Wincanton shows no signs of putting on the brakes

Renewed contracts and a new deal with Morrison’s are welcome news for shareholders.

Article updated: 13 November 2019 1:00pm Author: Joe Healey

  • Revenues rise 1.9% and pre-tax profits grew by 9.9%, continuing good momentum shown in full-year figures back in May.
  • Robust performance and strong cash generation sees reduction in net debt to £14.8mn, a healthy decrease from £28.9mn.
  • Investors welcome increase in interim dividend by just over 8.3% to 3.9p per share.
  • Growth remains at the forefront of the business strategy with the group still assessing the potential merits of the Stobart deal announced back in October.
  • Recommendation: Trading at an attractive forward earnings valuation to competitors, we maintain our ‘Buy’ recommendation.

Wincanton posted solid H1 results this morning. Revenues increased by 1.9% and pre-tax profits rose by 9.9%, continuing to show good momentum following on from its full-year figures back in May. Strong operational performance also helped the group enhance margins by 20bps, spurred on by exiting lower margin contracts. In light of robust performance and strong cash generation, the company has also managed to reduce net debt to £14.8m, a healthy decrease from £28.9m. These positive results are likely to settle new CEO James Wroath into the role after joining in September.

With logistics being a good relative indicator for the economy, it appears Wincanton are showing no signs of slowing, which will be welcome news to shareholders, with renewed key contracts and a new five-year deal with Morrison’s helping to drive growth. Growth remains at the forefront of the business strategy, with the group still assessing the potential merits of the Stobart deal announced back in October. This deal would see Wincanton benefit from cost synergies and much greater scale, however it is important that this is completed at the right price.

Market uncertainty risks surrounding Brexit are being reviewed on an ongoing basis. Despite this, the group’s healthy cash flows and strong balance sheet sustains the company’s growth capabilities which we believe, alongside robust existing contracts and a healthy, growing dividend, will continue to deliver shareholder value moving into the future.

Trading at an attractive forward earnings valuation to competitors we view this stock as a ‘Buy’ for investors with a balanced portfolio willing to accept a higher level of risk.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Joe Healey

Investment Research Analyst

Following his completion of the graduate scheme, Joe is an Investment Research Analyst covering equities. He holds a BA Hons Business Management degree and is currently studying towards CFA Level II after passing CFA Level I in June 2019.