Despite the strong run in the share price since the start of the year (+19%), with the shares now trading at / near record highs, Next Fifteen still trades at a material discount to its peer group. This is against the context of a steadily improving trading backdrop, culminating in this latest trading update and the third earnings upgrade since September. Next Fifteen now finds itself in a position where it will deliver +7% / +21% revenue / PBT growth in what should have been a negative year. Next Fifteen is also one of only two stocks in the peer group whose FY2 estimates are higher now than at any point over the last year. Three key factors have combined to deliver this better than expected outcome. Firstly, the group’s B2B technology agencies have maintained and, in some cases, even accelerated their momentum through the year. Secondly, the B2C agencies, which saw the greatest initial squeeze on client marketing budgets, have staged a stronger than expected recovery in Q4. Thirdly, and most importantly; costs have been rebased driving much higher incremental margins through the second half. Coupled with a better than expected £10m net cash position, Next Fifteen has entered the new financial year in good shape. The current FY’22 PE of 14.9x does not look overly demanding.
02 Feb 2021
Q4 trading update – Organic growth & margin strength
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Q4 trading update – Organic growth & margin strength
Next 15 Group plc (NFG:LON) | 902 144.2 1.8% | Mkt Cap: 894.4m
- Published:
02 Feb 2021 -
Author:
Iain Daly -
Pages:
8
Despite the strong run in the share price since the start of the year (+19%), with the shares now trading at / near record highs, Next Fifteen still trades at a material discount to its peer group. This is against the context of a steadily improving trading backdrop, culminating in this latest trading update and the third earnings upgrade since September. Next Fifteen now finds itself in a position where it will deliver +7% / +21% revenue / PBT growth in what should have been a negative year. Next Fifteen is also one of only two stocks in the peer group whose FY2 estimates are higher now than at any point over the last year. Three key factors have combined to deliver this better than expected outcome. Firstly, the group’s B2B technology agencies have maintained and, in some cases, even accelerated their momentum through the year. Secondly, the B2C agencies, which saw the greatest initial squeeze on client marketing budgets, have staged a stronger than expected recovery in Q4. Thirdly, and most importantly; costs have been rebased driving much higher incremental margins through the second half. Coupled with a better than expected £10m net cash position, Next Fifteen has entered the new financial year in good shape. The current FY’22 PE of 14.9x does not look overly demanding.