Carpetmaker Victoria PLC (LON:VCP) expects its full-year underlying pretax profits to be “comfortably ahead of current consensus market expectations” helped by earnings enhancing acquisitions, with more of the same expected in the current year.
In a “positive” trading update for the year ending 1 April 2017, the AIM-listed group said its performance has benefited from “operational synergies following the integration of recent acquisitions in the UK and Australia, which have continued to positively impact gross profit margins and overheads throughout the current financial year.”
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The firm added: “Further improvements are expected in the coming financial year as the group benefits from the further expertise and input of Philippe Hamers, the new group chief executive, who started with Victoria on 20 March 2017.”
Victoria also said the ongoing operational improvements are expected to “continue to deliver very good organic earnings growth over the coming 12 months.”
Further acquisitions …
Additionally, the group said it has “invested a significant amount of time and energy during the past year identifying further suitable acquisition opportunities within Victoria's existing markets and, importantly, Europe.”
It added: “The group's banks continue to be very supportive and there remains considerable headroom in existing facilities.”
Victoria concluded that it is “confident it will deliver another year of significant, earnings-accretive acquisition growth in addition to underlying organic growth.”
Shares strong …
In early morning trading, Victoria shares were nearly 5%, or 22.5p higher at 477.5p.
In a note to clients on Victoria, analysts at Cantor Fitzgerald said they would leave their estimates unchanged at this stage, forecasting full-year pretax profits of £28.0mln, representing 54% year-on-year growth.
Reiterating a ‘buy’ rating and 525p price target price on the stock, they added: “After rising 28% YTD Victoria trades on a Mar’18 PER of 15.2x. We continue to believe this represents good value given the forecast 3 year EPS CAGR of 25% and the potential for further earnings enhancing acquisitions.”