OldManFit
Long

Walker Greenbank PLC (LSE:WGB) - ISA Investment - Long-term

LSE:WGB   WALKER GREENBANK PLC ORD 1P
Sector: - Consumer Cyclicals

How found: - Filtering for stocks like Lord Lee of Trafford’s recommendations (he was the first ISA millionaire).

Company Background: - Incorporated May 1899 (yes, old co.) public since Jan 1986. Walker Greenbank PLC is an international luxury interior furnishings company that designs, manufactures and markets wallpapers and fabrics together with a wide range of ancillary interior products. Brands are Sanderson, Morris & Co., Harlequin, Zoffany, Scion, Anthology, Clarke & Clarke and Studio G (to the uninitiated you’re talking £200+ per roll of wallpaper etc.. High quality at a price that reflects it).

Ratios: - PE 8.2 (on future earnings ) ranks first in PE for the industry (9) in household goods market on LSE , Div yield 3.5-4% with Div cover of 2-3 times.

Rough Technical: - The last year has been rocky with a 12-month range between 55-92p. Relative strength to the market 12m - -20%, 6m – 15%, 3m – 1%, 1m – 15%. Yep underperformed, a has been hit by the Coronavirus fear in the market in the last month, which presents an opportunity if that fear is unjustified.

Liquidity: - Average daily volume over 3 months is 61k, this is below my threshold (£120k), so price discovery and getting out of the share isn’t as easy as it could be. 55% of the shares are held by holders below 4%, 45% is held by 4%+ the largest holders being funds Octopus (11%), Schroders (14%), Ennismore (10%), Fidelity (10%), and others. Directors have some “skin in the game”.

Brokers Opinion: - 4 brokers cover the share, 2 have it as hold or strong buy. Target price is 97p – 35% above the present price.

Spread: - 278ps, so within my threshold of 400bps.

Beta: - beta is 0.490, so volatile in relation to the market. This time last year it was 0.05.

Accounts: - Turnover has had a yearly growth of 7.63% over the last 5 years, though profitability has been some what flat at £5M, forecast next year £6. 3M . Net cash position has been bumpy in the last 5 years ranging from -£8M to +£5.7M (2019). Year end result due soon. Balance sheet has been around £100-95M range for the last 3 years, so the asset position is greater than the market Cap by £50M ish .

Main Risks: - Updates in last year, “in line with expectations” “trade challenging” – so things might be not moving upward. Share price drop since 31st Jan – trade updates always pre-leak.

Main Favourables: - New CEO in last 18 months, 4% dividend, no excessive debt

Declaration: - No interest at the moment, this is one of the riskier investments. Support is around 70p, so I am looking for an entry below this due to the speculative aspect of the company. I am going to put a stop loss at 10% below entry price. I might just wait for the trading update, before entry (year end is 31st January).

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