In earlier newsletters we established that Caffyns’ (LSE:CFYN) net current asset value is between double or treble the current market capitalisation (assuming properties are current assets and there is no need to write down the value of its stock of cars for sale). We’ve also seen a big improvement on the balance sheet, financial distress risk and potential to pay off almost all bank debt with a single asset sale. Today we turn to its profit history.
Profit after tax and earnings per share 2012 - 2021 Reported profit after tax (including the “non-underlying” negatives and positives) £‘000 Earnings per share 2021 1,424 52.4p 2020 -252 -9.4p 2019 -566 -21p 2018 1,030 38.2p 2017 5,123 186.3p 2016 2,487 90.1p 2015 9,255 335.5p 2014 1,411 51p 2013 1,289 46.6p 2012 1,416 51p Average earnings per share 82.1pThe cyclically adjusted price earnings ratio at my buying price of £4.65 is 465p/82.1p = 5.7. But we need to scrutinise the components of the earnings. For example, the 2015 result deserves a special mention: most of that £9.255m profit was a result of pension rules changing (so that future pensions could rise by only the RPI rather than the CPI) – it is a true one-off. The 2019 earnings number was greatly affected by impairment charges on two properties (£945,000). Also there was a negative £572,000 exceptional charge mostly caused by a one-off expense for equalising pensions (a countrywide imposition on companies). If I correct for these distortions, remove true exceptional items and take away the profits made on property I arrive at earnings coming solely from the operating business (including rent collected on properties). Method 2. Stripping out the one-off elements and separating the operating income from the property development capital gains. Year end (in March) Profit from selling cars and rent, £000s Earnings per share from selling cars and rent 2021 1,571 58.3p 2020 -252 -9.4p 2019 952 35.3p 2018 1,030 38.2p 2017 1,284 46.7p 2016 2,525………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
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Glen ArnoldI'm a full-time investor running my portfolio. I invest other people's money into the same shares I hold under the Managed Portfolio Service at Henry Spain. Each of my client's individual accounts is invested in roughly the same proportions as my "Model Portfolio" for which we charge 1.2% + VAT per year. If you would like to join us contact Jackie.Tran@henryspain.co.uk investing is about making the right decisions, not many decisions.
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