Insolvency specialist Begbies Traynor (BEG) said business continued to trade well in the third quarter ended 31 January, giving the company ‘confidence in delivering full-year results at least in line with current market expectations.’ The shares rallied 9% to 85p, clawing back some of the recent weakness.

According to Refinitiv data, analysts are expecting 15% growth in full-year revenue to £69m and operating earnings 36% higher to £10.3m, for the period ended 30 April 2020.

The insolvency market remained favourable with the number of corporate insolvencies growing 7% to 17,196 in the calendar year 2019, the highest number since 2013, but still some way off the peak level of 25,000 seen during the financial crisis.

The property advisory and transactional services business has traded in line with management’s expectations with the integration of Ernest Wilson sales agency, acquired in October 2019, progressing well.

Executive chairman Ric Traynor said: ‘We continue to increase the scale of our business recovery practice and extend our property services offering, and our strong financial position leaves us well placed to further build upon our track record of organic and acquisitive growth.’

COUNTER-CYCLICAL

The company released its latest Red Flag Report at the end of January where it revealed the number of businesses in significant financial distress had reached a record 494,000 with the real estate, support services, construction and retail sectors badly affected.

In other words, an increasing number of small and medium-sized businesses were already struggling before the appearance of the coronavirus epidemic.

The financial impact caused by the spread of the virus will provide further headwinds for UK companies, and potentially, more business for Begbies.

We featured the stock last December as one of our annual stock picks.

READ MORE ABOUT BEGBIES TRAYNOR HERE

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Issue Date: 03 Mar 2020