A cyclical on peak earnings?

Similar for Factset

It this largely down to uk investor bias to dividends?

Agree with your view. I think consumers (on the whole) will continue to have a bias to browse rather than rely on AI prompt tool. They should step up buy backs here and modestly take up leverage in my view.

My "k-shaped" economy investments in $GRG and $WOSG is mainly being bailed out by the latter. Taking some profits on $WOSG today though...

Need more ideas on this theme!

Sorry, $rmv.l is on ~5% fcf yield and $auto.l is on ~6%

I would not be surprised to see an activist get involved to push for more levered buy backs

$AUTO.L trades at c5% fcf yield and I'd expect 5-10% growth in fcf per share. Both $AUTO.L and $RMV.L are great businesses with structural moats. AI risk is overplayed and is the opportunity in my view

Both companies are net cash and could easily take on modest leverage for larger share buy backs

Agents/dealers will be driven by eyeballs and click throughs on the portals which, given the consumer bias to browse, will largely remain in my view

These companies won't have permanently higher IT spend IMO. They need to currently to ensure they have embedded AI tools within their portals.

It's probable over time that more consumers use an AI generated list but I suspect the majority will remain using these dominant portals given piece of mind on large purchases.

Plan to add to my existing $rmv.l with some $auto.l

I think the market is pricing AI to disrupt these businesses. I'm taking the counter view that consumers will prefer to "browse" to buy vs creating a bespoke AI generated list.

Business is low margin but high roce given contract business and profit share with airport/rail/hospital landlord. Need to demonstrate value to landlord and customer - ability to grow spend per passenger via one stop shop offer should appear to both.

Risks
- no CEO currently
- FCA investigation (but been through audit review)
- potential to overprice bidding on new contracts
- travel disruption

- repositioning store formats into one stop eat, heath and beauty and travel essentials (takes up cap ex in near term)
- continued presence of activist investor

Thesis
- recovery from low expectations post accounting scandal
- company has good roce of around 20% and is investing into new franchises (having sold off high street business)
- paybacks of 3 years or better on new contracts

Thoughts on WH Smiths (SMWH.L) after recent results

Free cashflow ex growth cap (of 54m) and adjusted for working capital inflow (of 4m) is £113m
On mkt cap of 800m gives 15% normalised fcf yield

3 is the only one that allows for share dilution

$RMV.L
$FDS
$SMWH.L

Clearly a risk that the new CEO does some silly acquisition but he spoke sensibly to this on the call

At the current valuation I would not be surprised to see acquirers get interested or activists get involved to step up the buy backs above all else

What am I missing?

It may mean that the new CEO may have been incentivised to lower guidance and paint a picture of more investment needed when the reality could be much better

In fact other management seemed far more positive than the CEO on the recent analyst call

The cynical take here is around the new CEO incentives. Some very large figures here and $22m seems to have an entry price "in the fall" whatever that means.

Factset $FDS looks interesting here. Market is concerned about AI risk but I'm struggling to see evidence of this and at 15x forward PE it seems very attractive for a ~30%+ margin business with 95% retention.

Found an approx capex breakdown from the annual report. So approx normalised free cash flow of 53m, add back expansionary capex of 67m then deduct the 30m overstatement gets to 90m. On 800m mkt cap, so 11% free cash flow yield. Could be interesting .... especially with the activist on the register

I tried to get my head round the low free cash flow today. Do you have a sense of what their maintenance capex is likely to be (ie excluding new store openings)?

The Greggs' app is interesting. I've not been a regular at Greggs but started recently/got the app as I bought shares. Unlike other cafe/food apps I've used, you pre pay onto the app in "round" £s. Wonder if this is likely to give the company decent float over time as well as the loyalty/data?

I get Fcf in the last few full periods as 15m and 10m ...

Perhaps full year fcf will be a lot stronger. Current half year was c8m.

It has given me reasons to be more cautious

Please correct me. What have I missed?

And stating the obvious, fcf is needed to pay off debt. Not EBITDA.

They have ~85m of interest bearing debt. assuming fcf increases by the same % as adjusted operating profit is guided to grow, they appear on track for ~10m fcf. Which suggests it will take them some time to get the debt down..

#kitw $kitw.ln
I need help understanding the debt situation here. Management don't offer a proper calc of free cashflow (fcf) and in one of the slides seems to mislead free cashflow generation. Working capital has soaked up cashflow in the last several years so fcf is fairly depressed

#wosg $wosg.l
I get this trading on a free cashflow yield of 15% if you adjust for the one off working capital impact linked to suppliers reacting to tariffs which is expected to revert

Seems very attractive given growth initiatives here