The Financial Grimes: A very useful acquisition
This top City analyst reviews the financial sector stocks making headlines today.
9th August 2019 10:04
by Jeremy Grime from ii contributor
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This top City analyst reviews the financial sector stocks making headlines today.
Jeremy Grime spent 15 years as a financial sector analyst, working at Altium Capital, RBC Capital Markets, Panmure Gordon and most recently as Director of Research at finnCap. Jeremy is also a qualified accountant.
Jeremy's blog is written with more experienced investors in mind. However, we have included a brief glossary at the bottom of the page to help those less familiar with some of the language used. For more on key financial metrics and valuation ratios click here.
Equals Group – Acquisition 
Share Price 117p
Mkt Cap £193 million
Equals Group (LSE:EQLS) is a low-cost payment services provider
Conflict Disclosure: No Holding
- Acquisition Hermes FX is acquired for £2 million in cash. The founder of Hermes is joining Equals group and subscribing for 1 million shares at the current share price of 117.5p/share. With revenue of £1.8 million and PBT of £0.6 million this represents 1.1X revenue and 3.3X PBT. Nice price. The company provides FX to a predominantly corporate client base.
- Estimates With £10 million PBT forecast for Dec 19 and £14 million the following year this looks to be c. 5% earnings enhancing.
- Valuation FY 19 PER 18.4 before earnings enhancement. The company had cash of £7.9 million at Dec 18.
- Conclusion Very useful acquisition. This company will do well and for those that can't bring themselves to pay 27X for AlphaFX it is a good alternative. Â
| Glossary | |
|---|---|
| PBT | profit before tax |
| EPS | earnings per share |
| DPS | dividend per share |
| ROE | return on equity |
| EBITDA | earnings before interest, tax, depreciation and amortisation |
| PER | price earnings, or PE ratio |
| Yield | dividend yield |
| FCF | free cash flow |
| NAV | net asset value |
| Price/Book (PB) | a company's share price versus what it owns |
| Book Value | a company's worth after subtracting debts and liabilities from assets |
| AUM | assets under management |
| FUM | funds under management |
| OTC | over-the-counter |
| FCA | Financial Conduct Authority |
| ESMA | European Securities and Markets Authority |
For information about Jeremy's 'deep dive' company analysis, you can email him at jeremy@charltonillingworth.co.uk
Jeremy Grime is an independent equity markets analyst and freelance contributor, not a direct employee of interactive investor.
These articles are provided for information purposes only. Â Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. Â The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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