Bullish Trifast still a value play

Trifast is a fantastic British company. It makes screws, nuts and bolts and sells them to manufacturers of cars, electronics, telecoms products and medical equipment. Business is going well, and after a decent fourth quarter, management now think results for the year ended 31 March will be "as a minimum, at the upper end of current market expectations".

"The strong performance in the year reflects the results of the operational improvements implemented by management over recent years now delivering growth in both margins and profitability," explains the East Sussex firm. "The forward order book remains solid and the group's trading performance and commercial progress this year looks set to continue across the business units."

Henry Carver, an analyst at house broker Peel Hunt, is looking for adjusted pre-tax profit of £13.7 million when Trifast reports final numbers on 16 June. That's only marginally higher than consensus estimates and up from £9.2 million last year. Organic revenue is tipped to grow by 6.8% at constant exchange rates to £152 million.

Viterie Italia Centrale (VIC), the Italian supplier of fasteners to Indesit, Whirlpool, Electrolux bought by Trifast last May, has been successful, too. In fact, it's forecast to have helped improve cash profit margin by 210 basis points to 9.6%. 

Carver currently expects an increase in profit next year to £14.4 million, roughly in line with consensus, giving adjusted earnings per share (EPS) of 8.6p. "But we see upside risk to this number as the year progresses," adds Carver, given the strength of the orderbook and the outlook heading in to the 2016 financial year.

Trifast shares more than tripled in value to a 13-year high between November 2012 and last summer. But they've traded sideways since and largely tracked the market in recent months. Still, at 108p, the shares currently trade on a modest 12.6 times 2016 EPS forecasts. And most analysts acknowledge that if the current performance persists, profit upgrades in June look highly likely.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.