Bonkers Bargain: results in-line and outlook maintained
This hitherto excellent small-cap, with a track record of attractive margins, cash flow and dividends has seen its shares tumble following a series of profit warnings. Thankfully, a well-supported equity raise bolstered the balance sheet, with additional cost savings also identified. The latest interim results offered reassurance and the recovery story remains. There could be big upside here if this business gets back on track.
The previous CEO of this specialist manufacturer presided over meteoric growth in its share price, which ultimately brought entry to the FTSE 250. Over his tenure it consistently generated sector leading operating margins, excellent cash flow and a 20%+ return on equity, using modest levels of debt. Investor communication has also always been excellent, with quarterly updates and explanatory videos covering their products. Unfortunately, after hitting highs in 2021, the shares have fallen back sharply, with a large litigation claim also influencing investor sentiment. More recently, a profit warning saw the shares fall back to 10 year lows. While the…