Titon – is it still a bargain?

PUBLISHED: Dec 24 2015 @ 05:41 | Comments (0) |

To judge whether Titon (LSE:TON) is still worth buying I need to start with an examination of its balance sheet: Is Net Current Asset Value greater than market capitalisation?

£’000s	October 2015	October 2014
Inventory	3,786	3,479
Receivables	4,992	4,589
Cash	2,870	2,149
Total current assets	11,648	10,217
minus all liabilities	-4,275	-3,913
minus non- controlling interests	-1,043	-682
Crude NCAV	6,330	5,622
NCAV if one-third of inventory and 20% of receivables valued at naught	4,070	3,545

NCAV amounts to less than half of current MCap of 10.6m shares x 99p (offer price) = £10.5m.

We could allow for the additional value in property of around £2m, but that still doesn’t get us anywhere near the MCap.

So, while the qualitative features of this company – cumulating evidence of managerial competence displayed in the profit numbers, industry economics and stability – have all improved over the last two years I cannot say that this is a NCAV bargain, which is not very surprising given the share price rise.

Does it now fit the criteria for one of my other portfolios?

No, because it lacks the eps history to satisfy the Modified-price-earnings ratio portfolio (cyclically adjusted PE), its industry economics are nowhere near good enough for a Buffett-type bargain, and it does not have the share pattern history to fit the return reversal portfolio.

Do I sell?

There is a great danger for investors experiencing ……….To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.