Thanks to Edmond for a valiant attempt at analysing this company but anyone reading the article can see that there are plenty of uncertainties which tend to prevent accurate assessment of short term performance. The main attractions of the company are the conservative way it is run and the high return on capital employed which has been independently calculated as ranging from the upper twenties to low thirties over the past five years. I must admit I'm not too concerned about the weather and the impact of European economies as these just introduce volatility in the short term, but the quality of the company will show through in the long term.
"Does a hot start to June portend a bumper year for Â£200 million AIM-listed hire group of pumps, heating and air conditioning equipment? Higher margins on air conditioning equipment, hired predominantly from June, makes LSE:ASY:Andrews Sykes ..."
"Where does the buck stop for equities valuations, either for dividend yields or earnings/cash flows? AIM-listed LSE:ASY:Andrews Sykes Group exemplifies how a keen search for yield amid ultra-low low interest rates is skewing some shares on the ..."
"Is a yield over 7% too good to be true? Combined with an AIM listing it initially suggests a dubious enterprise i.e. the stock priced for a high yield to compensate for risks. Yet the five-year table for LSE:ASY:Andrews Sykes shows robust if ..."
"Buying any share involves an element of risk. None of us can possibly know with certainty what will happen tomorrow and history is littered with great companies gone wrong - think Marconi. But some companies have been around for decades, even ..."
I was interested to read the recent Motley Fool article entitled "3 great shares for your ISA that you've probably never heard of". The essence was that they had found shares in 3 long established companies with bomb proof balance sheets that would provide safe ISA investments and also provide inheritance tax relief if held for 2 years or more (like many AIM companies). The 3 companies they tipped were James Halstead, FW Thorpe & Nichols. I would like to suggest that Andrews Sykes also has these qualities and is perhaps a great share that the Motley Fool has probably never heard of. It is hardly suprising as it must have one of the lowest investor profiles of any successful company. Despite the company trading since 1964, I had never heard of it until fairly recently, despite my monitoring of AIM stocks. Worth a look if you are a long term investor who likes conservatively run microcap companies
Whilst today's results are disappointing, it would appear that the main causes are beyond the company's control and are not the result of errors made by the company so I am not too worried. I know companies always try to blame the weather if they have poor results but I think there is justification for this in the case of Andrews Sykes. The sensitivity of the financial performance to the vagaries of the weather is a weakness of the company but I am pleased to note that the company is continuing to pay a decent dividend as this is a sign of confidence in the future. I also note that the after tax profit margins continue to be very good. Let's hope for an awful winter!
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