Morgan Sindall (MGNS) £23.85
Gain to date: 25.1%
Original entry point: Buy at £19.06, 15 April 2021

Construction and regeneration firm Morgan Sindall (MGNS) took us and the market by surprise last week with an unscheduled update announcing better than expected trading in its first half and that full year earnings would be ‘significantly ahead’ of its previous forecast.

Shares jumped as much as 15% on the day, but have given back 25p or so as the excitement dies down, although analysts are beavering away raising their estimates after the firm said trading had ‘continued to accelerate’ since its previous positive update in April.

The group is scheduled to publish its half year earnings next week, but it has already guided investors to expect pre-tax profits of around £53 million compared with just £15.7 million last year and £36.3 million in the same half of 2019.

The order book stood at £8.3 billion at the end of June, with growth in construction and infrastructure providing good visibility for the full year and likely to generate divisional earnings ‘significantly stronger than expected’.

Analysts at Numis point out that, despite the pandemic, they have had to upgrade their February 2020 forecasts for 2021 earnings four times, and their current pre-tax profit estimate of £122 million is £24 million higher than their estimate nearly 18 months ago.

SHARES SAYS: Keep riding the positive earnings momentum. 

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