The AGM Statement by Mark Hammond, Executive Chairman of the DX (Group) (LON:DX.) was very encouraging for shareholders of the delivery solutions group, whose shares were suspended for some eight months of this year.
“Trading in the first quarter of the new financial year was in line with management expectations. I am pleased to announce today that trading to date remains in line, and that the pipeline of new business opportunities continues to be very healthy. The Group remains in a strong financial position, with high levels of liquidity and significant net cash.”
The Group’s Business
Established in 1975, DX is a market leader in the delivery of mail, parcels, pallets and freight of irregular dimension and weight.
The group, which provides a wide range of specialist delivery services to both business and residential addresses across the UK and Ireland, operates through two divisions, DX Freight and DX Express.
DX now provides one of the widest ranges of overnight delivery services in the market, as well as logistics services.
Items that DX transports range from confidential documents and valuable packages to large, awkward-to-handle freight, unsuitable for automated conveyor.
Analyst Opinions – price targets ranging 50p to 57p share
Analyst Guy Hewett at finnCap, the company’s NOMAD and joint broker, has estimates for the current year of £457.0m sales, £25.4m adjusted pre-tax profits, earnings of 3.5p and a 1.5p dividend per share.
He is even more bullish for 2024 looking for £475.6m revenues, £29.9m profits, 4.0p earnings and a 1.7p dividend per share.
Hewett has a 57p Target Price out on the shares.
Over at the other joint broker, Liberum Capital, their analyst Gerald Khoo considers that the group’s shares have attractive fundamentals, while the company is resilient in its trading.
For this year his figures suggest £453.0m revenues, £26.7m profits, earnings of 3.3p and a similar 1.5p per share dividend.
Liberum Capital rate the shares as a Buy and have upped their Target Price to 50p (45p).
Conclusion – from 26.5p to 35p
I reckon that this group’s shares are looking distinctly undervalued at just 26.5p, trading at around 8 times current year earnings and yielding almost 6%.
Before the group provides a further update on trading in February it is reasonable to expect the shares looking to rise clearly over the 30p barrier, with 35p being a good price objective in 2023.