When the behavior of a company is analyzed by fundamentals, cash flow is one of the main ratios that affect the investor, because it shows the financial reality of a company. But it can also be a good indicator of a company’s ability to offer extraordinary remuneration to its investors. I’m still waiting round table In favor of small companies that have not benefited from the rate cuts, analysts expect that four of the companies listed on the Spanish continuous market will justify more than 20% of the value of their shares on the market only by the capital that they will have accumulated in cash at the end of 2024. These companies that offer this investment opportunity are Sanjose, Logista, Técnicas Reunidas and Naturhouse Health.
It is worth noting that OHLA has the highest cash percentage of its peers in the General Index of the Madrid Stock Exchange (IGBM), which represents 134%. But the company is in the process of increasing its capital to strengthen its financial structure, so due to this increase in its cash flow it cannot be taken into consideration.
Sanjose, the best of the “little ones”
The Sanjose Group has the best cash position of all small cap companies listed on the Madrid Stock Exchange. The construction and renewable energy company would cover, with its cash flow, 94% of its stock market value. During the year, Sanjose saw its share price increase by 35%, which led the company to have a market capitalization of 308 million euros, although the conglomerate can go more than double on the stock market, since it has a potential of 103% for the coming months, according to the consensus of analysts gathered by FactSet. In the meantime, the consensus estimates that this company will manage to accumulate up to 290 million euros in cash.
Ignacio Romero, analyst at Banco Sabadell, says that “this company continues to accumulate liquidity due to the retention of profits, the delay of investments and partly the increase in advances linked to the increase in the works portfolio. ” “In our opinion, These high percentages indicate that the stock is truly undervalued by the market.“, underlines the expert, this is why they increased the valuation of the company by 10%, which represents a price target of 9.62 euros, compared to the 8.78 euros it had until there.
Romero explains that “IThe cash position both at the end of the 2023 financial year and in June 2024 increased significantly compared to the previous year thanks to the ebitda (profits before subtracting interest, taxes, depreciation and amortization) generated since the level of capital investment was relatively low. while the portfolio of contracted works, and with it advances from clients, increased significantly“. And even, “from June 2024, the net cash position has increased further, up to 330 million euros, despite the dividend paid in May”.
For its part, Logista has a cash flow forecast of 1,758 million euros, compared to the market capitalization of 3,675 million that it has on the stock market, which represents 48% of its market value. As a distributor of tobacco products, their cash flow is generally high, as they also have taxes on these items stored in their coffers, which they then return to the state. But its high cash position, which had benefited the company with interest rate increases, by raising the price of silver, allowed it to obtain high profits by being a lender to its largest shareholder, Imperial Brands. In 2023, he earned 76 million thanks to this credit, out of the total of 272 million obtained that year.
But with the arrival of rate cuts from the European Central Bank, this situation is not over either. tailwind to the company, since it has entered into an agreement with its parent company to continue granting credit, but profiting with a high minimumwhile the ECB continues on the path of lowering the price of silver.
From Bankinter they believe that Logista has “the aim of protecting itself from the risk of variability of interest rates”, and they explain that AndThis credit line has two tranches, a fixed one at 2.86% plus a marginal one of 0.75% and another variable linked to the six-month Euribor plus a spread of 75 basis points which allows Logista to generate a additional source of capital with euribor at 3.4%”. For the analysis house, this will mean “an average cash flow of 2,400 million euros and despite the possible start of rate cuts this year, it will obtain financial income of more than 70 million euros euros during the year 2024/2028”.
Técnicas Reunidas and Naturhouse
The engineering company Técnicas Reunidas has a stock market value that reaches 921 million euros, while the consensus of specialists who monitor the company’s behavior on the stock market estimates that it will obtain 344 million euros in cash at the end of the current year. This represents 37% of the company’s market value.
The head of institutional research of Renta 4, César Sánchez-Grande, in the latest delivery of his report on the company’s results, corresponding to the second quarter of the year, certified that “the online net cash flow of 318 million euros (143 million euros excluding the SEPI participatory loan) compares to the 340 million euros estimated for Renta 4 and the 320 million euros expected by the consensus”.
In the case of Naturhouse Health, the percentage of liquidity to capitalization is 20%. The company expects cash flow of 20 million euros, compared to 100 million in capital it has on the stock market. It will even reach these cash levels after having distributed its last dividend of 5.6%, or a total of six million euros gross for the year 2024, or the equivalent of 0.10 euros per share.
However, the high percentage of liquidity is motivated by the intention of its president, Félix Revuelta, to exclude the company from listing on the Madrid Stock Exchange. As he informed this media, Revuelta affirms that he is acquiring company shares, and that he hopes to reach “80% of the capital and I will have to communicate it and if I reach 90% I will have to launch a public offer of ‘purchase”. although he said he was “in no rush.” The business leader considers himself “one of the rare businessmen who cares very little about the stock market value.”
Lighthouse, the Spanish Institute of Analysts, considers that Naturhouse maintains an enviable net cash position at the end of the first half of 2024. “A very comfortable cash position that protects its current dividend policy and leaves room to increase investments Or payment“, they indicate.
