Augean - bullish estimates despite Covid-19

Edison Research have come out positively about Augean (LON:AUG), the specialist waste management business.

It has now been repaid £1.6m by HMRC for wrongfully collected Landfill Tax payments, it is possible that there are even more repayments due shortly - as much as £38m.

Noting the company’s resilient waste lines Edison's analysts state that Augean faces a shift in challenges in the second half of the current year, as North Sea decommissioning activity declines and waste flows return towards more normal levels following first half shutdowns.

Edison concludes “Encouragingly, cash flow remains strong and we anticipate a positive net cash balance at the year end.”

Its estimates for this year are £93.5m (£107.1m) in revenues and £19.8m (£19.2m) in pre-tax profits, giving earnings of 15.4p (21.0p) per share.

For next year their analyst goes for £100m of sales, £21.7m of profits and earnings of 17p per share.

Those estimates totally underline my enthusiasm for this group’s shares, which after hitting 205p on Monday last week, have since fallen back with the unsettled market to the current 180p.

I remain convinced that my price objective will be achieved, hopefully this year.

(Profile 31.10.19 @ 158.5p set a Target Price of 200p*)

(Profile 10.06.20 @ 185p set a Target Price of 235p)