Cutting Celebrus Technologies (LON:CLBS) and adding to 4imprint Group plc (LON:FOUR)
I maintain faith in 4imprint Group, but have lost it in Celebrus Technologies
I sold my shares in Celebrus Technologies when the market opened this morning following the release of a trading and accounting update. From my perspective, the key information contained in today’s release was: “annual recurring revenue ("ARR") ended the year up 13.9% at $18.8 million (31 March 2024 restated: $16.5 million)”.
I was previously of the view that Celebrus offered a superior set of software products when compared to the competition, but I cannot reconcile that view with modest revenue growth from a low base. I have been unsure of management here for a while and perhaps that is the lesson to be learned.
I put some of the proceeds of my sale into 4imprint Group, having previously suggested that I intended to add to the position. I have full confidence in the management of this business given their track record of firmly establishing 4imprint as the market leader in the North American promotional products industry over recent decades.
4imprint’s shares appear to me to offer compelling value currently with the caveat to this view being the substantial uncertainty created by Trump’s ongoing trade war.
source: ShareScope
On a price-to-sales basis, the stock is as cheap as it has been over the past decade with the exception of the Covid crash.
source: ShareScope
This is despite the fact that operating margins have increased over the period (although I expect these to take a hit in the short-term due to tariffs).
In addition, the company is returning 317p to shareholders who are on the register at the end of April via a final and special dividend. This represents a yield of more than 10% at the time of writing.
I think conditions will remain difficult for 4imprint in the foreseeable future and so do not expect a speedy recovery in the share price. Despite this, the upcoming capital return has prompted me to add to my holding now rather than wait for things to improve.