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Moss Bros Group (MOSB)

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CommissarJones
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Moss Bros Group (MOSB)

#98643

Postby CommissarJones » November 24th, 2017, 8:29 pm

As an income-focused investor, I am finding this one distinctly tempting - the dividend yield is up to 6.8%, according to Hargreaves Lansdown. Many of my fellow HYP-ers seem to have a preference for large caps, so I suspect MOSB's small market value (£86.7 million) might deter some of them. In addition, the company is a retailer, a sector that has been distinctly out of vogue since the Brexit referendum. However, MOSB has the following points in its favor, IMV:

- The balance sheet is strong; specifically, the company has no debt.
- The five-year dividend history is positive.
- MOSB is performing well in terms of sales and profit, despite the pressures on retailers in general and tough competition in its specific market.
- The company is a good generator of cash.
- Some competitors, such as Austin Reed and Jaeger, have dropped by the roadside, presumably to the benefit of those who remain.

MOSB did not give a figure for free cash flow in its most recent annual results, but the company generated net cash from operations of £16 million in the latest fiscal year and devoted £8.8 million to capital spending, leaving £7.2 million. With dividends paid out coming to about £5.7 million, I make that coverage of around 1.25 times - not the greatest, but given MOSB's ability to generate cash, I think it would allow me to sleep at night. The major risk would seem to be some kind of downturn in the financial industry specifically or a broader economic slump.

Any thoughts?

jackdaww
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Re: Moss Bros Group (MOSB)

#98693

Postby jackdaww » November 25th, 2017, 8:40 am

the yield (c.7%) is very attractive at this price (c.90p) although the p/e (c.14) is not at bargain levels , is cash generative , and the balance sheet looks ok .

its a low margin long established market leader with a well known brand .

it is held by funds hargreave hale , legal & general and artemis.

will it maintain this yield and grow a bit ?

depends on management and ongoing demand -- like many other business's .

i continue to hold a small position and may add at this price.

scottnsilky
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Re: Moss Bros Group (MOSB)

#98810

Postby scottnsilky » November 25th, 2017, 5:10 pm

I looked at MOSB for a few months now and finally bought in a month ago, at 96p, just in time for the dividend, and as usual for me, the price immediately fell, down 12% now, but as a HYPer, the capital value is not important, is it?! So long as it keeps paying me 5%+ I'm happy. Others on my list include Inmarsat (ISAT), the telecommunications and mobile internet provider. Anyone any idea why it's sp has dropped so much recently? There's been a few downgrades,, anything more than that? Epwin (EPWN) is another I'm watching, plastic mouldings for houses etc, dropped very heavily a couple of months ago, putting the yield a bit too high for safety.

atb, dp

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Re: Moss Bros Group (MOSB)

#100146

Postby markLDN » November 30th, 2017, 10:55 am

I'd be tempted to take a look into MOSB. I never used it during my time buying suits as a new graduate working in London, preferred M&S, but my colleagues did. But the yield is attractive and I like the direction the stock price is going (down) and with that the seemingly high PE ratio of 16. Will add to my watchlist.

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Re: Moss Bros Group (MOSB)

#100151

Postby markLDN » November 30th, 2017, 11:18 am

Forgot to add: I remember walking into their Oxford Street location and the place just being full of suits everywhere, no where to walk. Definitely interested in seeing how inviting their revamped stores are.

CommissarJones
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Re: Moss Bros Group (MOSB)

#101152

Postby CommissarJones » December 3rd, 2017, 6:28 pm

Thanks to those who took the time to reply. For anyone who might be unaware (as I was until today), there's another incentive to buy into MOSB: the stockholder perk. Specifically, anyone who owns even just a single share receives a voucher annually that is good for a 20% discount on full-price merchandise in MOSB stores.

http://corp.moss.co.uk/shareholder-discount/

Investors holding the stock in nominee accounts are eligible as well, but must put in a request for the voucher.

WickedLester
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Re: Moss Bros Group (MOSB)

#109241

Postby WickedLester » January 10th, 2018, 3:18 pm

Fallen a fair way today after a mild profit warning, the yield is looking even more attractive if it is maintained.

Most non food retailers seem to be struggling this year, I had a small investment in Debenhams which I sold for a loss after the recent guidance that fy profit is going to be significantly below expectations.

Anyone buying these at these levels?

Lester

CommissarJones
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Re: Moss Bros Group (MOSB)

#109319

Postby CommissarJones » January 10th, 2018, 9:23 pm

WickedLester wrote:Anyone buying these at these levels?


Not me. Firstly, the stock still doesn't look particularly cheap to me in P/E terms, at least not the Hargreaves Lansdown quote of 16.3x. (Bloomberg says 13.1x, which is more reasonable, but still not a screaming buy to me.) And secondly, now that the company has warned, I would definitely want to wait for the next set of earnings in order to have a better picture of the situation before making a move. MOSB's full-year results should be released in late March or early April, which isn't all that far off.

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Re: Moss Bros Group (MOSB)

#112920

Postby markLDN » January 24th, 2018, 12:26 am

The P/E is 11.6 at 64p and 5.51p EPS.

I have spent the last day looking at fundamentals and haven't turned up any red flags, bar one. In their last annual account payables shot up £5m, which is an entire years profit. It was spread out across the board: trade, other, accruals/deferred income.

They are a very stable company it would seem. The Executive Team have done a stellar job turning the company around. Revenue is still expected to climb (albeit slower), but profits are expected to fall due to higher wages and input costs. They forecast for a tough year ahead but if the pound stabilises or recovers results could be better than expected (which we could be in the beginning phases of already).

Free cash flow (after capital expenditure) covers the dividend 1.24x. And cash on hand (no debt!) covers it 3.36x. Dividend History: they re-introduced the dividend in 2011 and it grew quickly to a target 5p; they then introduced a progressive policy to grow it in line with earnings (5%pa). Once again, they are debt free and are sitting on more than enough cash to run the business. I would guess they could distribute 50-75% of it and still function.

My first question is, can its business model be disrupted? I recently signed up to Thread.com to see what it was like. I haven't ordered anything yet, but the premise is that it uses an algorithm to pick out clothes for you. A suit is a tough thing to fit right though. Their Hire business is unrivalled. And they are executing on e-commerce (12% of sales - expected).

Second: more of a concern for me is a slowing UK economy a la Brexit - less jobs/slow economy = less threads.

Here is a link to my analysis template https://docs.google.com/spreadsheets/d/1G1wb1Es_XJG0f8yn9ArDlwy__JlRQzuM3EJrrSeYfd8/edit?usp=sharing

If anyone has the resources to run numbers on their competitors that would be much appreciated.

WickedLester
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Re: Moss Bros Group (MOSB)

#123301

Postby WickedLester » March 8th, 2018, 9:29 pm

I was taking another look at these today after the fall below 60p but I still don't think they're especially cheap and I wonder if that dividend will be maintained being that it is likely to exceed this year's earnings by a considerable margin.

My first question is, can its business model be disrupted?

I was also wondering the same thing about this but less about disruption and more about changing culture. Last year I was working for the Civil Service and it was only necessary to wear a suit if you had a formal meeting. Currently I am working for a small fund manager and once again it is only necessary to wear a suit if you have a formal meeting. It seems to me that fewer and fewer workplaces require people to wear a suit every day. Could it be that MOSB's market is going to contract going forward?

I'll keep these on the watchlist anyway but won't be buying any just yet.

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Re: Moss Bros Group (MOSB)

#124974

Postby CommissarJones » March 14th, 2018, 10:56 pm

WickedLester wrote:I was taking another look at these today after the fall below 60p but I still don't think they're especially cheap and I wonder if that dividend will be maintained being that it is likely to exceed this year's earnings by a considerable margin.

The P/E is on the verge of sliding below 10, as the stock has come down farther to about 55 pence (it touched 54p yesterday), so to me it's now closing in on "cheap" territory. But this one feels a little too risky for me in the context of the recent news flow, and if I put any more money into retail equity, it will be devoted to expanding my position in CARD.

CommissarJones
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Re: Moss Bros Group (MOSB)

#126652

Postby CommissarJones » March 21st, 2018, 9:21 am

Trading update released today, further profit warning, dividend cut. Not really a surprise given the recent context. Stock down 27% to about 42p as of this writing. The final divi for the 2017-18 fiscal year falls by half to 1.97 pence a share, and the total divi for FY17/18 is 4p/share, down 32% from 5.89p for FY16/17.

(I have looked at buying MOSB but have never owned.)

CommissarJones
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Re: Moss Bros Group (MOSB)

#139451

Postby CommissarJones » May 16th, 2018, 8:54 pm

Conditions are improving at MOSB, although sales are still falling. The stock rose 12% today. Perhaps a contrarian total return recovery play for the brave?

WickedLester
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Re: Moss Bros Group (MOSB)

#139457

Postby WickedLester » May 16th, 2018, 9:22 pm

Conditions are improving at MOSB, although sales are still falling. The stock rose 12% today. Perhaps a contrarian total return recovery play for the brave?


I'm not sure i'd bother just yet with sales still falling and an uncertain outlook for the current year. I wouldn't be surprised if the dividend got cut further this year and they're not especially cheap on any basis I can think of considering their current problems. Revamping the stores is costing more than depreciation unsurpisingly and even after what appears to be a pretty favourable movement in working capital they didn't generate enough cash to cover the dividend.

How many more of their stores do they need to refurbish, I guess once this is over and done with they may generate a bit more cash.


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