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  • Writer's pictureMark Watson-Mitchell

Legal services, domain registration and news and magazine wholesaling

DWF Group (LON:DWF) – looking for a 23.4% uplift in 2023


There is a gentle swell in the shares of this £276m global provider of legal and business services.


The recent acquisition of the Canadian-based Whitelaw Twining legal group has been completed by the issue of the consideration shares yesterday.


Analysts Mike Allen and Rachel Birkett at Zeus Capital consider that the group has shown a resilient performance in a challenging environment.


For the current year to end April they estimate that revenues will grow to £387.6m (£350.2m) taking adjusted pre-tax profits up to £45.9m (£41.4m), with earnings of 10.8p (10.7p) and an increased dividend of 5.4p (4.8p) per share.


Over at Edison Investment Research analysts Andy Murphy and Neil Shah have a slightly take on the group’s figures for this year, looking for £381.1m revenues, normalised pre-tax profits of £46.5m, earnings of 11.5p and paying a 6.1p dividend per share.


For the coming year they see £415.7m revenues, £56.6m profits, 12.7p earnings and a healthy 6.9p per share in dividends.


These shares are for buying based upon such analyst estimates.


Unless I am really missing a trick here, I would have thought that DWF Group shares are an absolute steamer for 2023.


At last night’s close of 81p that puts the shares out on just 7.04 times current year and 6.38 times prospective earnings, while yielding a current year 7.53% and a 8.52% prospective yield.


Those ratings are far too low and are destined for a good rise in 2023.


Twenty-three days ago, I set a 100p price aim and I remain firm on that objective.


(Profile 01.06.20 @ 67p set a Target Price of 100p*)

(Profile 20.12.21 @ 111p set a Target Price of 140p)

(Profile 12.12.22 @ 78p set a Target Price of 100p)


CentralNic Group (LON:CNIC) – 180p here we come


Following the recently passed Resolution to pursue a Share Buyback Programme, the global internet software and services group has been into the market buying.


An announcement out yesterday stated that last Saturday the group purchased 220,000 shares at 154.38p each.


Now that really did interest me – was it an ‘off-market’ transaction because the London Stock Exchange closed early on Friday afternoon and did not open again until yesterday morning.


The near £340,000 purchase represented about 8.5% of the company’s £4m buyback budget.


Anyway, it does not matter when and where and from whom the transaction was completed.


I remain incredibly positive about the 2023 and thereafter prospects for this real ‘money machine’.


The shares closed 2.5p better last night at 157.5p, leaving 180p and above as my very nearby price aspirations.


We can only be a few days away from the announcement of a Trading Update for the 2022 finals and a date when exactly those figures will be declared.


Don’t miss this one – I have been telling you this for ages now and I have never waivered from my view of the company and its values.


(Profile 12.07.21 @ 89p set a Target Price of 110p*)


Smiths News (LON:SNWS) – 4.36 times earnings and yielding 8.7%


The shares of the UK’s largest newspaper and magazine wholesaler have been a good market of late.


The group’s AGM is due to be held on Tuesday 24 January, which will hopefully declare some corporate positivity.


From a 27p 2022 price Low in late September last year, the group’s equity has subsequently increased significantly in value, with its shares last night closing at 48p, where it gains a £123m capitalisation tag.


For a long time, I have been extolling the virtues of this under-rated stock.


Andy Murphy and Natalya Davies, analysts at Edison Investment Research, consider the group’s share to have a discounted cash flow valuation of 89p a share.


Their estimates for the current year to end August 2023 are for revenues down from £1.089bn to £1.057m while pre-tax profits could rise gently to £33.1m (£32.3m), with earnings easing to 11.0p (11.7p) while the dividend will be held at 4.2p per share.


On 4.36 times current year earnings and yielding 8.7% the shares continue to have appeal.


Hold tight.


(Profile 24.07.20 @ 20.25p set a Target Price of 27p*)

(Profile 24.06.21 @ 39.5p set a Target Price of 55p)


(Asterisks * denote that Target Prices have been achieved since Profile publication)


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