Newcastle-based Northern Bear (NTBR.L) is a provider of specialist building services. The company was floated on AIM in December 2006, and provides services ranging from general building work, fire protection, roofing works, fork lift truck sales/hire and health and safety consultancy. There are currently 11 businesses in the group which together employ over 300 people.
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On July 16th 2018, NTBR announced preliminary results for the year ended 31 March 2018. During the year the group completed the acquisition of H Peel & Sons (Holdings) Limited. Turnover from continuing operations rose to £53.6m (2017: £45.6m), with adjusted operating profit from continuing operations up to £3.1m (2017: £2.5m). Adjusted EPS rose to 12.5p from 11.3p, and the group increased the proposed final dividend to 3.0p per share (2017: 2.5p), plus a special dividend of 1.0p per share. Exec Chairman Steve Roberts said he was “delighted to be reporting on another great set of results. With a strong current order book, I am hopeful of another good year to come and would like to thank my fellow Directors and the management teams and staff at all of our companies for the efforts they put into making the Group such a success story. “ “We are pleased to be back on the acquisition trail and will continue to look at opportunities as and when they arise.”
VectorVest valuation metrics for NTBR had occasionally flickered into life in early 2018, but it was the run up to the June trading update that saw the RT (Relative Timing) metric, (a fast, smart, accurate indicator of a stock’s price trend), flag up an opportunity. Now in mid July, despite a bullish move higher in the share price, the NTBR RT metric still logs 1.27, which is rated as very good on a scale of 0.00 – 2.00. Other high scoring metrics include a GRT (Earnings Growth Rate) of 19%, which VectorVest also considers very good. The stock continues to add gains, but even at 82p, VectorVest believes the stock is still underperforming against a valuation of 108p.
A weekly chart of NTBR.L is shown above in my normal format. After a strongly trending upward move, in the first seven months of 2017, the share has traded sideways to down. Chartists refer to this type of pattern as a continuation pattern. Recently the share has broken the trendline defining the highs of the continuation pattern on rising volume. This is very bullish price action and bodes well for a push to at least the last high made on August 2017.
Summary: With over 85% of NTBR turnover coming from repeat business, its management can rightly be praised for a discerning approach to finding and bedding in quality acquisitions. Income investors will note that NTBR offers regular dividend payments, but with Exec Chairman Steve Roberts bullish over forward prospects for the group, VectorVest also sees an opportunity for near term capital gains. We rate the stock as buy, with a price target of 108p.
Dr David Paul
July 17th 2018
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