4Imprint Group Plc (LON:FOUR) has again posted strong results, with FY16 revenue increase well ahead of the market growth of 2-3% and a tick up in operating margin. Second half performance was good, with revenues up 8%, which would have been higher but for market uncertainty around the US presidential elections. December returned to normal trading patterns. As indicated at the interims, there has been a 35% uplift in the dividend, reflecting the de-risking of the pension position and marketing spend at appropriate levels. With strong cash generation, a cash positive balance sheet and good earnings and dividend growth, the premium rating is clearly merited.
Market share gains in fragmented market
Revenue came in very slightly shy of market forecasts, as potential new customers held off purchases ahead of November’s election, after which trading patterns resumed their normal path. Adjusted PBT was nevertheless a little ahead of our $37.7m forecast as management was able to tailor marketing spend quickly to the circumstances. Our forecasts are broadly unchanged on these results. We assume continuing growth in the market (driven by US GDP) with further market share gains. The total US market is estimated to be worth around $25bn and remains highly fragmented. 4imprint continues to build its online/mobile presence and use data analytics to optimise targeting and marketing spend.
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