Market's view on Driver Grp
Published on April 2024
- Driver Group’s pre-close trading update indicates overall encouraging progress, with smaller regions returning to profitability and a positive performance in the UK and Europe. The company completed cost rationalisation following the move to a smaller London office, and cash remains high, representing 32% of the market capitalisation. Expectations are set for higher revenues and profitability ahead of 2027, focusing on added-value expert services.
- A Stock watcher anticipates a trading update, highlighting the company’s leaner cost base going into 2024 and finds the current low valuation anomalous.
- Concerns are raised about a lack of announcement regarding intended share buybacks, with disappointment expressed towards the management’s slow progress.
- A takeover is suggested as unlikely despite previous successful takeovers, with beliefs that a true recovery might not be visible as a result.
- Driver Trett has opened a new office in Dublin.
- Positive sentiments are shared about the future growth prospects and a more upbeat and growth-oriented tone in the latest results presentation.
- Discussion about the necessity of central costs with opinions that a smaller group would require reduced central costs.
- The firm’s focus on near-global operations is criticised, suggesting a more profitable business could be achieved by concentrating only on successful regions.
- Criticism is voiced regarding the portrayal of return to profitability as misleading, with suggestions of adding back non-recurring costs being equivalent to selling “snake oil”.
- Concerns about constant parts of management remuneration linked to share-based compensation and the recurrence of such charges are discussed.
- Suggestions are made to divest underperforming regions like the Middle East and APAC, questioning the feasibility due to potential overseas partner agreements.