DCC retained as a 'buy' by Cannacord on strong cash generation
(ShareCast News) - Strong full year results and "impressive" cash generation at diversified support business DCC have led to a 'buy' retention from Cannacord Genuity with a target price of 8000p.
CG said the company's healthy balance sheet left the company "well positioned to grow the business organically and through acquisitions". The outlook remains positive and we retain our BUY recommendation and 8000p target price.
"While the company is trading on relatively high earnings multiples, the potential for strong and sustained earnings growth remains impressive, not least driven by possible further earnings-enhancing deal flow," CG said in a note to clients.
"In April 2017 the company announced a deal to acquire Shell's LPG business in Hong Kong and Macau for c£120m . This followed a deal announced in February to buy Esso's retail petrol network in Norway for c.£235m. The energy space continues to look particularly interesting as oil majors continue to de-emphasise downstream operations."
CG noted that net debt was only £121.9m at 31 March 2017, with extensive cash balances of over £1bn.
Despite the figures DCC shares were down 3.19% to 7130p at 1107 GMT.