brilliant!? Three brief updates today from seemingly boring stocks:
1) Berendsen (BRSN)- which with its subsidiaries is engaged in the laundering and maintenance of textiles. The Company provides service solutions to source, clean and maintain the textiles that the customers need to keep their businesses running.
2) Computacenter (CCC)- The IT service provider which I wrote up after its results last month.
3) Unilever - (ULVR) well everyone knows what they do, don't they?
Please note also that the chart above is a price chart and does not include the fairly decent dividends / yields paid by these Companies over the last five years.
Taking Berendsen first as this has been a longer term holding for me and one I have traded successfully over the years. It used to be called Davis Service Group and has generally stuck to what it knows which is textile rental, dust mats, wash rooms and work wear (uniforms) etc. It supplies these services to hotels, hospitals and other businesses so it tends to be a fairly steady business but with some economic sensitivity from the hotel, catering and industrial uniform side of things.
Any way their update today saw trading in the first three months of the year in line with management's expectations. Underlying revenue for the Group, at constant exchange rates, was up 3% compared to the equivalent period last year and in their Core Growth businesses, revenue increased 4%. Reported revenue for the Group, including the impact of currency translation, was similar to last year. Their margins increased again in their core business and this meant their operating profits were also up here. While in their ex growth bits or what they describe as manage for value businesses (cash cows),
as expected revenue was similar to last year here, but profits were lower as a result of the contract re-pricing in the second half of last year and start-up costs on a number of significant new contracts.
Cash flow remained strong and the group expects to deliver further growth this year. Given the rise in the shares over the last few years (see chart above) they are not such good value as they were, but in the context of the current market and with their strong forecast eps growth and dividend growth trending at around 7%, 2x covered by earnings they seem OK if not outstanding value on around 16.7x earnings with a yield of 2.9% forecast for this year with the shares at 1044p.
Next I'll briefly pick up on Unilever which I mentioned in my post earlier this week when I returned from my Easter break. This was because Diageo had flagged the effects of weak emerging market currencies and some weakness in consumer demand in some of those markets. Well Unilever talked about underlying sales growth of 3.6% overall and 6.6% in Emerging markets and pricing being up by 1.6% but overall turnover fell by 6.3% after an 8.9% currency hit - so the same effect there. However they talked about positive results in Home Care and Personal Care and a strong start to the year in Refreshment. Their food business declined which they blamed on the timing of Easter. The market does not seem to like the results as the stock is off 1.3% this morning in a market that is up 0.5%. Given it is on around 19x and struggling to grow I guess the price reaction is not that surprising for an expensive defensive stock. However as far as I'm concerned the most interesting bit in the announcement was that the quarterly dividend was up by 6% to 28.5 cents or 23.3 pence. This is around about the 7% growth that is forecast by analysts which puts it on a 3.5% yield for the current year at the current 2600 share pence price. So as a result I'll probably retain my small holding for the yield as part of a broader diversified income portfolio.
Finally - briefly, you'll be pleased to hear Computacenter can be summarised as UK business strong, Germany stable and France still struggling and providing a drag on performance with an exceptional restructuring charge of between £7 million and £9 million. They still have cash on the balance sheet and cash generation remains strong. If you want a more detailed review of the business then please click though (at the link above) to my write up from last month - it still seems OK having drifted back after the results as I expected to leave it on around 13x with a 3% yield @ around 650 pence. I'll leave it there and well done if you got this far - but as I said at the beginning boring can be brilliant!