Edison issues outlook on Norcros (NXR)

London, UK, 31 August 2017

Edison issues outlook on Norcros (NXR)

Norcros has continued to deliver against our expectations and AGM comments reinforce expectations of progress. The strategy of building a larger complementary business portfolio has been executed well to date and the company retains the financial flexibility to continue this process. Such activity may provide a catalyst for a re-rating but there is already scope for this to happen in our view.

Norcros's share price has largely traded within the 150-180p range over the last 18 months or so. It is currently c 11% below the level at the end of 2016 and has underperformed the FTSE All Share Index by almost 30% as a result. Our estimates have remained robust throughout and, consequently, the company's current year P/E and EV/EBITDA (adjusted for pensions cash) have compressed to 6.6x and 4.0x, respectively. Business prospects are somewhat better than the rating suggests in our view and a prospective 4.4% dividend yield enhances total return potential.Click here to view the full report.

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