Sureserve Group PLC (AIM:SUR)’s extension of its multi-year gas service contract by up to 10 years with its long-standing client The Guinness Partnership underlines the growing quality of earnings, says Shore Cap.
Guinness Partnership is one of the UK’s leading owners of social housing and although forecasts are not changed, this major contract renewal underpins the existing estimates said Shore.
Given the long-term growth and earnings quality, the valuation remains compelling says house broker Shore at 11.6 times forward earnings and free cash flow yield of 6.3% despite the shares more than doubling.