Sports Direct International, the enfant terrible of the Footsie, put in an uncharacteristically middling performance in the 26 weeks to October. There was a little bit of disappointment over profits and sales, but the business is chugging along respectably.
Investors accepted the line that England’s early exit from the World Cup and the low footfall on Britain’s high streets this autumn were bound to take the shine off performance.
Underlying ebitda before staff bonuses — the company’s preferred measure of profitability — still came in at a respectable £201.1 million, up 11 per cent. Earnings per share growth was a more sluggish 4 per cent.
The days of spectacular expansion triggered by the demise of the arch-rival JJB two years ago are over. SDI now has to work harder to keep the momentum going. Investors hopes are centred on international expansion, including in Austria, Poland, Estonia, Portugal, France, Hungary and the Czech Republic. Mike Ashley, the founder and 58 per cent shareholder, has promised to “bash the competition” on the Continent, but his “bashing” prowess, though well proven in Britain, is impossible to assess across the Channel because SDI no longer breaks out overseas numbers, to the frustration of analysts.
By attacking so many different markets, Mr Ashley is spreading himself thin. In Britain, diversification hopes are centred on a string of minor fashion shops and a new fitness clubs group. The fashion shops continue to lose money, albeit in smaller quantities.
Even after the reversal of its shares from an April high of more than 900p to 666p yesterday, down 9p, they still trade on a multiple of 18 times forecast profits.
That still looks a bit pricey for a company dogged by so many controversies and question marks.
Mr Ashley adds to the gaiety of nations. No one has a better knack of sourcing cheap trainers and knocking them out efficiently in store, and increasingly online.
However, his cavalier attitude to boardroom rules and his penchant for punting company money on wagers on rival retailers should rightly lead prudent investors to expect a substantial discount on the share rating. That isn’t there.
Market cap £4bn Yield 0%
My advice Sell
Why Share rating still too rich given governance risks and question mark over whether Europe will be the honeypot that Mr Ashley claims
Acme, of course, is the name stamped on dozens of elaborate contraptions used by Wile E Coyote in his doomed attempts to kill the Road Runner.
Acme, of the cartoon world, makes everything from rocket-powered rollerskates to earthquake pills.
Acme Supplies is an entirely innocent and non-fictitious Vancouver-based supplier of toilet roll and cleaning products to Western Canada.
As such, it is perfect fodder for Bunzl, the workplace supplies group, which has waxed fat over the years successfully absorbing scores of small fill-in acquisitions such as this.
The deal was announced alongside a pre-close trading statement in which Bunzl said that it was on track for underling revenue growth of 2.5 per cent for this year, as expected.
Bunzl also reported “a promising pipeline” of further acquisitions, which will cheer investors disappointed by the rather slow deal pace of the past year.
Acquisitions have fuelled Bunzl’s tremendous profits growth, but it has managed only £140 million so far this year, half the level of last year.
Bunzl looks on track to post pre-tax profits of £380 million this year and maybe £410 million next. However, investors are well up with events: the company is valued at a sky high 22 times 2014 earnings.
Bunzl is skilled in finding and bedding down acquisitions, but the occasional one will inevitably explode in its face or drop off a cliff.
Even the Road Runner can be rattled by an earthquake pill. Beep beep.
Market cap £6bn Yield 1.9%
My advice Hold
Why Tidily run company but shares looking very pricey
Investors were unnerved yesterday by disappointing interim results from Polar Capital. Costs at the fund management group came in higher than expected and the increase was not fully explained. A flurry of clients took fright at bad economic news from Japan this year and pulled money from Polar’s normally popular fund for that country.
Core operating profit for the six months to September came in at £13.9 million, up 34 per cent on last time, but still 10 per cent below expectations. The shares dived 12 per cent to 396p.
Polar is uncomfortably exposed to Japan, with 39 per cent of client money invested there. Until Abenomics — or whatever alternative comes out of the looming election — starts to show a lasting recovery, Polar is likely to be vulnerable.
However, it has promising alternative sources of revenue growth in its healthcare, financials, technology and emerging markets teams. Nothing seems to be fundamentally broken. It trades on less than 14 times prospective 2015 profits. A yield in excess of 6 per cent should help to underpin the shares.
Japanese politics and economics could continue to make it a bumpy ride for a while, however.
Market cap £397m Yield 6.2%
My advice Hold
Why Still some value here for the patient shareholder
And finally . . .
Grenville Turner, chairman of Countrywide, has cashed in nearly half his holding in Britain’s biggest estate agency group. He banked £3.9 million by selling 880,000 shares. The disposal was “part of a planned rebalancing of his personal portfolio and family trusts”, the company said. He retains 1.07 million shares and has unvested options too. He sold at an average price of 446p. The disclosure came after the market closed with Countrywide shares unchanged at 453¼p. The group is scheduled to report in February.
