CRM

Afourth profit forecast upgrade in four months means Carr’s Milling Industries (CRM) is unique among food groups. The latest positive surprise persuaded Nicola Mallard of house broker Investec (INVP) to raise her target price to 760p, for 12% upside in the stock.

Carr’s has now indicated profits will be ‘in excess of £12.5 million’ compared with £6.1 million last year. Mallard is now forecasting profits for fiscal 2007/08 of £12.8 million, for EPS of 106p.

Although all divisions contributed to this growth the main boost has come from the agricultural division, which has enjoyed strong sales of feed and fertiliser. Margins have improved thanks to stock profits. One-off factors, such as these profits, currency and early sales of fertiliser, have contributed some £4 million to this improvement.

Investec has also increased its 2008/09 forecast to £9.9 million for EPS of 76p. Mallard believes the shares warrant a forward price/earnings ratio (PE) of 10, which justifies the new target price.

by John Marshall