Wynnstay Group – Vulnerability to financial distress?

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The last two newsletters showed that Wynnstay’s shares (LSE:WYN) are selling cheaply compared with proven earnings over ten years and that it has some competitive advantages in the territories where it is the leading supplier. Wynnstay’s market capitalisation is £62.4m at £3.17 per share.

Piotroski Analysis

  1. Positive net income? Yes.
  2. Positive cash flow from operations? WYN has high cash flow (£12.8m).
  3. An increase in return on assets employed in the business from the previous year? No
  4. Cash flow greater than profit? Yes, so WYN scores a point here.
  5. Has the firm’s long-term debt reduced relative to its total assets? Long term debt is very low in both years. Nevertheless, no Piotroski point awarded.
  6. Has the firm’s current ratio improved? Again, respectable ratios in both years, but the position deteriorated therefore no Piotroski point.
  7. Has the firm avoided raising fresh equity capital in the last year?  It has – a point.
  8. Has gross profit margin improved? A (small) deterioration therefore no Piotroski point.
  9. Has the ratio of turnover to total assets improved? Yes – one more Piotroski point.

A Piotroski score of 5 out of 9 is OK, indicating a relatively low likelihood of financial distress.

An analysis based on the half year to 30 April 2019 concluded with a 5 out of 9 score as well (points scored on the same items).

Balance sheet extracts (ignoring intangibles)

£m   30th April 2019………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

 

  31 Oct 2018   31 Oct 2017
Inventories 46.5 52.3

………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

 

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