Utilitywise - Termination of coverage

Edison Investment Research is terminating coverage on Utilitywise (UTW). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.

Forecast updates

We have updated our forecasts to reflect recent announcements from Utilitywise (UTW), including those related to consumption volumes in ‘nominated contracts’, implementation of IFRS 15 and the trading update. While our changes have resulted in lower projections for revenues, profits and dividends, changes to revenue recognition will result in lower levels of accrued revenue and a stronger link between profits and cash flow. Following recent falls, the rating of the shares appears undemanding for...

On course for FY17

Utilitywise’s (UTW) trading statement indicates that it continues to grow. Consultant headcount rose in H117 after a flat performance in FY16 and, despite the seasonal impact on cash flow, we expect UTW to be in a net cash position by year-end FY17. The rating of the shares remains modest for a company that continues to grow and offers an attractive yield.

Insider sold: A director sold 58,675 shares at 190p and

A director at Utilitywise sold 58,675 shares at 190p and the significance rating of the trade was 68/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearly show...

Ford Equity International Rating and Forecast Report

Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...

Headcount key to growth

FY16 results were in line with the post-trading statement expectations and showed continuing growth, despite staff retention difficulties and investment in energy services. In FY17 we expect improved staff retention and additional energy service contracts, such as that recently signed with Asda. With improving cash flow and a strengthened management team, there is the prospect of further growth in the current year. Utilitywise’s (UTW) current rating does not appear to reflect this potential for ...

Update: On course to meet expectations for FY16

In H116 Utilitywise (UTW) again posted strong growth and is on target to meet market expectations for FY16. We expect further growth in H2 and beyond and our valuation analysis indicates potential upside in the shares.

Update: On track for FY16

Utilitywise’s (UTW) trading update states the business is progressing in line with management expectations and indicates that the company remains on track for FY16. Encouragingly, the proportion of extensions business is said to be declining. A continuation of the reduction in the proportion of contract extensions in H2 would have a beneficial impact on cash flow and, in our view, market perception of the business. Potential upside remains.

Outlook: Beyond headcount growth

New markets and a broadening service offering provide growth opportunities for Utilitywise (UTW) in the medium term. Increases in consultant headcount will underpin further rises in profitability in the short term. The pursuit of new business rather than contract extensions should lead to a gradual improvement in cash flow. Our valuation analysis indicates potential upside on a short- and long-term view.

Update: Confirming the growth trend

Interim results from Utilitywise (UTW) extended its track record of growth. We expect further growth in H2 and FY16, supported by contributions from both organic (consultant headcount) and acquired (T-mac) sources. The P/E multiple of c 10.5x (CY15) compares to 16.9x for the FTSE All-Share.

Institutional Comment: Daily comment

Utilitywise is trading at a discount to the broader market, despite offering superior growth. While uncertainty could persist until the finalisation of the regulatory regime later this year, we believe that Utilitywise’s internal controls place it in a strong position to deal with regulatory changes and provide it with a competitive advantage over smaller market players. Meanwhile, the share price appears to be discounting significant risk. We leave our estimates largely unchanged.

Update: Market failing to value growth

Utilitywise is trading at a discount to the broader market despite offering superior growth. While uncertainty could persist until the finalisation of the regulatory regime later this year, we believe that Utilitywise’s internal controls place it in a strong position to deal with regulatory changes and provide it with a competitive advantage over smaller market players. Meanwhile the share price appears to be discounting significant risk. We leave our estimates largely unchanged.

Update: Execution of strategy

FY14 results showed a continuation of the strong growth trajectory of recent years. The prospects for further growth, organic and acquisitive, appear promising and Utilitywise is trading at a discount to the FTALLSH and Support Services sector valued on a PEG basis.

Institutional Comment: Daily comment

Outlook: Pricing the growth

Based on the targeted increases in consultant headcount, we expect profits to grow rapidly at Utilitywise. In view of the high projected growth rates we believe PEG ratios provide the best guide to valuation. Aligning Utilitywise’s PEG with that of the All-Share indicates a valuation of 510p/share. Applying the PEG of the industrial support services sector would indicate a price of 400p/share.