London, UK, 13 September 2021

Severfield (SFR): Positive start to FY22

Severfield provided a pretty robust year-to-date trading update to coincide with its AGM, including a stronger UK order book position and, in our view, firmer pipeline sentiment than previously. The company's broad sector capability is serving it well and input cost challenges appear to being managed effectively. Severfield's share price has traded in a narrow range in recent months and its P/E dips below 10x next year on our slightly updated estimates.

After a good start to the year, Severfield's share price has largely traded around 80p since the end of February (up c 16% ytd overall versus c 11% for the FTSE All Share Index). On our estimates, the company is now trading on FY22 P/E and EV/EBITDA multiples of 10.7x and 7.0x respectively, falling to 9.5x and 6.3x one year out and we contend that underlying UK earnings ratings are effectively below these levels. An FY22e dividend yield of 3.9% with the prospect of further growth adds interest for income investors.     

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