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Photo-Me - 60% margin on laundry side makes for big swing factor

August 2014

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • PHTM
  • Price:
  • 142.5p
Photo-Me shares are simmering and on the cusp of a breakout (see chart below). This has been helped by strong full year results with pretax profit up 24% to £30.1m, partly helped by a lower depreciation charge. Eps was up 19% to 5.7p. Sales were £186.6m, which was 4% lower and largely reflects the ongoing strategic withdrawal from the minilab business. As finance director Francoise Coutaz-Replan says, in an era of smartphones and digital cameras, Photo-Me's former manufacturing business, which supplied photographic equipment such as minilabs, has seen its market collapse in the last few years. People just don't bother developing their photos and consequently the photo processing labs have all shut down. Revenue on the sales and se ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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