After months of suspended dealings the shares of the DX (Group) (LON:DX.) delivery group have risen nearly 14% in the last three weeks and now we can expect them to rise even further.

The results for the 52 weeks to 2 July reached a seven-year high and there is more to come.

Revenues were up 12% to £428.2m, while adjusted profits before tax were up 68% to £20.2m, and earnings were 45% better at 2.9p per share.

Net cash increased to £27m (£16.5m), strengthening the group’s balance sheet.

Ron Series, who retires today as Executive Chairman, commented:

“These are excellent results in a year of challenges for the Group. Both revenue and adjusted pre-tax profit reached seven-year highs. The significant progress the Group has made reflects a well-executed growth strategy, underpinned by the major investment we have made in the business over recent years.

“The Group has a very strong balance sheet, with net cash of £27 million. We believe that DX remains very well-positioned to achieve its growth objectives in the current financial year and beyond despite the economic uncertainties.”

The 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.

Current outlook

Trading in the first quarter of the new financial year remained in line with management expectations. 

Encouragingly the group has a very healthy pipeline of new business opportunities as it enters the seasonally busier second quarter. 

The group’s management considers that despite the uncertainties facing the economy at present, the group remains in a strong position to achieve its growth objectives for the current financial year. 

The proposed return to the dividend list in the new financial year signals the Board’s confidence in DX’s growth prospects.

Analyst Opinions – two brokers rate a Buy

At Liberum Capital, analyst Gerald Khoo rates the group’s shares as a Buy looking for them to rise to 45p.

For the current year to end June 2023 his estimates are for £453m sales, £26.7m profits, earnings of 3.7p and a resumed dividend of 1.5p per share.

He notes that “We see DX offering a highly unusual combination of double-digit EPS growth, a double-digit free cash flow yield and a 6% dividend yield. “

Guy Hewett at finnCap has a Target Price of 57p for the group’s shares noting that the group is valued at a 53% discount to its peers. 

He also comments that the investment in infrastructure, systems and staff is paying off, supporting high service levels and market share gains

For this year his figures are looking for £457m revenues, £25.4m profits, 3.5p earnings and 1.5p in dividend per share.

Conclusion – 34p short-term objective

Against difficult trading hassles this group looks as though it is going to gain ground this year and going forward.

The shares look very attractive at the current 25p level, with my expectation of rising to 34p in the short-term

Vodafone shares sank on Tuesday after the group said EBITDAL fell 2.6% due to a legal settlement in the prior year, and underperformance in their German business.

There was general uptick in revenue but cash flow from operating activities dipped due to working capital movements and higher tax payments.

Vodafone’s customer numbers increased, but by a very small increment. The number of European mobile customers rose just 700,000 to 66.7m while European broadband customers dipped by 100,000.

“With tiny revenue growth, a flat dividend and guidance for earnings to be at the lower end of previous guidance, telecoms group Vodafone is not exactly firing on all cylinders,” said AJ Bell investment director Russ Mould.

The painfully slow rate of progress in Europe was partially offset rising by African customers, although the growth here was disappointing given the opportunity the region offers.

Vodafone shares sank 5% in the immediate market aftermath.

“It’s certainly not plain sailing at Vodafone right now, warnings that weaker economic conditions and rising costs are set to bring full year results down from previous guidance put a dampener on half year results. A €1bn extension of the existing cost savings programme and further pricing actions are being brought in to try and keep rising costs in check,” said Matt Britzman, Equity Analyst at Hargreaves Lansdown.

“Challenges remain in Germany, the group’s largest region, with the group losing customers in both broadband and TV. New legislation came into effect at the start of the year and Vodafone’s battled with compliance with the new rules and finding essential cross-selling opportunities under the new way of operating.”