New record for AIM star Portmeirion

Portmeirion, the Stoke-on-Trent ceramics giant, says it made "slightly" more money than expected in 2015 after achieving a seventh consecutive year of record sales. The share price rose as much as 6% to a new high at 988p, and bosses remain "committed" to a progressive dividend policy, which is clearly great news for income seekers. It also justifies our decision in May last year to name Portmeirion as one of our nine AIM shares to buy and keep forever.

Results should confirm revenue rocketed 11% from £61.4 million to over £68 million last year when they are published on 9 March. A confident chairman Dick Steele said UK sales had been "robust" throughout last year, with strong growth online. The US business had a strong run up to Christmas. Even at constant dollar rates, group sales would be up at least 8%.

That group revenue figure is £4 million more than broker Panmure Gordon had pencilled in. Analyst Michael Stewart has now raised revenue forecasts for 2016 by £4.2 million to £70.6 million, and by £3.7 million for 2017 to £72.3 million.

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If its estimates are right, Portmeirion made a pre-tax profit of £8.4 million last year versus Panmure's previous guess at £8.2 million. A new kiln should be up and running from the beginning of February to meet expected UK demand in 2016, so Panmure's forecasts for both this year and next increase to £8.7 million and £9 million, respectively.

By maintaining dividend cover at 2.2 times earnings, the projected dividend for the current financial year increases from 28p to 28.8p, generating a yield of 3.1%.

"With the stock trading at a 13.6% discount to what we believe to be their fundamental worth, we continue to believe that the shares are well positioned to create further value for its shareholders," says Stewart.

"Our valuation analysis shows the shares to be worth 1,059p [from 1,013p]; this is based on a target price/earnings (PE) ratio of 16.0x. Our analysis is underpinned by a dividend discount model which shows the intrinsic worth of the stock to be 1,172p."

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