Smaller Companies: Little guys who deliver the goods
Sunday 07 December 1997
And the parcel deliveries specialist, Business Post, has certainly managed that, despite competition from the Post Office and the likes of Fedex and Hays. Buoyant recent interim figures were ahead of market expectations. Pre-tax profits rose to pounds 9.38m, from pounds 7.7m for the comparable period, and the interim dividend was lifted to 4.4p, in line with the rise in earnings per share growth - up 2.6 per cent to 12.46p.
Taking on the competition however, does not come cheap. In September Business Post opened its national hub in Birmingham at a cost of pounds 7.3m. This will complement a regional hub opened in Park Royal, west London, to cover deliveries into London, while another regional hub will open shortly in Runcorn, Cheshire.
Nevertheless, funding should not be a problem, with net cash on the balance sheet of pounds 9.8m.
A niche player like Business Post can always hope to make some inroads into the opposition. Given its track record of consistently expanding sales while maintaining profit increases at a similar pace, its future prospects look satisfactory.
The problem for an investor is the level at which the shares are trading. Since a low of 435p, struck in July, they have surged ahead to the current price of 570p. According to stock broker Charterhouse Tilney, the company should generate pre-tax profits of pounds 19.4m in the current year, rising to pounds 23m in 1999.
That translates into earnings per share of 25.82p and 30.61p respectively. That leaves the shares trading at 22 and 18 times prospective earnings. While that sounds about right for a potentially good growth stock, with a sustainable formula, the question arises as to whether the shares are overvalued.
On the basis of its track record, arguably not.
Investors can take comfort in the fact that the founding Kane brothers still own over 50 per cent of the shares between them. On balance,the downside is probably limited. The shares are a buy.
- 1 Finland schools: Subjects scrapped and replaced with 'topics' as country reforms its education system
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 Watch: Man takes selfie every mile of 2,600 mile hike, creates amazing timelapse video
- 4 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 5 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Amanda Knox murder conviction: Italian court overturns verdict for US student and Raffaele Sollecito in the killing of Meredith Kercher
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Revealed: Putin's army of pro-Kremlin bloggers
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...