Dividend Portfolio: Enero Group Ltd (ASX: EGG)

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Published 25-JUL-2019 00:00 A.M.

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2 minute read

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Overview: Enero Group Limited ("Enero", "the Company") is a boutique network of marketing and communications businesses offering clients a full range of marketing and communication services. EGG focuses on integrated marketing and communication services, including strategy, market research, advertising, and corporate communications. The Company consists of 10 marketing and communication s services businesses across seven countries.

Catalysts: Following a period of financial challenges, Enero Group experiences renewed growth across all key metrics, driven by organic expansion and acquisitions in key geographical markets. Continuation of this trend has the potential to deliver shareholder value via a mix of earnings growth and dividends. Enero generates free cash flow from its operations and coupled with a cash balance of $38.4 million we see the potential for further value-added acquisitions and group reinvestment.

Hurdles: There is no guarantee that the recent turnaround will extend and that Enero will continue to deliver revenue and earnings growth. Historically Enero's business was vulnerable to currency fluctuations and economic sentiment which could have a negative impact on its financial performance. Entry barriers to the industry are low and Enero may be subject to increasing competition.

Investment View: Enero Group offers profitable exposure to advertising and communication trends. We see Enero as a turnaround play as recent growth initiatives have materialised following a period of operational challenges and declining revenues. The Company’s primary geographical markets – Australia, Europe, and the USA – are growing simultaneously and recent acquisitions have been successfully integrated and enhanced the company's earnings profile. We see the potential for capital management initiatives for shareholders and initiate coverage with a "buy" recommendation.



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.

 

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