Delivering sustainable, quality growth

Begbies Traynor’s track record demonstrates its ability to generate consistent growth in increasingly sustainable revenues across the economic cycle. This stems from a strategy driven by value-accretive acquisitions over the past six years, designed to build both upon existing and develop new, complementary disciplines.

The results are clearly visible in 16% CAGR in EPS from FY16-FY20, consistently positive cash generation and 8% pa dividend growth since 2017. Earnings growth is significantly ahead of the UK insolvency market (4% CAGR FY16-FY20), reflecting improved market shares from an increasingly diversified business, divisional cross sales / referrals, and the benefit of the acquisition strategy.

The current portfolio combines corporate and personal insolvency, corporate finance, financial advisory and a broad range of property consultancy and transactional services. That is an increasingly well-balanced revenue base, including counter-cyclical and more stable, contracted, cyclical income. We expect more of the same strategically, as management intends to secure further earnings accretive acquisitions from a pipeline of potential additions.

An excellent growth record (16% CAGR in adj. EPS over 4 years) and strong prospects (+50% EPS growth forecast in next 2 years) are not adequately reflected in a 12.4x FY22e PER and 3% yield. At our 140p fair value / share the FY22e PER is 16.3x and yield 2.3%, ratings that we regard as more suited to Begbies’ track record and outlook.