Homeserve plc (LON: HSV) (LSE: HSV.L) has released a trading update for the period 1 April to 15 July today. It coincides with Homeserve’s AGM which also takes place today and shows that the international home emergency business is trading in-line with management expectations.
Homeserve expects to deliver good growth in the year to 31 March 2017, with trading being weighted towards H2 as usual. This reflects the seasonality of its marketing activity and its associated renewals profile.
In the US part of the business, Homeserve continues to build its prospects pipeline. The acquisition of Utility Service Partners was completed on 1 July and this adds 400k customers to bring Homeserve’s total US customer base to 2.7 million.
In the UK, Homeserve is performing as expected. An affinity partnership with Dee Valley Water was signed in July, with Dee Valley being a water services provider in North East Wales and North West Cheshire.
Homeserve’s other operations in France, Spain and Italy continue to perform in-line with management expectations.
Since the start of the year, Homeserve’s share price has risen by 29% despite today’s 2% fall. This is considerably higher than the performance of a number of its support services sector peers such as Wolseley plc (LON: WOL), G4S plc (LON: GFS) and Travis Perkins plc (LON: TP). For instance, Wolseley is up by 10%, while G4s has fallen by 20% and Travis Perkins has slumped by 23% in 2016.
Homeserve has a P/E of 22 and even though growth in EPS is forecast by the market in each of the next two fiscal years, that figure looks high in my view. Although its international operations should benefit from a weaker pound, I think that it may be fully valued.
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The author does not own shares in Homeserve, Wolseley, G4S or Travis Perkins at the time of writing.