EG Solutions growth continues apace with a 12% boost to 2018 EBITDA guidance compared to prior market expectations
Companies: EG Solutions
A welcome Trading Statement from EG Solutions (LON: EGS) this morning ahead of its close period led to a 13% rally in share price. The stock has since settled at up 8%.
Management has raised guidance for the full year after a strong first half:
"The Group is pleased to report that trading in the first half of the financial year has been strong. The Board now expects results to be ahead of market expectations with Revenue for the full year ended 31 January 2018 to be not less than £10.5m (2017: £8.2m) and Adjusted EBITDA to be not less than £1.9m (2017: £1.2m)"
Looking at current consensus expectations, forecast revenue for the year to end January 2018 was £10.2m, so this is a modest 3% increase compared to expectations.
Broker N+1 Singer put out a report this morning in which it adjusted its 2018 EBITDA forecast from £1.7m to £1.9m, which is a 12% boost, bringing it in line with new Management guidance:
" We increase our FY 2018 estimates in line with guidance, but make no changes to our FY 2019
forecasts pending the release of interim results. However, upgrades are now likely given the rate of growth in
contracted revenues to be recognised beyond FY 2018 (+14% to at least £21.1m since 31 January)"
The valuation is currently at a premium versus the sector, with the forecast PE ratio of 25x compared to the wider sector average of 18x. However, it is enjoying strong growth having moved from revenues of c.£5m in 2013 up to more than double that level expected in 2018.
