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Begbies Traynor – positive full-year results, a counter-cyclical buy

By Tom Winnifrith & Steve Moore | Saturday 15 July 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.

Begbies Traynor (BEG) has announced results for its year ended 30th April 2017 and that “we anticipate a growth in earnings in the new financial year”

The results show an adjusted pre-tax profit of £4.9 million on revenue of £49.7 million, generating earnings per share of 3.3p, compared to a prior year 3.2p. Even after particularly £2.9 million of acquisition spending and £2.3 million of dividends paid, net debt was still slightly reduced to £10.3 million.

The statement noted “activity in business recovery for the year as a whole was impacted by the insolvency market being at the lowest level since 2004”, but there was mitigation from financial advisory and property services diversification – and it was added re. business recovery “we remain the leading UK corporate appointment taker by volume and are well positioned to take advantage of the cyclicality of this market”.

Indeed, recent business recovery activity levels have improved – and we look for earnings per share from the company comfortably above 3.5p for the current year.

At some point, we continue to expect much more as the current remain low-cycle earnings, though while we wait, attractive dividends continue – 1.6p per share recommended to be paid on 8th November, with an ex-dividend date of 12th October, seeing the per share annual total maintained at 2.2p.

It is added “the board remains committed to a long-term progressive dividend policy, and intends to increase dividends when we are confident of both the market outlook and continuing our recent earnings growth” – and the shares have responded higher to a current 53.75p. At around these levels though, we rate them a counter-cyclical buy.

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 tip from Tom & Steve shortly and a new shorting piece from Lucian out yesterday afternoon click HERE

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