Goals Soccer Centres fell 5% today after announcing that while total sales increased 0.5% during 2017, to £33.7m, on a like-for-like basis revenues actually dropped 0.5% year-on-year. The AIM-listed business advised: “The decline was exacerbated by the disruption of closure due to investment in upgrades.”

As a result profits for the full year will be roughly in line with the lower end of estimates, the company advised.

Goals noted that the trading conditions it had experienced in the summer had carried through into the the second half. On the one hand it advised: “Major Arena investment is delivering good sales growth in a large group of sites, whilst minor refurbishment has reduced the rate of sales decline.” But it added: “Sites that have yet to receive investment have continued to perform poorly.”

On the defensive

The sluggish rate at which the turnaround programme is progressing continues to infuriate the market, as illustrated by the company’s steady share price slide. Back in August it confessed that its return to profit is taking “slightly longer than anticipated,” and the resignation of chief executive Mark Jones the following month was hardly a ringing endorsement that its recovery strategy is running to plan.

Today’s update will pour further scrutiny on hopes that profits are finally about to flip higher.

Prior to the release, the business was expected to have endured a 21% fall in 2017, the fourth bottom-line reverse if realised. Meaty increases of 13% and 10% were forecast for 2018 and 2019, however brokers are likely to be busy scribbling out these estimates in the wake of Monday’s profit warning and further downgrades, of course, cannot be ruled out further down the line.

A forward P/E ratio of 9 times may be cheap, but not cheap enough to encourage me to invest. The business may have its fans, but I think risk-averse investors should give Goals Soccer Centres a wide berth.

Animal magic

Instead, I believe those seeking little-known growth stocks would be better served by checking out Animalcare Group (LSE: ANCR) today.

The medicines giant advised today that total revenues rose 9.5% during the 12 months ending December, to £91.9m, or 3.4% on a constant currencies basis. As a consequence, profits should meet management expectations, the business added.

Animalcare has proven over many years its mettle as a reliable earnings generator. And while profits expansion is expected to slow to 1% in the year to June 2018, this should speed up again before long (an 11% rise is forecast for fiscal 2019).

This comes as no surprise given the strength of the veterinary care specialist’s product pipeline, not to mention the long-term benefits afforded by its reverse-takeover of rival Ecuphar last June. In my opinion, Animalcare is a growth great worthy of a premium prospective P/E multiple of 19.5 times.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Arena Events Group (LSE: ARE), which floated on AIM only in July this year, is one that I think is looking good. The company, which provides temporary structures, furnishings and the like for sporting, outdoor and leisure events, raised £59.3m in its IPO. That allowed it to get net debt down to £10.5m while leaving enough on the balance sheet “for future acquisitive growth“.

Revenue in the half reached £51.1m, up from £44.5m at the same stage last year, and gross margins look healthy after gross profit rose by 5% to £14.7m.

Cash looks good, with operational cash generation up from £2.8m in 2016 H1 to £7.4m, and the company was moved to post a maiden interim dividend of 0.45p per share — that’s a first-half yield of only 0.7% on the 61p shares, but it suggests confidence in the firm’s future dividend potential.

Solid contracts

Arena has managed the “successful delivery of multiple recurring contracts“, including Cheltenham Festival. It has extended its European Tour contract by four years, which should bring in up to £10m, and a new five-year contract with the US PGA is the “largest contract win” in its history.

The main outdoor event season is June to September, and the second half of the year has apparently started well and full-year expectations seem confident.

We really don’t have any meaningful financial ratios at this stage, but even without them, Arena Events really does strike me as one that could reward IPO investors well in the next few years.

Recovery on the cards

My second pick is Goals Soccer Centres (LSE: GOAL), a company that operates five-a-side football pitches. Goals has had a tough time, with three years of falling earnings (plus a further drop predicted for this year) sending the shares into tailspin — the price has lost 60% since a peak of 242p in early 2015, to 98p today.

But I reckon that could be all set to turn around nicely. 

One arm of of the firm’s recovery plans is to refurbish its UK offerings, and upgrading 27% of its clubs with five arenas or more has already seen football sales grow 5.1%. Smaller venues have not done so well, so the focus is on those larger ones (which constitute the majority anyway).

Go west!

The second arm is the launch of the brand in the USA. To that end, Goals has pulled off a 50:50 joint venture with City Football Group — that’s the business behind Manchester City and New York City football clubs, and it looks like a bit of a coup to me.

A handful of US clubs have already opened, and there’s some way to go yet — but we could easily be seeing some feedback into 2018’s bottom line, with an EPS rise of 15% forecast for that year.

This time we do have useful ratios, and we’re looking at a P/E of only a little over 11 on 2018 forecasts. If we really are past the worst and the mooted return to growth does come off, that could look very cheap.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Despite rising over 18% in value over the past year, the company’s stock trades at just 10.4 times forward earnings while offering a 3.2% dividend yield. For a cash-heavy, nicely growing business I reckon this could be an attractive entry point.

It must be said that in the six-month period to February the company’s sales did fall 5.7% year-on-year (y/y) to £61.5m with underlying operating profits collapsing 17.2% to 7.2%m. However, much of this loss can be attributed to a strong comparative period and a conservative approach to stock management over the Christmas period. I believe this makes the sales decrease a one-off, and judging by the market’s bullishness, so do other investors.

Indeed, management remains convinced it will meet analyst expectations for 51p in earnings for the year to August, which would represent a 7% y/y improvement. I believe this is eminently achievable, even with H1 setbacks, as the company’s steadily expanding array of brands remain popular in the UK, which accounts for 75% of revenue, and internationally.

Furthermore, I like that insiders own around 20% of outstanding shares, which aligns their interests with those of other investors and suggests a long-term approach to growing the business. This outlook is clear in the fact that the business has no debt and holds a whopping £18.6m of net cash.

With a great group of properties, solid long-term growth prospects and a highly-experienced management team with skin in the game, I reckon Character Group could be a bargain growth and dividend option.

Can this stock recover from an own goal?

A riskier growth option on my radar is five-a-side football pitch operator Goals Soccer Centres (LSE: GOAL). The company has run into problems of late with three straight years of falling earnings. But with management rolling out a new plan to redevelop its pitches and expand into the US market, I see reason to take a closer look at the company.

Refurbishing its pitches is starting to pay dividends with like-for-like (LFL) sales for the half year to June rising 2.5%, when accounting for temporary work-related closures and overall group sales up 2.2% y/y to £17.4m. Unfortunately, these refurbishments aren’t cheap and interim results released this morning showed operating profits fell 27.9% to £2.8m in the period. However, I think with its shares trading at just 12 times earnings, investors may be discounting the group’s long-term growth potential.

The main source of growth will be expansion into the US and the 50:50 joint venture announced this morning with Manchester City’s owner will provide £16m in cash and allow the group to use City’s branding in its US centres. The group’s first property in California is already profitable and it has plans to expand to four by Q1 2018.

Goals Soccer Centre isn’t out of the woods yet but with an ambitious turnaround plan at home and long-term growth in the US, I reckon growth-hungry investors should give the company a second look.

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Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Goals’ stock has fallen by more than 50% over the last two years, and the group reported a full-year loss of £6m in 2015. Management claims it’s starting to see evidence of a decisive turnaround, but do these claims stack up based on today’s figures?

The bad news

Goals’ revenue rose by 1.3% to £33.4m last year, with like-for-like growth of £0.6m. The company described this as “broadly in line with market expectations”. But the word broadly usually means slightly below, and that seems to be the case here.

The latest consensus forecast I’ve found for Goals suggests that revenue was expected to hit £34m this year. This might not seem a big difference, but it implies sales growth of 3% — more than double what the group actually achieved.

Here’s the good news

The first piece of good news is that Goals is expected to have returned to profit last year, with adjusted earnings of 9.8p per share. There was no mention of profit in today’s update, so it’s probably fair to assume that earnings should be close to current forecasts.

The second piece of good news could be more significant. Goals upgraded 136 of its pitches last year, with improved surfaces and various other changes. The group said that while activity levels only rose by 1% across the whole year, they rose by 3% during the second half. That could mean that customers like the upgraded sites and are playing more.

Nick Basing, Goals’ chairman, believes the firm has “turned the corner with this result”. I think there’s more work to do, but with the shares trading on a forecast P/E of 10, it could be worth a closer look.

Does this recovery play make sense?

Troubled sportswear retailer Sports Direct International (LSE: SPD) owns a 3.84% stake in Goals Soccer Centres. Unfortunately Sports Direct’s turnaround may not be as quick or straightforward as that of Goals.

Its shares have lost 60% of their value over the last two years. Profits are expected to fall by 64% during the current financial year, from £277m to just £100m. A string of PR disasters probably hasn’t helped Sports Direct’s relationships with big City investors, either.

As a value investor, none of this would bother me, if Sports Direct looked really cheap. Recent news that the group plans to sell the Dunlop brand for $137.5m suggests that there may be some hidden value in the retailer’s portfolio of brands. But to be honest, I don’t think this is enough to swing the shares to a buy for me.

I’m concerned by the group’s plan to spend £300m on property over the next two to four years. This seems likely to ramp up net debt at a time when profits are weak. It’s also not clear to me why these purchases are needed to develop the retail business.

The group pays no dividend, so shareholders are reliant on share price gains for their returns. With no clear understanding of the firm’s strategy and a forecast P/E ratio of 17, I think the risks are too high. I won’t be investing.

The post Is Goals Soccer Centres plc on the cusp of a major turnaround? appeared first on The Twelfth Magpie.

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However, there’s more to safety than good dividend cover. And Goals Soccer Centres (LSE: GOAL), which announced half-year results this morning, is a case in point.

Safe as houses

Goals joined the stock market in 2004 to roll out its five-a-side football centres. The majority of earnings would be retained to help fund the rollout, but the company proposed to pay “a small dividend each year for the foreseeable future.”

Such dividends were duly paid and even maintained through the financial crisis. For 2014, the payout advanced to 2p, covered a safe-as-houses 7.25 times by underlying earnings. However, for 2015 the board announced there would be no final dividend and that payouts would only recommence “when appropriate.”

What went wrong?

Debt and high operational gearing did for Goals’ dividend. A 4.9% fall in revenue for 2015 translated into a whopping 20.3% drop in EBITDA, and the company’s three times net debt/EBITDA covenant with its lenders was breached. The dividend had to go.

It emerged that there’d been chronic under-investment in Goals’ older sites, and the company announced boardroom changes and a placing to raise £16.75m for catch-up modernisation and to reduce the level of debt.

At the time of the placing Goals said it intends to “return to paying dividends in 2017 when the balance sheet recovers.” However, in today’s results, “2017” has been dropped in favour of “when the Directors believe it is appropriate to do so.”

Arguably, Goals should never have been paying dividends when its expansion was being part-funded by a high level of debt and when older sites were in dire need of modernisation. Management is looking ahead to a future of international expansion, and I reckon retaining earnings may be more sensible than paying dividends at this stage of the company’s development.

Cause for concern?

BT Group (LSE: BT-A) paid a dividend of 14p for its financial year ended 31 March, covered 2.4 times by underlying earnings, which is comfortably above the blue chip ‘safety’ benchmark of two. The yield at the current share price is an attractive 3.7%.

However, debt has led to dividend disappointments in the past for BT shareholders. Back in 2001, the payout was halted with net debt at a whopping £27.9bn. Dividends subsequently resumed at a lower level, and increased until 2009 when the payout was slashed with net debt at £10.4bn and the pension deficit at £4bn. Again, dividends have since grown — although they’re still lower than 10 years ago.

Furthermore, the current balance sheet isn’t exactly healthy, because net debt stands at £9.6bn and the pension deficit at £7.6bn. BT’s business is in better shape today than it was back in 2009 — and the board has shown its confidence by saying it intends to lift the dividend by 10% a year for the next two years — but the balance sheet gives some cause for concern.

BT is already committed to making pension deficit payments totalling £5.25bn between now and 2030, but with the deficit having risen to £7.6bn there could be pressure on the board to send more cash the pensioners’ way and less to shareholders. I don’t see a dividend cut around the corner, but dividend growth could be much less bubbly than investors may be hoping for.

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Not such a bad ban

I’m seeing an example of that at Royal Bank of Scotland (LSE: RBS). Using fellow bank Lloyds Banking Group as a yardstick, as the banking recovery gained pace we saw RBS attract a significantly higher rating than Lloyds, while it looked like it was at least a couple of years behind in getting back on track. Lloyds paid its first post-crisis dividend in 2014 and looks set to yield more than 6% this year, while we’re unlikely to see a penny from RBS before 2017.

But then RBS shares went through a drastic correction and lost 40% since their February 2015 peak, to 239p today. While there’s a big fall in earnings expected this year, analysts are predicting a strong recovery in 2017, which would drop the P/E multiple to just 10.6. The forecast 1.6% dividend yield would need the approval of the PRA, but I don’t see any danger of that being withheld now that liquidity looks strong, and I’d expect to see the dividend at least double in 2018.

While there’s still some risk, and I still see Lloyds as better value, I think the second half could turn out well for RBS shareholders.

Asian recovery

Standard Chartered (LSE: STAN) could also be past the worst, with the shares having picked up a bit since their February low. At 549p, the four-month recovery of 36% puts them on a forward P/E of around 14.5 based on 2017 forecasts — high for a FTSE 100 bank, but we could see that multiple dropping drastically with further EPS recovery, while the dividend looks set to bounce back.

A few key developments are underpinning the change in sentiment. New boss Bill Winters, who took over a year ago, is still in that honeymoon period where he can make drastic changes and not get yelled at. And in the bank’s Q1 report, he noted progress in “managing costs tightly, progressing on key investments … and maintaining strong levels of capital and liquidity“.

The troubled Korean operation looks to be making progress, and recent higher-than-expected Chinese oil demand suggests that country’s slowdown might be bottoming out too. Standard Chartered shares might not be a screaming bargain, but I’m cautiously optimistic.

Football boost

What is Goals Soccer Centres (LSE: GOAL)? A small company that operates a five-a-side football centres around the country. Its shares have been through a bad patch following a couple of profit warnings and lost 63% from theirFebruary 2015 high to this year’s March low. But since then we’ve seen an upturn of 30% to 118p.

On 3 June, Goals announced a new share placement to raise £16.75m, the proceeds to be used to refurbish its UK centres, to build on its one US centre and to reduce debt. And the company has finished its strategic review resulting in a new CEO and new non-executive directors, among other actions.

Goals shares are on forward P/E multiples of between nine and 10 for the next two years, which could be attractive. And with the new shares being placed at 100p, close to the average price of the last three months, sentiment looks upbeat.

The post Is 2016 the year for Royal Bank of Scotland Group plc, Standard Chartered plc and Goals Soccer Centres plc to bounce back? appeared first on The Twelfth Magpie.

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A 50% increase would take BHP shares back to about 1,200p, a level last seen in October. In my view, the medium-term outlook for the commodity market hasn’t really changed that much since then.

Instead, what seems to be happening is that big miners like BHP are being given some recognition for the measures they’ve taken to cut costs and improve cash flow. There’s also growing evidence that the oil market is starting to rebalance, which should help BHP.

City analysts are turning more positive on BHP. Forecast earnings for the current year — which ends on 30 June — have risen by 18% in the last month alone. Current forecasts suggest that BHP’s profits will double in 2016/17. If this year’s results support this outlook, then I believe further gains could be on the cards.

This small-cap could double

An unscheduled announcement from Goals Soccer Centres (LSE: GOAL) this morning revealed that the firm has raised £16.75m in a placing.

Goals shares have fallen by almost 48% over the last year, following two profit warnings. The need for extra cash wasn’t a big surprise, and I’d argue that today’s placing is actually good news for shareholders.

The placing was carried out at 100p per share, only marginally below Thursday’s closing price of 102p. This is good news, as it minimises dilution for other shareholders. The placing price also suggests to me that the investors taking part are confident Goals’ turnaround plans will be successful.

Goals plans to use the cash to give its UK estate a facelift, cut debt and fund a US pilot. I’d normally expect some of this to be affordable from operating cash flow. But with a new chief executive on board, I’m willing to give Goals the benefit of the doubt. The stock currently trades on about 9 times 2016 forecast earnings. If earnings growth accelerates as expected, I think a target price of 150p is quite reasonable.  

Is this giant now turning the corner?

Successful turnarounds often aren’t obvious until they’re well under way. I suspect this may end up being true of Rolls-Royce Holdings (LSE: RR).

One of the City’s biggest beefs with Rolls was that its forecasts had become too unreliable. To make matters worse, the firm’s profits were hard to understand. Chief executive Warren East — who oversaw the impressive growth of ARM Holdings — has committed to simplifying both the business and its accounts and providing more accurate guidance.

This approach seems to be working. Analysts’ consensus forecasts for Rolls’ 2016 earnings are stabilising, and have been broadly unchanged for the last three months. That’s progress after the multiple profit warnings we saw last year.

Analysts currently expect Rolls to report adjusted earnings of 24.6p per share for 2016, rising by 35% to 33.1p per share in 2017. This puts Rolls on a forecast 2017 P/E of 18. That’s not cheap, but if earnings can continue to recover it may prove to be a reasonable entry point.

An added attraction is that Rolls has almost no debt and offers a 2.3% forecast yield. Over the medium term, I think these shares could deliver decent gains.

The post Could BHP Billiton plc, Goals Soccer Centres plc and Rolls-Royce Holding plc climb 50% within a year? appeared first on The Twelfth Magpie.

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This means that, while Goals was forecast to post a pretax profit of £10.9m for the full-year, it now expects pretax profit to be between £9.3m and £9.8m. While not as impressive as previously expected, it would still represent a significant increase on the £6.7m pretax profit that was posted last year. As such, the company’s share price decline appears to have been something of an overreaction, with Goals still having huge expansion potential in the US where its Los Angeles centre is performing extremely well and delivered a 22% rise in sales in the first half of the year.

Furthermore, Goals trades on a price to earnings (P/E) ratio of just 10.2 which, despite today’s disappointment, seems to be rather low. That’s especially the case since Goals will beef up its marketing campaign so as to encourage more bookings and also has the potential to expand in the US, which is a rapidly growing market in terms of the popularity of football/soccer. As such, Goals seems to be a relatively risky, but potentially very rewarding, buy at the present time.

Of course, other UK-focused consumer stocks also have considerable appeal. Online fashion retailer Boohoo.Com (LSE: BOO) has also faced a testing recent period, with its share price having declined by 15% since the turn of the year. However, just as with Goals, it has the scope to turn recent disappointing performance around, with Boohoo.Com’s earnings set to rise by 42% in the current year, and by a further 25% next year. This means that its earnings could be as much as 78% higher next year than they were last year, which is likely to have a positive impact on investor sentiment.

In addition, Restaurant Group (LSE: RTN) is another appealing consumer stock. It is a very stable performer, having increased its earnings in each of the last five years at an annualised rate of 11%. Given that the UK has been in a tough economic period for at least two of those years, such a strong financial performance is hugely impressive. And, looking ahead, Restaurant Group is expected to deliver a rise in its earnings of 13% this year, followed by 12% next year. This puts it on a price to earnings growth (PEG) ratio of just 1.5 which, given its defensive attributes, seems to be a bargain.

Because of this, and while all three stocks appear to be worth buying, the stability of Restaurant Group makes it stand out as the preferred option at the present time. Furthermore, with Boohoo.Com performing well right now, it appears to offer less risk than Goals and at least as high a potential return.

The post As Goals Soccer Centres plc Dives 20%, Are Boohoo.Com PLC And Restaurant Group PLC Better Small-Cap Investments? appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

At what price were these directors happy to treat themselves, and how much did they invest? Read on!

Goals Soccer Centres

Goals Soccer Centres, a £127m AIM-listed company, is the UK’s leading five-a-side football chain with 44 sites around the country.

Philip Burks, who co-founded self-storage firm Big Yellow Group, joined Goals as a non-executive director at the start of 2011. Up until recently, Burks had made relatively small annual purchases of Goals shares. However, in the last few months he’s massively upped his buying. A £240,000 investment on 22 December was the culmination of four separate purchases, totalling almost £0.7m.

Burks’s average buy price was 218p, but you’ll have to pay a bit more than that today. The shares currently trade at 235p — or 14 times 2015 forecast earnings.

Reckitt Benckiser

Another director who bought himself a £0.7m present of company shares was Reckitt Benckiser’s chief financial officer, Adrian Hennah. Hennah, who was poached from medical devices firm Smith & Nephew two years ago, bought 13,222 Reckitt shares at 5,177p a pop, doubling his previous holding at one fell swoop.

The share price is at around the same level today and represents a hefty 20 times Reckitt’s 2015 forecast earnings. However, you’ll miss out on a benefit Hennah and other shareholders at the time enjoyed. The CFO bought his shares before Reckitt demerged its pharmaceuticals business on 23 December, and, as such, automatically received shares in the new company, Indivior, currently worth 149p. Effectively, then, an investor today would need to buy Reckitt shares at 5,028p (5,177p minus 149p) to match Hennah’s deal.

British American Tobacco

British American Tobacco chairman Richard Burrows rounded off 2014 with a New Year’s Eve purchase of 5,000 company shares at 3,520p a time. The £176,000 investment took his total holding to 15,000 shares.

Burrows, a former chief executive of Pernod Ricard, who joined British American Tobacco in 2009, was happy to pay 16 times BAT’s 2015 forecast earnings and bag a dividend yield of 4.5%. You can pick the shares up slightly cheaper today at 3,460p.

The post Big Director Buys At British American Tobacco Plc, Reckitt Benckiser Group Plc And Goals Soccer Centres plc appeared first on The Twelfth Magpie.

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