i think these results are an incredible performance
profits are up, there is CASH and CASH flow.... as well as a 6% dividend.
WINK are obviously performing well despite the tough market.
the BIg advantage they has is as a franchise model.
thus they are veyr protected from lower volumes as they just earn the franchsie fee
secondly they are able to grow quite easily as there are lots of aspiring entrenpenuers....
so they are able to choose the most committed,
and then these individuals take the first aspect of business risk
EPS will be 9p and i think a P/E of high teens is justified for the business,
then add back the CASH to get a valuation closer to 200p
they also talk re industry consolidation so the price should also hold a bid premium
seems like a steady buy and a 6% divi yield to tide over for a couple of years.
The slowing housing market and approaching general election mentioned in the article has resulted in a significant decline in the company's share price which I think now offers reasonable value. I have been investing in financially strong AIM stocks for a few years but have never really looked at estate agents because the cyclical nature of the housing market tends to create booms and busts for this type of business. You can be certain that Winkworth's share price will fall further if there is another sharp decline in the housing market. However, the interesting point is that this company remained solidly profitable during 2008/9 when property prices were weak so the impact of falling house prices on its financial performance (as opposed to its share price) is limited. I think this is partly because about a third of its business is based on property rentals rather than sales and because it sells franchises rather than operates estate agents itself. This reduces the assets that are tied up in the business and transfers some of the financial liabilities to the owners of the franchise. The lack of any significant debt also helps make Winkworth more resilient. The limited assets tied up in the business also make it possible to achieve a relatively high return on capital invested which is always a good sign and decent profit margins. The family also has a significant stake in the business which I take as a positive sign. Of course, there are other similar franchise businesses such as Belvoir and MartinCo but my impression is that Winkworth is a better quality company. I have checked the web sites of all three companies and Winkworth seems to have significantly more properties offered for rent or sale per office than the other two companies. I have also read that Winkworth has more franchisees who have had previous experience in the estate agent industry than the other two companies which I think is another good sign. Although I have invested now, I'm not sure this is a good time to invest - I am no good at timing, but I because of the company's fundamental qualities I expect to receive a satisfactory return in the long term.
"Uncertainty surrounding May's General Election will stifle an already slowing housing market, LSE:WINK:Winkworth has warned, something flagged up at September's interims. But these concerns should at least support the estate agent's rental ..."
An agent on the move and making it seems the right decisions to expand in targeted markets. Working in the industry, I see the same mistakes repeated of agents trying to expand in the good times but without a focused plan and the staff quality to bring it to fruition. Normally I wouldn't buy a share with such a small cap, but this like Belvoir has potential I feel. Both are backed by decent dividends.
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