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Sanderson Group – half-year trading update, “in line” & confident

By Steve Moore & Tom Winnifrith | Saturday 6 May 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.

November addition to the Nifty Fifty Growth portfolio, Sanderson Group (SND) has updated on half-year ended 31st March 2017 trading “in line with management's expectations” and on a “good level of confidence that the group will continue to make further progress during the current financial year”

This is with half-year revenue up by 10.5% to £10.90 million, with a particularly strong Digital Retail performance. Though gross margins were lower, reflecting the initial roll-out and installation of network, communications and hardware infrastructure at new customer sites, adjusted operating profit is noted to have increased by £0.08 million to £1.55 million, with cash up by £0.17 million to £4.51 million.

It is added that “the board remains keen to enhance the strength of the group by selective complementary acquisitions”, but that it “will continue to adopt a careful and measured approach” and that the “order book at 31 March 2017 stood at a much better balanced and more manageable level across the group's businesses at £2.78 million”.

We thus continue to look for full-year earnings per share heading close to 6p and a dividend per share rising comfortably above 2.5p – and remain of the view that 90p+ is a realistic share price target here. However, at a current 83.5p, the shares are now comfortably above our 72p offer price recommendation and – ahead of a 24th May scheduled interim results announcement – our stance is thus currently hold.

This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tips from Tom & Steve and more from Lucian next week click HERE

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