Half year results
On Monday, as I was looking for investments to potentially replace stocks in a portfolio I'm fast feeling is no longer obviously cheap, I stumbled back upon my thoughts on Quarto group a couple of months ago. The price is more or less the same, and I remember being bullish then, so I booted back up the spreadsheet and clicked back on their website, only to find they were reporting results two days from then.
That's always a slightly uncertain moment for me, because I'm still not sure what I feel about buying directly before results. If I'm of the conviction that the stock is undervalued, surely the balance of risks on every results day is going to be positive - it's more likely to surprise (since, if the stock is cheap, expectations are implicitly low) on the positive and see upwards share price movement. I think that logic is solid, but I rarely follow it. I prefer to wait for results and see where the cards lie before making my decision. Perhaps that's just my all too-human aversion to being in the dark. Maybe I pay a premium for the privilege!
Either way, the business is obviously functionally the same as it was in my look at it the last time, with two posts; one focusing on the business, and one focusing on the figures. Click through to those for a more complete representation than I'll put here, but to sum up the business in one sentence; Quarto are an international book publisher who focus on non-fiction books - manuals, 'lists' etc. - which makes their revenues and operations less volatile than fiction publishers.
What do the half-year results tell us about how the business is progressing? Well, not a lot, but perhaps that's a good thing given that I was thinking of buying. It meant the price of the company stayed roughly flat today. It is interesting to see co-founder Robert Morley resinstated to the board after his departure in all the Orbach-related intrigue last year (discussed in first post). The company's working on the usual objectives one comes to expect when a company gets ruffled up - debt reduction and cost reduction. In Quarto's case, there's also a notable hat-tip on digital revenue, after Orbach's level-headed but evident scepticism meant they had a rather lowkey digital strategy before. Still, I have to say, I'm happy to see the company isn't leaping into the fire on this - I see the same refrain as before on the subject, which gives me confidence in Leaver (new CEO, old board member): "we feel strongly that our titles work best in print... That said, if our readers choose to read them digitally we want to make that same content available to them in whatever form they choose to consume it." A reasonable strategy, I reckon. (more…)