Pawnbroker and jeweller Ramsdens Holdings (LON:RFX) has issued a positive Trading Update for the year ending on the 30Th September.
Only two months ago it had given a strong indication of good business in the current year, so this morning’s news is even better news.
The group, which is based in Middlesbrough, operates from 169 stores within the UK (including one franchised store) and has a growing online presence.
It is a growing, diversified, financial services provider and retailer, operating in foreign currency exchange, pawnbroking loans, precious metals buying and selling and retailing.
Management Comment
CEO Peter Kenyon stated that:
“Ramsdens’ positive trading momentum has continued into the second half of the year, once again reflecting the strengths of our diversified model, trusted brand and the hard work and commitment of our team.
We continue to benefit from the ongoing investments made in enhancing our multi-channel customer proposition, including our online presence and new Multi-Currency Card, as well as the sustained high gold price, which is encouraging greater awareness and demand for our precious metals buying services.”
The group’s good trading momentum has continued into the second half of the financial year to date.
This positive performance continues to reflect the strengths of the group’s diversified income streams, the ongoing and successful investments made in enhancing the customer proposition, and the high gold price driving a better-than-expected performance in the Precious Metals segment.
Ramsdens stated that as a result, the Board now expects the current year pre-tax profits to be at least £11m, which is ahead of its previous expectations of £10.5m.
Analyst Views
Analysts James Allen, John Byrne and Ray Maile at Panmure Liberum are rating the group’s shares as a Buy, upping their Price Objective to 305p (290p) a share.
Their estimates for the current year are for sales of £95m (£84m) with pre-tax profits of £11.2m (£10.1m), taking earnings up to 25.6p (24.0p) and paying a dividend of 11.2p (10.1p) per share.
For the coming year the brokers go for £97m of sales, £11.2m profits, 25.7p earnings and a dividend of 11.4p per share.
The analysts note that:
“The outperformance across the store network has been driven by a stronger than expected performance in the Precious Metals segment due to the high gold price which has helped to offset some marginal weakness in Forex.
This highlights the strength of the diversification of the Ramsdens offering, whereby it’s mix of both cyclical and counter-cyclical services offer a natural hedge.”
In My View
The shares at 192.50p, which values the group at only £61.5m, offer some good upside.