Today I would like to look at fundamental analysis of one the best ran British small-cap stocks, Treatt Plc.
As always I prefer first to look at the valuation numbers and here it becomes clear that the stock is expensive.
You have to pay a hefty 28.8 times the trailing earnings for the stock.
When you look at the average three preceding years, the stock is even more expensive at 32.7 times trailing earnings.
Already here I would hesitate, but it gets worse. At these market prices, you are paying 5.2 times Book Value which obviously is not cheap.
The Balance Sheet looks far better. The Debt to Equity ratio is 0.9 and the Working Capital to Debt is 1.1.
The ratio between Current Assets and Current Liabilities is 3.3 which is very good.
Treatt Plc. has a Net Working Capital of £21,000,000 which equates to about 40p per share.
The dividend history looks good with more than 15 years of non-interrupted and increasing dividends.
The current dividend yield is only 1.3 percent which obviously is a reflection of the high price.
If you already own Treatt Plc. by all means keep the stock, but if you do not I wouldn’t buy it at these prices.
The Balance Sheet looks very good, but I would not buy the assets at this price.
The company has a good dividend history, but the feeble yield is a reflection of the price.
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