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Norcros NXR


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Norcros PLC manufactures and markets showers, taps, bathroom accessories, tiles, and adhesives. You will know it from its range of Triton showers, and you may well know Johnson Tiles, too.


It is today capped at £145m, with 79.9m ord’ shares in issue. It currently swaps on a PE of 6.3 based on this years’ full forecast of 28.7p.


Shares offer at £1.81, and I think in the next 6 months are likely to hit £2.25, offering realistic upside of 24%. Below I outline why.


NXR has been steadily increasing its revenues, and this far booked 10.6p of earnings, and historically always returns a greater portion of sales in the second-half. I’d say it will achieve 21p earning in the next half-year, based on history, giving a full year EPS of 31p, around 10% above broker estimates.


To aid this growth, NXR has been buying complimentary services, most recently Merlyn Industries Ltd per its RNS 02/Nov/17. This was part-funded with placing new shares at £1.72, which were 55.7% taken up by existing shareholders, demonstrating a strong confidence and loyalty of its shareholders. NXR has a strategy to drive sales to the £420m mark by 2018, and this target is looking increasingly achievable.

Two brokers have BUY rated this outfit, with a target price of £3.07p (69% upside) so considerably higher than my own mid-term target of £2.25p


If NXR achieved FY18’s earnings estimate of 30.1p (and this seems highly likely on this years performance) and moved back to its three-year-average PER of 7.5 this gives an inferred price target of £2.25. Further, if it remains on track to produce revenues of £420m by EOY 2018, and can maintain its Operating margin of 7%, it could bring home PTP of £29.4m or 37p earnings, translating to £2.77 share price based on a three year average PER.


This could be further notched to the upside by stripping out cash (£17m)

The shares have been creeping up since April this year, and previously reached £2.25p in 06/15. NXR has been a notoriously boring and ‘slow’ company, and each share price rise has relented as stale holders have scaled down and sold their positions. That said, it is quite a thinly-traded stock, with an EMS of only 1,500 shares, so £2.5k roughly is all your quote is good for.


I think the increasing earnings opportunities from the bolt-ons, the stable and steady sales growth and profit margins and its small market cap all collude to offer an increasing chance of NXR shares breaking out and heading back to previous highs.

I note significant buying from the BoD with CEO spending £405k this month and major stake increases from Canaccord (9.65m held) and Hambro Capital Management (6.86m held). NXR are also held by Artemis – the same Artemis that have been stake building in RBG group. They seem adept at spotting undervalued small cap stocks See the recently rejected Stonegate offer, and Artemis' stake increases, esp since the offer was rejected).


I am long of this stock, and whilst holding I reap 4.1% dividend, covered 3.8 times. This stock is for those who are happy to play the waiting game for an eventual shift in focus once acquisition earnings kick-in, or a potential take out with the company trading at less than 10x EBIT.

These are my thoughts, happy for any sensible and informed dialog.


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Guest oilfxpro

Good post 


Nice to see a change from all those who sing useless technical analysis on forums, but can't trade .Only thing to bear in mind is the Indexes dropping short term can trigger a fall in all stocks, but this is unlikely to happen.

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Hi Oilfxpro


thanks for reading it. I also use technicals but like to ensure there is an underlying fundamental argument first, then then can use charts to time my buy an improve the pricing I obtain. However too much talk of indicators alone makes for very bland reading and I find it marginally unconvincing. Obviously on some asset classes like FX it is imperative.



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another quickie here, just to prove I have not abandoned(!)


NXR is due to provide its next update Prelims in June -13th IIRC.



The price seems to be consolidating ahead of this. Anticipating good news to push higher, or no doubt if disappointment creeps in it could fall back.


Interestingly I type this note from a large international hotel group, and noticed the other week that the showers they are fitted out with are a brand that is now owned by NXR, Merlyn!




Ownership of this brand could have a serious impact to the underlying figures now Merlyn is under NXR ownership and stewardship.


Don't expect much over the next month or two, just noise, but I have annoted the chart to show the possible inflexion point. And it looks as though this will be news driven.



Thoughts, questions?


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11 Oct TU was inline.



Clearly a boring co, so no excitement here, but I continue to hold. Yield 4%+, PE less than 7, "Group revenue for the first half is expected to be approximately £162.5m (2017: £145.0m), 12.1% higher than the prior year on a reported basis,"


growth coming from acquisitions but the strategy is cross-selling so happy wit The attempts to break out earlier have failed but who knows in the short term. Continue to hold :)

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interesting on this one. Just having a look at their core business.

what are your thoughts on the argument for a bit of diversification? obviously business have their core areas they work in, but with so many sub companies all relating to showers and bathrooms (more of a holding company it seems) I wonder if there is scope to branch out... ?

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Yes its a fairly humdrum company and I suppose diversification could help, or indeed it could fit as part of a portfolio for a wider group.  I definitely think it is a safe bet, albeit boring, but should be fine over time. And pays a decent dividend in the meantime. Perfect for a SIPP or somewhere for a long term hold, imo.

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  • 1 year later...

dear all,

it's been a while. We are now in new highs territory. And the buys are flooding in. Today reached £3 and that target will likely be breached in the next few days, as new highs is often a buying criteria/strategy. An 18,000 share trade for example was recorded today at 16:38.

I have been buying on the rise. And the company is still modestly rated. Which, if strategy continues to execute as planned, bodes well.





Screenshot 2020-01-23 at 19.16.45.png

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