The company, which specialises in providing pension and wealth management services for Britons living abroad, said that revenue rose by 24% to £21.5m last year. Underlying pre-tax profit rose by 39% to £3.2m, while underlying earnings rose by 68% to 5.29p per share.

Cash and cash equivalents held on the group’s balance sheet rose by 55% to £18.4m, while the final dividend will rise by 20% to 1.2p per share. This gives a total payout for the year of 1.8p per share.

An eventful year

2017 was a difficult year for the firm. Tax changes in the government’s Spring Budget meant that the firm’s overseas pension business took a big hit, losing an estimated 80% of new sales of its ‘QROPS’ product.

To accommodate these changes, the company launched a new international pension product, the International SIPP. In today’s results, STM said that sales of this new offering have replaced most of the lost QROPS business by “both policy number and revenue”.

The firm is also continuing to expand its life assurance business, where revenue rose from £2.8m to £5.8m in 2017.

In my opinion, this company seems to be adapting well to changing market conditions. STM’s strong cash balance also gives the firm some breathing room and could provide funding for further acquisitions.

STM shares now trade on around 9.5 times 2018 forecast earnings, with a forecast yield of 3.5%. I believe this could be of interest to long-term investors.

Don’t give up too quickly

When Standard Life and Aberdeen Asset Management announced plans to merge and form Standard Life Aberdeen (LSE: SLA), hopes were high that the group would deliver bigger profits at a lower cost. So far the evidence has been mixed.

The group’s shares have fallen by about 15% since the merger completed last summer. Although assets under management and administration ended 2017 up by 1%, at £654.9bn, we learned recently that Lloyds Banking Group will withdraw approximately £109bn of assets under management from the group, subject to a 12-month notice period.

According to the firm, the Lloyds assets represented “less than 5%” of the combined firm’s 2017 revenue. Cost-cutting should reduce the impact on profits, but analysts’ consensus forecasts for 2019 have still been cut by 8% since this news was released.

Despite this, many large deals have teething problems. I think it’s too soon to write off this FTSE 100 firm. Indeed, my view is that it’s starting to look like a possible contrarian buy.

Is this 6% yield safe?

Standard Life Aberdeen’s falling share price has left the stock with a 2018 forecast P/E rating of 12, and a potential yield of 6.4%.

Although dividend cover is now quite slim, at just 1.3 times earnings, I think this valuation is starting to look quite tempting.

Analysts forecasting a 1% increase in earnings per share for 2018, with a 6% increase in 2019. Investors expecting fireworks should probably look elsewhere, but I think the group’s strong cash generation means that a dividend cut is unlikely.

Indeed, I believe the shares are starting to shape up as a potential long-term buy for income investors. I’d consider opening a starter position at current levels.

The post Why 6% yielder Standard Life Aberdeen plc isn’t the only dividend stock I’d consider today appeared first on The Motley Fool UK.

Soaring shares

Shares in Somero Enterprises (LSE: SOM) have climbed by 150% over the past two years, but even at 281p I’d say they still look good value.

Full-year results reported on Wednesday showed a 22% rise in pre-tax profit and a 23% rise in adjusted net income per share. Net cash soared by 60% and the company was able to to hike its dividend by 61% to 11.1 cents per share.

CEO Jack Cooney spoke of “record revenues, profits, and cash flow” and “the strongest balance sheet in our history“. And speaking of the firm’s prospects for 2017 he enthused

“We are financially stronger than ever, have the broadest product portfolio in our history and have made significant investments to increase our global reach“.

Sounds great, but what does the company do?

It produces laser-guided equipment for laying and levelling flooring, and offers products that include laser screed machines, concrete hose line-pulling and placing systems, ride-on screed products… No, I don’t know what they are either, but sales are growing strongly in North America, Europe, Australia and China.

On a fundamentals front, Somero shares are on forward P/E multiples for this year and next of around 11, with no real EPS growth forecast for the two years overall. But in the light of these results and the firm’s upbeat outlook, I can see those being re-rated upwards in the coming months. As a result, I think Somero shares are good value.

Cheap shares

There’s quite a contrast to the share price performance of STM Group (LSE: STM) — it’s fallen 40% over the past 12 months. But the slide over the past week or so has been halted, at least for now, by a pretty decent set of full-year results.

The financial services firm saw an 8% rise in revenue in 2016, although that translated to ‘no change’ in EBITDA or in earnings per share, both of which remained static. But the balance sheet looks better, with cash and equivalents up 49% to £11.9m, and the full-year dividend was lifted 67% to 1.5p per share.

It was a year that saw the acquisition of London & Colonial Holdings, a SIPP and life assurance business, and STM reckons that its integration should result in cost savings of around £500,000.

Chief executive Alan Kentish said that the recent budget will have an adverse effect on this year’s profits, but he still expects to see growth over 2016. Forecasts for a 48% rise in earnings per share are probably now optimistic and will need to be scaled back, but I’m confident we’ll still be looking at a forward P/E of under 10 and an attractively low PEG ratio.

On top of that, dividends are likely to yield a well-covered 4% or so this year, and STM told us that its improved cash generation “allows the business to continue its dividend policy” while still having plenty of cash to spare. There hadn’t been a dividend from STM for a few years before 2015, but I’m liking the look of this new progressive dividend policy — and I see the recent share price weakness as a buying opportunity that should yield nice profits over the next few years.

The post This high-flying stock should keep on soaring appeared first on The Motley Fool UK.

Motif Bio had intended to raise up to $60m from the move to fund its flagship drug iclaprim’s phase III clinical trials. Although today’s news doesn’t necessarily mean that funding will be lacking for the potential new treatment, it has caused investor sentiment towards Motif Bio to come under severe pressure. However, with the company stating that today’s move is a deferral, it could be a case of an overreaction by the market.

Still, Motif Bio is likely to remain highly volatile in the short run owing to doubts surrounding its near-term strategy. Therefore, it may be prudent for investors to watch, rather than buy, the company at the present time.

Certainly, it has significant long-term potential and the multi-drug-resistant bacteria space is set to be a major growth area as ‘superbugs’ are emerging at a faster pace than new antibiotics are being developed. And with Motif Bio having an experienced management team and a sound strategy to build its treatment pipeline, its shares could continue to rise over the long term following their 20% gain since the start of the year. However, until more clarity is forthcoming regarding its public offering, it may be a good idea to look elsewhere for healthcare investments.

Value for money

While Motif Bio is among today’s major fallers, STM Group (LSE: STM) is among the biggest winners. STM’s shares are up by as much as 16% following the release of an update that shows the cross-border financial services provider has seen its new business numbers increase by 28% in July.

This follows an adjustment to STM’s pricing strategy for its core product, QROPS, with this being done to stimulate and drive new business growth for the benefit of future recurring revenue. And with new business applications in July representing the highest month of applications over the last year and a 75% uplift on the average number of applications of the first four months of the year, the pricing adjustment seems to be having its intended result.

Looking ahead, STM is forecast to increase its earnings by 23% in the current year and by a further 33% next year. This has the potential to act as a further positive catalyst on its share price and with STM trading on a price-to-earnings (P/E) ratio of just 8.2, it seems to offer good value for money for less risk-averse investors.

The post Should you buy today’s biggest winner or biggest loser? appeared first on The Motley Fool UK.

Shares in Verona Pharma (LSE: VRP) have soared by over 20% today after the company announced a successful placing to raise gross proceeds of £44.7m. The money raised will be used to fund a Phase 2b clinical trial in chronic obstructive pulmonary disease (COPD) for the company’s treatment called RPL554. Further Phase 2 studies for RPL554 in COPD and cystic fibrosis are also planned, with the money being earmarked for that use, too.

Clearly, the outlook for Verona Pharma is relatively upbeat and market sentiment is improving following a challenging year for the company’s investors. Even after today’s rise, shares in Verona Pharma are still down by 37% in the last year but with the company’s financial outlook being optimistic, that could be about to change.

Certainly, Verona Pharma is a smaller, high risk play which lacks the diversity of a major pharmaceutical peer. However, for less risk averse investors it could be worthy of a closer look – especially for the medium to long term.

A step-change in sentiment

Also increasing in value today are shares in STM (LSE: STM), with the financial services company recording a rise of 12%. That’s despite no significant news flow having been released by STM, with a rising wider market likely to be the major reason for improving investor sentiment in the stock.

Today’s rise is a step-change in investor sentiment for STM, with the company’s share price having fallen by 13% year-to-date even with today’s double-digit gains taken into account. And with STM forecast to increase its bottom line by 23% in the current year and by a further 33% next year, it would be somewhat unsurprising if the market continued to view STM more favourably.

This could lead to an upward rerating and with STM trading on a price-to-earnings growth (PEG) ratio of just 0.2, there is tremendous scope for this to take place over the medium to long term. Furthermore, due to STM’s yield of 3.1% and its forecast growth in dividends of 31% next year, it remains a sound income option for less risk averse investors.

Wide margin of safety

Meanwhile, shares in NAHL Group (LSE: NAH) are also among today’s biggest gainers. They are up by as much as 9% despite no significant news flow having been released by the company since its AGM statement in May. Encouragingly, NAHL reported back then that it was trading in-line with expectations, although its outlook remained uncertain given the prospect of regulatory change following the Chancellor’s Autumn Statement from 2015.

Looking ahead, NAHL is forecast to increase its bottom line by around a third next year. If met, this would put it on a forward price-to-earnings (P/E) ratio of around 8.2 which would indicate excellent value for money. And with a wide margin of safety, NAHL could be worth buying even though market sentiment is weak following its 26% fall in value over the course of the last year.

The post 3 soaring small-caps: STM Group plc (+12%), Verona Pharma plc (+20%) and NAHL Group plc (+9%) appeared first on The Motley Fool UK.