update.

Business has been very good in recent months, prompting the small cap to say it would exceed its previous reinstated expectations for the current financial year, ending 31 December.

The old guidance was $75 million revenue, $19 million adjusted EBITDA and $20 million net cash. The new guidance is $80 million revenue, $21 million adjusted EBITDA and $26 million net cash.

Somero credited a strong US market, good contributions from new products and higher revenues from its SkyScreed family of products following an easing of job-site restrictions. Cash generation has been good thanks to effective working capital management and customers paying on time.

Broker FinnCap raised its adjusted pre-tax profit forecast for 2020 by 11% to $19.6 million and implied Somero could be more generous with its dividends thanks to higher cash, upgrading its total dividend estimate for the year to 21.8 cents.

It also raised its share price target from 255p to 285p based on a fair value price to earnings ratio of 14 for the 2020 financial year.

SHARES SAYS: It’s great to see an improvement in Somero’s trading and the latest update confirms our original premise that this is a solid business.

‹ Previous2020-11-26Next ›