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Lighthouse Group – contract renewal ahead of results announcement, good value?

By Steve Moore | Saturday 11 February 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


A contract announcement from national financial advisory group Lighthouse (LGT) sees me catch-up on progress of this former tip – we having banked more than 50%, less than 6 month, gains on the shares at 14p following an offer approach a bit less than a year ago.

That swiftly proved wise as the possible offeror soon walked with recriminations – and the shares slid back. They have though recovered from sub 9p as recently as the start of September to a current 11.75p.

The contract announcement is of a three year renewal as the preferred provider of financial advice to members of one of the largest trade unions in Britain, Usdaw. The company emphasises this will sit with an “impressive list of affinity partnerships, which includes major employee organisations such as UNISON, Unite, BA Clubs, Prospect, Boundless (formerly the Civil Service Motoring Association) and the Royal College of Nursing” and that it “remains committed to increasing our affinity partnerships throughout the UK”.

Results for the 2016 calendar year are scheduled for the 21st of this month – with there forecasts for earnings per share to rise from a prior year 0.68p to more than 0.85p, dividend per share from 0.24p to 0.30p (including 0.09p, up from 0.08p, paid for the half-year) and net cash of £7.5 million (though a significant amount of this required for regulatory purposes).

At the current 11.75p share price, the market cap is £15 million and the potential (now historic) price earnings multiple circa 13x and dividend yield 2.6%. With further good growth presently anticipated for 2017, this is certainly one for the watchlist ahead of the results announcement – and could again prove good value from here.


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