Times of opportunism can produce profits for versatile investors.
Now could well be the time, for such market players, to jump into the shares of one company that I really like ahead of its figures being published.
Last week DX (Group) (LON:DX.) came back to the market after its shares were suspended ten months ago.
Inability to publish its 2021 Annual Report inside the statutory six-month timeframe allowance brought about the suspended dealings.
It also did not help that its previous auditors were concerned over certain corporate governance issues and a resulting inquiry.
However, that all seems to have been sorted out, certainly sufficient for the group’s shares to be requoted on the market.
Some 47 years old
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.
Progress during the suspension
With the inquiry and investigation having been concluded, with several important improvements having been made in procedures and training, it is impressive to see that it has clearly not affected the group’s short-term trading.
DX Freight has continued to make strong progress driven by continued market share gains backed by its strong service levels and with price rises offsetting cost pressures wherever required.
Encouragingly the DX Express side has returned to sales and profit growth, having been supported by the successful expansion of the Parcels business.
Outlook – stronger growth
The company expects to report the financial results for the year ended 2 July 2022 in the second half of November.
It is now reasonable to expect that the high service levels combined with additional investment into sites, equipment and information technology will help to drive stronger growth into the long term.
Analyst Opinions – price targets ranging 45p to 57p share
Analyst Guy Hewett at finnCap, the company’s NOMAD and joint broker, has estimates out for the last year to have shown revenues improving from £382.1m to £425.0m, while adjusted pre-tax profits could come in at £20.0m (£12.2m) generating earnings of 2.8p (2.0p) per share.
For the current year he is going for £457.0m sales, £25.0m profits, earnings of 3.4p and even a 1.5p dividend per share.
He is even more bullish for 2024. Prior to the return from suspension, he had a 57p Target Price out on the shares, however I think that he may cautiously temper that objective.
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.
He has £426m sales for the last year, £19.6m profits and 2.6p in earnings per share.
For this year his figures suggest £450.0m revenues, £25.4m profits, earnings of 3.3p and a similar 1.5p per share dividend.
Cautiously he has a Target Price of just 45p.
Conclusion – as ‘locked-ins’ get out then just jump right into a bargain
Awaiting the actual final results being published towards the end of next month I would expect to see the group’s shares gyrate somewhat in price, as locked-in holders liquidate positions out of necessity.
They returned from suspension at 30p and have since fallen back to the current 22p.
After frenetic dealings upon its return last week, the market has now levelled out and looks ready for an uplift.
That is why I suggest that adventurous investors should now take a view on the group’s shares climbing back up to, and hopefully above, the 34p peak of last November, they are certainly worth a lot more in price.