Petards (PEG) – FY2019 results
The main news for me today is the Petards (PEG) results.
The good:
- Revenue of £20.0m is above expectations of £18m.
- Normalised pre-tax profit up nearly 60%.
- Small contract win separately announced today (as I speculated), with work commencing immediately.
- Order book up and further orders expected.
- Net funds down only £0.3m despite £1.25m acquisition.
The bad:
- Second half weighting for FY2019.
- Warning of reduced defence business in FY2019.
- Order book (at year end) is only modestly higher at £19m vs £18m of which the forthcoming year is up from £12m to £13m.
- Gross margins down.
- Normalised EPS not reported and I cannot immediately compare to forecasts.
I would expect a modest rise in the share price this morning. However I already have a moderate position and due to the negatives highlighted above I will be holding off adding until there is an unjustified price fall or further positive news.
Norcros (NXR) – FY trading update
In-line update. This is reassuring giving that they carry some debt and pension liabilities.
I had reduced my position at a higher price over concerns whether FY results could be achieved and so will be looking to re-add this morning. Note that despite its relatively small size, this is not an AIM stock.
Disclosure
I hold shares in Petards and Norcros.
LeoInvestorUK's blog 
Petards’ share price did indeed rise first thing, but it seems that investors then focused on the negatives I highlighted as it has since fallen back 15%, close to 12 month lows.
My suspicion remains from the delayed results and simultaneous contract statement that management were disappointed by the performance of the business even if this doesn’t quite come through in the figures. Interestingly the Beneish M-Score is relatively high which is statistically associated with a risk of earnings manipulation.
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