The Coventry Group Ltd (ASX: CYG) share price is surging on the back of the company's earnings for the first half of financial year 2022.

At the time of writing, the Coventry Group share price is $1.72, 6.17% higher than its previous close.

Coventry Group share price soars alongside profits

• Revenue of $156.9 million – 13.9% more than the first half of financial year 2021
• Net profit after tax (NPAT) of $2.4 million – a 116% increase
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $7.3 million ­– up 4%
• New Zealand COVID-19 lockdown estimated to have cost EBITDA of $750,000 and $3 million of sales
• No interim dividend declared

Over the first half of financial year 2022, the distributor of industrial products' trade distribution sales increased 13.9%. Meanwhile, its fluid systems sales grew by 15%.

The trade distribution leg's EBITDA came to $7.6 million – up from $5.7 million in the prior comparable period.

The company's fluid system segment, however, saw its EBTIDA fall to $6.3 million, down from $6.7 million.

As of the end of the half, Coventry Group had net debt of $26.9 million. For context, its debts came to $16.3 million at the end of financial year 2021.

Its increased debt was mostly down to the company boosting its inventory by $11.3 million due to inflation and increases in stock levels in an effort to dodge supply chain issues.

Capital expenditure for the period came to $2.3 million.

Finally, the company isn't paying an interim dividend. It stated that, in the context of current capital needs, a final dividend will suffice.

What else happened in the half?

The only time the market heard price-sensitive information from the company last half – aside from news of its annual general meeting and full-year results – was in October.

Then, it released a trading update on the first quarter of financial year 2022.

The Coventry Group share price jumped 5% after the company announced its sales and earnings were strong in the September quarter.

What did management say?

Commenting on the result fuelling the Coventry Group share price, CEO and managing director Robert Bulluss said:

The group delivered pleasing sales and profit growth in [the first half of financial year 2022].

This was despite the negative impact of the enforced New Zealand Government Alert 4 lockdown in Auckland which we estimate negatively impacted sales in the order of $3 million and EBITDA in the order of $750,000.

What's next?

Unfortunately for eager investors, the company has declined to provide guidance for the rest of financial year 2022.

It said the markets in which its fluid systems and trade distribution businesses operate are performing well.

However, continuing uncertainty due to COVID-19 has spurred its decision to eliminate guidance.

Though, it did say it plans to provide a dividend for financial year 2022 after it resumed handing investors a portion of profits last financial year.

Additionally, the company noted that its priority has been to continue providing the same level of service to customers during the recent uncertainty.

Now, during financial year 2022, it will be taking action to "prudently manage" its inventory levels, collections, and operating costs to boost its cash position.

Coventry Group share price snapshot

Today's gains have boosted the Coventry Group share price into the year-to-date green.

It's now 2% higher than it was at the start of this year. It has also gained 67% since this time last year.

The post Coventry Group (ASX:CYG) share price surges 6% as profits double appeared first on The Motley Fool Australia.

The Coventry Group Ltd (ASX: CYG) share price will be on watch this morning following the company's release of a trading update.

At yesterday's market wrap, the industrial solutions provider's shares finished the day at $1.31.

How did Coventry perform?

The Coventry share price could be on the move today as investors digest the company's solid performance for Q3 FY21.

For the period ending 31 March 2021, Coventry reported robust growth across its key metrics. Group sales accelerated by 16.9% over the prior corresponding period (pcp), and were up 12.6% when excluding acquisitions.

Coventry revealed that year-to-date sales are at $209.2 million, a jump of 13.9% on the previous comparable year. When excluding H.I.S Hose, year-to-date sales lifted 12.1%.

The overall result was mostly driven by the company's Fluid Systems segment which recorded a 32% gain on sales in Q3 FY20. The business unit achieved new sales orders throughout the period and completed a prior order of $8 million that was placed in Q1 FY21.

Moving on, the Trade Distribution segment realised a 7.4% increase over this time last year. Coventry noted that all divisions within Trade Distribution have improved contribution.

At the end of March, the company closed the quarter with net assets of $107.6 million.

No outlook was given due to the uncertainty surrounding COVID-19. However, the group stated that its outstanding performance is continuing to run into Q4 FY21.

Coventry group CEO and managing director Robert Bulluss commented:

We are pleased the Group has delivered a third consecutive quarter of strong sales growth in FY21. All business units contributed to the improved performance of the Group. We are continuing to execute our clear strategy for long term sustainable profitable growth.

Coventry share price snapshot

The Coventry share price has been advancing since April 2020, reflecting a 150% surge and, year to date, it is sitting 36% higher. The company's shares hit a 52-week high of $1.35 on Wednesday and could be set to break that feat again if investors respond positively to today's update.

On valuation grounds, Coventry commands a market capitalisation of roughly $117.9 million, with 90 million shares on issue.

The post Why the Coventry (ASX:CYG) share price will be on watch this morning appeared first on The Motley Fool Australia.

The Coventry Group Ltd (ASX: CYG) share price is in focus this morning, after news of an acquisition. The supplier of industrial solutions has agreed to purchase Fluid Power Services Pty Ltd (FPS).

The Coventry Group share price closed at $1.16 yesterday and has remained flat in early trade so far.

Let's look closer at the news Coventry released this morning.

New acquisition

Coventry Group is set to acquire Fluid Power Services, a Tasmania based provider of specialised hydraulic equipment.

It stated the acquisition will allow create a Tasmanian branch of the company's Fluid Systems division.

FPS is said to be a leading provider of hydraulic products and engineering solutions in Tasmania. It has a diverse customer base and strategic supplier alliances with Rexroth and Hydac.

Coventry Group will purchase the Tasmanian company for $2.1 million, which it will pay in cash. The ability for a cash transaction comes from the group's new financing facility with NAB, which it announced last week.

The release from Coventry Group stated FPS has had a total revenue of $4.9 million in the 2020 financial year. It also has an adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.2 million.

The acquisition is planned to be finalised late this month. Although, Coventry Group has stated in the case of material adverse change, it may not go through with the acquisition.

Commentary from management

Coventry's managing director and CEO Robert Bulluss said Coventry is pleased to welcome FPS to the group.

FPS is a well-run business that has delivered sales and earnings growth over an extended period. The business is highly complementary to our Fluid Systems business, further diversifying into non-mining markets and providing geographical coverage in Tasmania. FPS represents another compelling acquisition opportunity that is consistent with Coventry Group's growth strategy and satisfies Coventry Group's key acquisition criteria.

Coventry Group share price snapshot

The Coventry Group share price has had a good performance on the ASX lately. The group's share price has risen by 17.6% year to date and is also up by 142.7% over the last 12 months

Coventry Group has a market capitalisation of around $104 million, with approximately 90 million shares outstanding.

The post Why the Coventry Group (ASX:CYG) share price is in focus today appeared first on The Motley Fool Australia.

The Coventry Group Ltd (ASX: CYG) share price has popped up 5.83% at the time of writing and is currently trading at $1.09.

The bounce follows Coventry's release of its half-year results for the period ended 31 December (1H21).

Let's take a look at how Coventry has been performing.

Coventry Group financial highlights

Coventry's 1H21 revenue was up 12% compared to the prior corresponding period (pcp). Revenue for the period rang in at $137.8 million versus $122.6 million for 1H20.

The group reported a net profit after tax (NPAT) of $2.3 million, which was a bump up from the $2 million posted in the pcp.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $7 million, a 74.5% jump from $4 million in 1H20.

Group underlying earnings before interest and taxes (EBIT) came in at $5.7 million, popping up from $2.6 million for 1H20. 

1H21 earnings per share (EPS) was 2.5 cents per share compared to the 1H20 EPS of 2.3 cents.

Including acquisitions, Coventry Group posted a 1H21 sales boost of 12.5%.

The company reported $103.8 million of total current assets at the end of 1H20, slightly up from $100.2 million held at the end of 1H21.

Acquisitions and future financing

On 1 December 2020, Coventry Group acquired H.I.S Hose Pty Ltd. For the 1-month period from 1 December 2020 to 31 December 2020, the acquired business contributed $802,000 of revenues and a net profit of $19,000 to the group.

Subject to final documentation, the business has entered a new 3-year financing arrangement with National Australia Bank Ltd (ASX: NAB). The deal includes a 3-year $45 million borrowing base facility and a $5 million senior secured ancillary facility.

Because of the uncertainties associated with the coronavirus, the company did not provide full-year guidance.

Coventry Group share price snapshot

Coventry Group is a distributor of industrial supply products such as fasteners, fluid hydraulics and cabinet hardware.

Over the past 6 months, the Coventry Group share price has zoomed up 37.3%.

The company's market capitalisation is presently $92.7 million and there are 90 million shares outstanding.

The post Here's why the Coventry Group (ASX:CYG) share price is up 5% today appeared first on The Motley Fool Australia.

At the time of writing, the industrial solutions provider's shares are up 9.4% to $1.04. In comparison, the All-Ordinaries Index is also travelling higher, up 1.15% to 7,015 points.

What did Coventry Group announce?

According to this morning's release, Coventry Group advised that it has achieved a positive result despite COVID-19 uncertainty.

For the period ending 31 December, the company reported group sales of $138.1 million. This reflected an increase of 12.5% over the prior corresponding period, and a 11.9% lift excluding H.I.S Hose.

The latter was added to Coventry Group's portfolio on 1 December, following the completed acquisition. The company noted that business integration is currently underway and on track.

For performance in each of the segments, Fluid Systems took charge, with sales rising 21.1% on the prior year. To date, $5.5 million has been received from its large $8 million won in the first quarter.

Trade Distribution sales also grew, but took second place with a 7.5% improvement from this time last year. The sound result was attributed to improved business units during the period.

Coventry Group recorded a healthy balance sheet for the first half with net assets totalling $105.3 million. In the prior period ending 30 June 2020, net assets stood at $102.1 million.

What did the head of Coventry Group say?

Coventry Group CEO and Managing Director, Mr Robert Bulluss, hailed the robust result, saying:

We are pleased with the Group's momentum despite challenging conditions. We continue to execute on our strategy with positive results from all parts of the business. The integration and financial performance of our recent acquisitions is pleasing with acquisitions being an important part of our growth strategy.

Outlook

Looking ahead, Coventry Group revealed that both of its divisions are continuing to perform to expectations. It noted that while growth has been achieved in the first half, the remaining financial year is uncertain. This is largely due to the timing of large scale projects affected by the unpredictable nature of COVID-19 trading conditions. Furthermore, the mounting trade dispute between Australia and China is also likely to have an effect.

A review of the Coventry Group share price

The Coventry Group share price is relatively flat over the past 12 months, down marginally 3%.

Its shares hit a 52 week high of $1.13 last February before COVID-19 took the world's economy hostage. Falling to an all time low of 46.5 cents in April, the Coventry Group share price began to recover.

Today, its shares are just a whisker away from breaking a new 52-week high record.

The post Here's why the Coventry Group (ASX:CYG) share price is soaring 9% today appeared first on The Motley Fool Australia.

The Coventry Group Ltd (ASX:CYG) share price is up 9.59%% at the time of writing to 80 cents. This came after the company released a quarterly update for the September quarter. 

What was in the announcement?

Coventry Group announced sales growth of 7.7% in the September quarter 2020 when compared to the September quarter 2019. Total sales for the period were $68.3 million. 

The company reported that sales of its fluid systems were up 12.7% in Q1 FY2021 when compared to Q1 FY2020. According to the company, this was due to its strong value proposition along with activity in key market sectors and diversification into new markets. Coventry Group received a large order for its fluid systems in September of $8 million from a major mining and resources client. The company expects this large order to have a positive effect on its half year results.

According to Coventry Group, sales from its trade distribution business were up 4.8% in the September quarter of 2020 when compared to the prior corresponding period. The company reported that all business units in trade distribution posted a positive contribution to results for the September 2020 quarter.

According to the company, COVID-19 has had a minimal impact on its business, with the exception of lock downs in New Zealand. Coventry Group reported that all business units are fully operational, apart from four Konnect branches in metropolitan Melbourne which are affected by lockdowns and have some customer constraints in store.

Coventry Group reported that it had net assets of $104.1 million at 30 September and is targeting completion of the acquisition of industrial hose and associated equipment supplier, HIS Hose, on 1 December 2020.

The company advised that the markets in which its fluid systems and trade distribution businesses operate have been reasonably resilient during the COVID-19 pandemic. Furthermore, it expects its businesses to benefit from additional government stimulus measures and for economic growth to rebound.

About the Coventry Group share price

Coventry Group is a supplier of industrial products to the mining, construction and manufacturing sectors. It has been listed on the ASX since 1966.

The Coventry Group share price is up 73.91% since its 52-week low of 46 cents, however, it has fallen 24.53% since the beginning of the year. The Coventry Group share price is down 26.61% since this time last year.

The post Why the Coventry Group (ASX:CYG) share price is up 10% today appeared first on The Motley Fool Australia.

The Coventry Group Ltd. (ASX: CYG) share price is up more than 17% today after the industrial group delivered a strong fourth quarter trading update. Sales increased 22.3% in FY20 compared to FY19 including acquisitions, or 4.7% if acquisitions are excluded. 

What does Coventry Group do? 

Coventry Group provides industrial solutions to the mining, construction, and manufacturing sectors. The company is behind a range of fastening systems, cabinet hardware systems, hydraulics, lubricants, fire suppression, and refueling projects. The Coventry Group share price collapsed in March, falling from over a dollar to 47 cents. The share price has yet to recover to previous highs, however today's announcement has helped. 

What did Coventry Group announce? 

Coventry Group gave an update on its performance, which was better than expected. The Fluid Systems division saw sales increase 15.2% in FY20 including acquisitions, or 8.5% excluding acquisitions. Growth is being driven by the strong value proposition and activity in the mining and resources sector. The company's Trade Distribution division saw a 27.3% increase in sales in FY20 including acquisitions, or 2% excluding acquisitions. 

Impact of COVID-19

COVID-19 meant the company had to suspend operations in New Zealand for a period of 23 days, however operations have since re-commenced. Sales have continued to perform to expectations as have sales at the Australian operations. Coventry Group is focused on managing the financial health and stability of the group as well as undertaking prudent cash management. 

Net debt at 30 June 2020 was -$3.3 million, an improvement on the -$10.9 million debt at 31 March 2020. Coventry Group is taking action to reduce inventory levels and manage operating costs to improve its cash position. The company is currently unable to estimate the potential impacts of COVID-19 on FY21 earnings. 

What is the outlook for the Coventry Group share price? 

Coventry Group reports that activity in its major end markets (commercial construction, infrastructure and mining) has remained solid to date. Nonetheless, it has warned that there is a high level of uncertainty surrounding the scale and duration of COVID-19 and its impact on these markets. Despite the uncertainty, Coventry Group is confident in its strategic plan and believes it is operating in markets that will enable it to navigate the situation and take advantage of opportunities as they arise. The Coventry Group share price closed the day at 68 cents which is still around 39% lower than it's pre-pandemic high in February.

The post Stock of the day: Coventry Group share price lifts 17% on fourth quarter trading appeared first on The Motley Fool Australia.

So much for the company's plan on paying five dividends between July 2014 and August 2015. And the cancellation of the share buyback in mid-January also hasn't helped.

But yesterday's announcement clearly shows a company struggling to make a profit. From four businesses, Coventry will now have two divisions, Konnect/Artia and Coopers. The 75%-owned AA Gaskets will continue to be managed as an investment. The company is divesting its IT solutions business MSS, which is currently losing money.

Coventry plans to close its Sydney and Adelaide distribution centres and has engaged external consultants to perform a thorough review of its distribution network. Annual operating costs are expected to fall by around $4 million within two years as a result.

The company is also cutting 100 positions from its 680 staff to further cut costs by around $7 million each year. As a result of the above changes, Coventry is likely to face one-off costs of between $6 and $7 million.

In a good move for shareholders, the company has abandoned its previous strategy of making acquisitions, in favour of restoring its existing business to profitability.

If you're wondering why Coventry has found itself in this position it's because many clients operate in the resources sector. As the downturn intensifies, competition has increased in the fasteners business while volumes are being impacted in Copper Fluid Systems.

As we've seen with Bradken Limited (ASX: BKN) and Coffey International Ltd (ASX: COF) recently, the downturn in mining investment and falling commodity prices is forcing miners to severely taper their spending. That means any company that relies on the sector for revenue is going to be hit, including companies like Coventry.

And that's one reason why I'm avoiding the sector. With better ideas like the one below, there's no need to take the risk.

The post Why Coventry Group Ltd is down 17% today appeared first on The Motley Fool Australia.

At the current price of $3.21, that's a return of about 17% in dividends alone (before franking).

As I highlighted back in March, Coventry was sitting on $53 million of cash, and as a result attracted the attention of corporate raiders. Sandon Capital investments and retail entrepreneur Lorna Dorsett launched a share raid in April, acquiring 7.8% of the company. The activists wrote to Coventry chairman Roger Flynn, asking the board to pay a special fully franked dividend of 60 cents, or around $25 million in total.

Now it seems Coventry has taken a step towards that, announcing it will pay five dividends of 11 cents from July 2014 until August 2015, costing the company $21 million. That obviously still leaves the company with a decent cash balance of around $32 million. Coventry says it has franking credits available to pay 57 cents in dividends, with a subsidiary's balance available to pay a further 5 cents in fully franked dividends.

The company says the view of its shareholders was that they value continuity of dividends rather than a very large one off dividend – hence the staggered payment.

But Coventry may need to keep as much cash as it can on hand, after downgrading its 2014 full year profit forecast to between $1 million and $2 million in April. Suffering from the downturn in the mining sector, and lower orders from its resources and mining services customers, Coventry is attempting to turnaround its divisions by cutting costs, rationalising the number of products it sells and improve its distribution network.

But investors should note that there's no guarantee that the share price won't fall by more than the dividend payouts. Mining investment is still falling, and those servicing that sector face a tough road ahead, including the likes of Monadelphous Group Ltd (ASX: MND), Cardno Limited (ASX: CDD), Bradken Limited (ASX: BKN) and Fleetwood Corporation Limited (ASX: FWD).

Coventry Group is just one way to generate high returns in the stockmarket. Here's our simple 10 step guide on how you could make $1 million in the market…

The post A fully franked 17% return in just over a year: Here's how appeared first on The Motley Fool Australia.

Concerns about a potential war between Ukraine and Russia…  And where the hell is the Malaysian Airlines' missing plane?

It's a virtual smorgasbord for worrywarts, pessimists, doomsters and gloomsters. If Tony Abbott was still in opposition, he'd be having a field day.  No wonder then the S&P/ASX 200 has seen three consecutive down days… although it is bouncing back a little in morning trade. Mr Market doesn't take kindly to all this negativity either.

Mark my words… and those of Warren Buffett

Of course, a "wall of worry" is nothing new.  The old saying goes that the market climbs a wall of worry. Today's wall has a light covering of moss… yes, it's a little slippery. But over time, it will continue its inexorable and inevitable rise.  Mark my words.

And for those of you looking to sell out, or even sit on the sidelines, recent wise words from Warren Buffett are always  soothing…  "The last thing you want to do during a war is hold money. Even during World War II, the stock market advanced, and stock markets advance over time."

This is not quite war… although it must feel like it at times for investors in iron ore companies, with even the Big Kahunas Rio Tinto (ASX: RIO) and BHP Billiton (ASX: BHP) not being spared, their shares down 8% and 5% respectively so far in 2014. Amidst all the despair, as Commsec tweeted yesterday, when you zoom out and look at the bigger picture, all is well… "Despite the All Ords being down 2% this week, shares are still up 5.6% from lows hit in last 30 days."

Even better, outside the commodities sector, where Scott Phillips likes to play, some stocks have had a stellar start to 2014. To highlight but one, Motley Fool Share Advisor recommended company SEEK Limited (ASX: SEK) is up 33 per cent so far in 2014 and up a whopping 160 per cent since Scott first made it an official Motley Fool Share Advisor recommended stock. It looks like a case of SEEK and you shall prosper.

The raging bull

Market commentator Peter Switzer is also optimistic and reckons we are in a raging bull market that still has a number of years to run. He says to keep an eye on the possibility of rising inflation and therefore higher interest rates, but with the RBA indicating low interest rates are here to stay for some time yet… the raging bull market could just be getting started. Yes Foolish readers, the party's only just getting started! Dance all night or cry into your term deposits. It's your choice.

As ever, however, it's a case of buyer beware. A rising tide carries all boats, but your job as an investor remains the same… ignore the rubbish companies floating higher and focus on the quality companies that may have been temporarily left behind.

Speaking of duds… For many years I had viewed resources stocks as pretty much similar to industrials stocks. They invest some money, sell a product, generate revenues and in some cases profits… and some even pay dividends.

Now I'm not talking about explorers who have yet to see one cent of revenue. The vast majority are nothing more than highly speculative pieces of crap. As with everything, there are exceptions… like the rags to riches stories like Fortescue Metals Group (ASX: FMG), Atlas Iron Limited (ASX: AGO) and Newcrest Mining (ASX: NCM).

But here's the problem with resources stocks… Miners are highly capital intensive – it's not cheap developing a mine and getting it into production. And you have to consider the years and years of drilling and study of samples before the miner even has a commercially viable mine.

For bulk commodities like iron ore and coal, miners then have to make massive investments in infrastructure to transport their goods to market including railways, ports and all the other associated infrastructure. It's no wonder then that Fortescue racked up over US$12 billion in debt to become the fourth largest iron ore miner in the world.

It was one massive punt on the iron ore price. In this case, the punt paid off. Early Fortescue Metals shareholders are millionaires, and Twiggy Forrest is a billionaire. But most punts don't pay off. Rare earths producer Lynas Corp (ASX: LYC) is teetering on the brink of financial calamity as its punt on higher commodity prices unravels faster than a Mitchell Johnson bouncer.

And the worst thing of all about being a miner? Your mine is in a constant state of depletion. One it's gone, it's gone. Nothing left but a big giant hole in the ground. So here's my question to you.

Why does anyone bother to invest in resources stocks?

It's not as if you can stick Fortescue in your portfolio and forget about it for 20 years, like you could say Woolworths Limited (ASX: WOW) or Commonwealth Bank (ASX: CBA). Ever wondered why Warren Buffett has never invested in a miner?

Over the long term the price of a commodity is unknown – it could be higher or lower than today's price. And commodity companies have no pricing power — falling prices and rising costs can rapidly turn a big profit into a significant loss. No wonder Motley Fool Share Advisor stock picker Scott Phillips recently said on Sky Business News, in reference to the iron ore miners… "The current price is NOT an opportunity."

I've seen the light and don't currently hold any resource stocks, apart from a small speculative position in four gold miners — but probably not for much longer.

Small and speculative… but not a miner, and does pay a dividend

Instead, I may switch my funds into some smaller speculative industrial stocks such as Coventry Group (ASX: CYG). With a market cap of just $99 million, Coventry holds $53 million in cash, and is paying a fully franked dividend of 8.4%. The company is a distributor of industrial products, such as fasteners, fluid hydraulics, as well as a manufacturer and distributor of automotive gaskets.

While Coventry Group has been struggling with a downturn in the infrastructure and construction sectors, it has diversified into IT Business solutions and cabinet hardware. The last six months result was disappointing, but the company says it is confident the second half will be an improvement.

With an improving outlook, no debt, plenty of cash, decent dividends and trading at a 25 per cent discount to its net asset value, you may want to give Coventry a closer look. Just be aware that this is NOT an official recommendation and shares are fairly illiquid.

The post Warren Buffett avoids mining stocks and you should too appeared first on The Motley Fool Australia.