Both companies published full-year results this morning, but is either company a buy?
Bilby operates as a gas heating and building maintenance services provider in London and the south east. The firms trading business, P & R Installation Company, is focused on contract work with housing associations and local authorities, and provides services to more than 100,000 homes and commercial properties.
Bilbys results made for impressive reading, in my view. The firms operating margin rose to 13.4% in 2014/15, from 8.8% in 2013.
Bilby has changed its year-end date so todays figures cover 14 months, compared to 12 months for last years figures. This means that you cant readily calculate percentage increases on last years sales and profits, but the upward trend is obvious.
Turnover was 14.91m, up from 9.73m during the previous year. Operating profits rose from 0.86m to 2.0m last year, while pre-tax profits rose from 0.83m to 1.98m.
Earnings per share for last year were 6.1p, giving a trailing P/E of 14.8. Thats backed by a dividend per share of 2.32p, giving a yield of 2.6% at the current 90p share price.
Bilbys attractions are enhanced by a strong balance sheet, with net cash of 1.7m and no debt.
The only broker forecast I can find for Bilby is by the firms house broker, which was forecasting earnings per share of 3.15p for 2015/16 before todays results.
Id expect that forecast to now be substantially upgraded. Bilby says its current order book is worth 95m, or nearly eight years revenue based on last years figures. Bilby has reported several new contract wins recently, and I believe further growth is likely.
Bilbys growth could slow if the housing market cools, but its focus on rented properties means that this is less of a risk than for companies thatfocus on owner-occupied homes.
Shares in Telecoms Plus fell by 18% in one day in April, after the firm admitted that it would have to write off 11m of bad debt and said that profit growth for the year would be significantly below market expectations.
The group, whose main trading business is Utility Warehouse, issued its final results today. Investors appeared to be relieved, and the shares rose by 3.5% to 850p this morning.
Revenue rose by 10.5% to 729.2m, while reported pre-tax profits rose by 21.3% to 42.1m. Adjusted earnings per share rose 9.3% to 53.0p, in-line with recent forecasts but 16% lower than the 69p per share consensus forecast in place before Aprils profit warning.
However, Telecom Plus did deliver its promised 14% dividend increase, taking the full-year payout to 40p per share. This gives a prospective yield of 4.7% that should rise to 5.4% in 2015/16, based on the firms commitment to increase the dividend by 15% to 46p this year.
The high yield on offer from Telecoms Plus looks attractive, but in my view the current valuation of 16 times trailing earnings is probably enough, making the shares a buy for income only.
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Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.