News

21-11-2005 - Printing.com - Printing.com BUY - Growth Company Investor

Printing.com – recommended in November’s Growth Company Investor at 60.5p – has posted exceptionally strong figures for the half ending 16 October. Despite a trickier economy in which chief executive Tony Rafferty admits ‘we are having to fight harder for each order than last year’, total retail sales – the company’s estimate of the retail sales value of all transactions – skipped 25% higher to £9.4m. Turnover was lifted 15% higher to £6.4m, and pre-tax profits powered 75% north to £1.1m. Fully diluted earnings rocketed 54% north to 1.66p, and investors were also treated to a 0.5p dividend.

Operating in a £1bn printing sector and with an estate spanning all regions of the UK, Printing.com now boasts 147 stores ‘open and pending’. And, to cater for anticipated growth, its main printing hub in Manchester is being upgraded in a move that will take total retail sales capacity to between £45-£50m.

Rafferty is casting his eye overseas, having unveiled an international strategy centring on the granting of master franchises to overseas printers for license fees plus royalties. This model should appeal to commercial printing companies attracted to Printing.com’s above-average margins and will ensure cash and profit contributions up front on each agreement. Although the international program is still at an embryonic stage, Rafferty has the US, Germany and France in his sights.

Last financial year, Printing.com made pre-tax profits of £1.5m from a turnover of £10.75m. This year, analysts are forecasting a rise to £2.45m from a top-line £13.6m, giving earnings per share of 3.6p, and a 1.5p total payout. We believe the forward multiple of 19.9 is more than justified by stellar current growth rates. Buy.

Market cap: £31.7m
PE Forecast: 19.9
Share price: 71.5p