Norcros (NXR) - the £106m bathroom fittings and tiles group has announced a year end trading update today. While not showering the market with good news they did at least say that Group underlying operating profit for the year is expected to be marginally ahead of market expectations. Aside from that their suggestion for turnover looks a little light versus forecasts, so given their comments on operating profits presumably this means margins might be slightly better than expected.

They alluded to tougher conditions in the UK market and strong growth in South Africa was negated by movements in the Rand. They did however get a boost from their acquisitions last year and this is part of their plan to double revenue to £420m by 2018. Which seems ambitious and I hope they don't go all out to get the turnover but at the expense of profits because as Warren Buffet said "turnover is vanity and profits are sanity."

The spending on acquisitions meant a cash outflow for the year and leaves them with £33m of debt versus £14.2m last year,  so they may still have a bit of headroom on the borrowing front for more acquisitions. Having said that though the other liability they have is a large Pension fund which saw an increase in the deficit to £73.5m (2012: £61.9m) representing an 84% funding level (2012: 85%) in the latest triennial review. The increased deficit was driven predominantly by historically low gilt yields.  A revised deficit recovery plan has been agreed with the Scheme Trustee, with a cash contribution of £2.5m per annum starting in April 2016, and increasing with CPI, payable over the next 10 years. This compares to a deficit recovery payment of £2.1m in the year to 31 March 2016 under the previous plan. So an extra £0.4m per annum hit to the bottom line.

The shares continue to look good value at 170p which puts them on around 7.5x with a 3.5% yield for the coming year assuming no changes to forecasts on the back of these numbers based on forecast eps of 23.5p to 24p. So it is on a zero growth type of rating so if they can deliver growth in their turnover, profits, earnings and dividends over the next few years then they could well be cheap and one could argue for a re-rating to say 10x which would give a price target of around 22 to23p which is close to the highs they reached last year. It may however continue to be one of those frustrating value stocks that just sit there on a low rating if the market continues to ignore it on the basis of its chequered history, pension deficit and South African exposure.

As I have observed in the past Thursday seems to be popular day for corporates to put out results and consequently, like today, we often end up with a throng of results on a Thursday.

So I'll cover in brief a few that I have mentioned in the past which are in size order Rolls Royce, Restaurant Group, Safestore & Norcros. So if any of those are of interest then click the read more.

....round up as there are lots of results and updates out today, but I'll cover briefly those that I have mentioned in the past or those that currently score well on the Compound Income Scores as they may be worthy of further research. So in no particular order we have had:

• Mondi (MNDI) the large (£7bn), well managed, global packaging group announced a positive looking IMS at the 9 month stage. The shares look fairish value on around 14x with a near 3% yield but do have a Compound Income Score (CIS) of 95. It is as I say a well managed group and continues to trade well at the moment, although it is worth remembering that it is cyclical and would be vulnerable in an economic downturn.
  
• Norcros (NXR) which I wrote up recently had an in line H1 trading update with some organic growth and benefits as expected from their recent Croydex acquisition. Post a reverse consolidation the shares are now 210p or so which equates to 21p when I originally wrote them up. Thus they are still quite lowly rated on around 10x with a 3% or so yield while they have a CIS of 63. They refer to mixed markets with benefits from strong housebuilding but weaker consumer demand, but otherwise it seem steady as she goes.
  
• Victrex (VCT) the world leader in high performance polymer solutions which it supplies to industrial, electronic and medical markets announced an in line full year pre close update. This is just as well as it is relatively highly rated on around 19x this years expected earnings but does offer a decent growing yield of nearly 3%. Growth in the business this year has been constrained by weaker demand in the oil & gas and medical areas but they seem to have been able to offset this. It is a good quality business which is also well managed, but therefore does not tend to come cheap although like Mondi it can be vulnerable in an economic downturn, It currently has a CIS of 92.
  
• Empiric Student Property (ESP) as its name suggests this is a property company which specialises in student property and it has been pretty active in acquiring and building out a portfolio since it listed last year. As a result they are raising more money from an on going placing programme. They also confirmed a quarterly dividend of 1.5p and their plans for a 6p full year dividend in the year to next July which at the current 108p level would give a yield of 5.5% or maybe a bit less as some of it will be paid as property income dividends which attract a 20% tax charge unless held in an ISA or SIPP. This seems like an attractive niche in the property market and this one has certainly been active in building up a portfolio to deliver the income which is the main attraction and they expect to increase this in line with RPI after next July.
  

That's it for today as I'm trying to get a more in depth look at another stock done, hopefully might have that ready for you tomorrow or over the weekend.

...as it were as I'm doing a quick write up on a stock that has been scoring well on the Compound Income Scores (CIS) recently. This follows on from my post last week called In praise of models & humans. In this I looked at some of the evidence for models being superior to humans. On that basis I thought I would to take a closer look at a stock which, although it scores well with a CIS of 91, I have been generally sceptical of due to my knowledge of its past, to see if I'm missing something due to my bias. Worth noting that it also scores well on Stockopedia's Stock Ranking system with a score of 95.

I say knowledge of its past as this one Norcros (NXR), which has been listed before its current incarnation and at the time was a much bigger company which generally disappointed, thus potentially clouding my view. It was put out of its misery as a listed stock last time around in 1999 by a venture capital backed management buyout, which may well have been a good deal for them as old economy stocks were way out of fashion back then and selling on cheap ratings. Having been tidied up and restructured it was then foisted back on the market with great timing (for the management and VC's) in July 2007 at 78p just in time for the credit crunch and housing crisis.

This then caused the shares to slump to around 5p by the end of 2008 which is probably why I'm still biased against it! The other negative feature is the fact that they are still weighed down with a large pension fund deficit which is a throw back to their former glory days. The Norcros Defined Benefit pension scheme has liabilities of £441.3m and an IAS19R deficit of
£44.3m at the end of FY15 which is significant in the group context and their market cap. of around £120m. This is I believe having a triennial review at the moment so this could lead to more payments and they also I believe have net debt of around £15m.

Since hitting their 5p low however it has gradually recovered to the current 20p level (see chart at the end) and does now seem to be (perhaps unsurprisingly) quite cheaply rated on around 8.5x with a reasonable 3% yield. The management also seem to have a plan to double turnover in the next few years, although this is largely expected to be driven by debt funded add on complimentary acquisitions. This is not without its risks but so far the deals they have done look reasonably sensible and since they are using debt it should enhance earnings, but would raise the risk in a downturn.

At the end of the day this one which makes Triton electric showers and other items for bathrooms plus ceramic tiles and as such is a play on the growth in the housing market and any pick up in consumer related DIY / repair and maintenance largely in the UK but also in South Africa to a lesser. It seems that the housing market and DIY demand are continuing to grow in the UK and consumer incomes are finally picking up in real terms. However given their skill in coming back to the market it 2007 I was also a bit perturbed to see the management selling shares in July, although the CEO still has a £1.5m stake and there are some reasonable institutions holding it like Miton, Schroders, Artemis, Standard Life and Jupiter.

So that's a brief background to it, have to admit I'm still in two minds about it, but it does look cheap and if the macro background remains benign then maybe it could re-rate and get to 25p to 30p range. If you are not put off by my doubts and like the sound of this one then there was also a recent sponsored note from Edison which looked at it in some detail and gives their views on valuation comparisons with other similar companies. You can download a copy below if that is of interest.