07.03.2004

Lavendon one of the UK’s "least loved" companies

RSM Robson Rhodes, the accountancy firm, have published their annual list of the UK’s most unloved companies, who is number seven on the list? none other than the Lavendon Group Europe’s largest Powered Access company.

The Robson Rhodes study, now in its fourth year, actually lists the companies who are doing well in terms of cash generation etc but whose stock market valuation does not seem to reflect that achievement. In other words company's where the market is not giving credit where credit is due.

While being in the top ten of the country’s least loved businesses, is not exactly something anyone would strive for, it does suggest that the company is doing something right and it also bodes well for future share price appreciation.

The Robson Rhodes analysis, takes each company’s cash flow generation over a five-year period including city analyst’s forecasts for the next two years and combines this with a multiple of cash flow per share compared to the share price and then formulates the index.

The top companies from last years index largely outperformed the market this year, with several seeing their share price rise by over 80 percent. The whole basis of this index is that cash flow is a better measure of true company performance than earnings.

So while no one wants to be one of the country’s least loved companies, this study would suggest that Lavendons shares might be a good buy at the moment.