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4imprint Group (LSE: FOUR) led the FTSE 250 Tuesday morning (11 November) with an early 17% rise. It’s all about a trading update, with a boost to full-year guidance.
It said: “The board expects full year group revenue of not less than $1.32bn, which is at the high end of the current analyst forecast range, and profit before tax of not less than $142m, which is above the upper end of the current analyst forecast range.”
That’s despite a 2% dip in revenue in the first 10 months of the year, against what the company describes as a “backdrop of volatile macroeconomic conditions.” Global tariffs are playing their part, but not as severely as feared. The board reported a strong gross profit margin of close to 33%.
Volatile business
Despite the falls of the last 12 months, the 4imprint share price has gained a healthy 45% over the past five years. And we’re looking at dividend yields in excess of 5% too. But what does this FTSE 250 company do to warrant a rocky share price ride?
It sells a range of branded promotional products used to raise brand awareness. That includes things like clothing, stationery, bags, mugs etc — items that can carry company logos and the like.
And it does most of its business in the USA. Ah yes, the land of tariffs. That’ll be why the share price went into freefall in April, when President Trump launched his bombshell.
Long-term outlook
But these are relatively short-term worries. There’s three years left of the current presidential term. And stock market investing really needs to be undertaken with a horizon of at least a decade, preferably longer. Also, over the past 10 years, the 4imprint share price has trebled — while the FTSE 250 is up just 33%.
Where are we in terms of valuation? We’re looking at a forecast price-to-earnings (P/E) ratio of around 13-14 for the next three years. That’s about average for the mid-cap index right now, though it has had a weak spell over the past five years.
The dividend outlook appears solid right now. Analysts expect earnings dips due to global trade turmoil. But they still expect the dividends to remain well covered, and maintained at 2024’s level. That could put the 2025 yield as high as 6%, even after this latest share price spike.
Top of the game
I’m looking at 4imprint’s long-term record and at the kind of margins it can achieve — a gross 33% looks excellent for the merchandise it sells, especially this year.
The company has net cash too, which is handy in rough times. Three out of five analysts have the stock as a Buy, with no Sells. And there’s an average price target of 4,960p — 25% ahead of today.
The American trade risks are real, and I expect further volatility. But I think investors seeking value and income should consider 4imprint.
This story originally appeared on Motley Fool
