Investors’ Chronicle recently published an article on Norcros Plc (LON:NXR) which we think highlights some excellent points worth noting:
- The South Africa division has been misunderstood and generates positive cash flow and ‘robust’ profits. The economic outlook in SA is positive following the opening up of the electricity market, with 1.0% economic growth forecasted by the IMF
- In the UK market, analysts may be ‘unduly pessimistic’ given that sales have held steady and the company continues to generate ample cash
- That company ROCE records show its successful acquisition and integration of brands
- The company is undervalued, trading at only 6x forecasted earnings, well behind those of Travis Perkins and Grafton
- The company’s ‘chunky’ dividend of nearly 6%
- Rising real incomes and growing mortgage availability should support a re-rating of the shares
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