Goals Soccer Centres hasn't really scored with investors yet -- but looks a good long-term bet.
Tipped as a share to buy for growth by the world and his wife during the boom years, Goals Soccer Centres' (LSE: GOAL) share price hasn't really hit the net since the financial world was red-carded three years ago.
In what has been very much a game of two halves, the East Kilbride-based 5-a-side soccer centre operator's price climbed steadily from its 62p flotation in December 2004 to over £4 in the summer of 2007. Since then, it's been downhill almost all the way. The shares reached a quid in the depth of the gloom before rallying to over £2.
As I write, they stand at 117.5p -- up a small amount on Monday's results for the first half of 2010 and valuing the AIM-listed company at £57m.
Creditable first half
Goals is pleased with its first-half performance this year, which saw an underlying pre-tax profit of £3.8m on sales of £13.2m; a creditable showing after the bottom line was hit to the tune of £0.8m following the worst snow conditions for 47 years during January, February and March.
The harsh winter hasn't derailed the company's growth plans. Since the start of the year, new five-a-side centres have opened in Liverpool, Portsmouth, Eltham and Gillette Corner in London, bringing the total number of UK centres to 37. Four further centres are currently under construction; Liverpool South, Sunderland and Ipswich will open later this year, with Norwich likely to open in January 2011.
Better second half?
In total, Goals plans to open a minimum of six centres during 2011 having already secured planning consent for the first three. It sees the tough economic climate for the commercial property market leading to increased opportunities.
Across the pond, Goals' joint Californian venture opened in June 2010 and is trading in line with expectations -- for a small loss this year. Meanwhile, a franchise agreement has been granted to an "experienced leisure operator" for the Republic of Ireland and Northern Ireland.
Underlying earnings per share of 5.3p are expected to be bettered in the second half. Brokers' consensus forecasts are for full-year earnings of 12.8p, rising to 14.9p next year.
The basic investment case, therefore, is that Goals is a growing business on anything but a growth rating, standing, as it does, on a forward price-to-earnings ratio of less than eight.
A bit of everything
In addition, Goals' purchases over the years mean the company has good asset backing with net tangible assets covering two-thirds of the overall valuation. In other words, Goals could be one of those shares with a little bit of everything; a lowly valuation based on earnings and cash generation, growth at a reasonable price, a decent amount of asset backing and, yes, even a small dividend.
The interim dividend, maintained at 0.675p per share, will bring the annual total to 1.85p if the final dividend is repeated, meaning the shares are yielding 1.5%. This is nothing to shout about, but it does show a rare and admirable commitment to acknowledging the importance of some income for shareholders from a small, growing company.
Even the directors have shown a little confidence, picking up shares at higher prices earlier in the year.
The beautiful game's popularity isn't going to dip any time soon; in other words, people want to play football whatever the world throws at them. And the ease of access granted by Goals' soccer centres make it an evergreen investment in my opinion.
The company's net debt of £43.8m is well within its newly extended facility of £55m and it has demonstrated an admirable ability to achieve long-term steady growth despite the obvious setbacks. I expect its share price to do the same for long-term investors.
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