Metal Scoop || Another quarter is surprisingly good

Holdings data in Scoop stock

According to FUNDER website data,
90 mutual funds hold NIS 56.27 million in Scope shares

Funds that hold significant holdings in the stock – for the full list of holdings

The following is a change in the holdings of mutual funds in the Scoop share according to FUNDER-MVF data

Another good quarter, showing improvement in sales and profitability: As the company is engaged in a field that is clearly related to economic activity in the economy, the company experienced a decline in its results in 2020, especially in the first half of the year. The fourth quarter, last year, reflected sales growth of about 8.5%, mainly due to the company’s activity in the US and Korea, which grew by about 9% in the quarter and the company’s activity in Israel, which grew by about 11% in the quarter.

The company’s activities in Europe It recorded a decrease in sales of about 1.5% in the quarter, the lowest erosion rate compared to previous quarters. At the annual level, the company grew by 3.6%, mainly due to sharp declines in activity in the first half of the year, following the outbreak of the corona virus and the comprehensive closure policy, which led to a decline in economic activity and tightening credit conditions.

Despite the erosion in sales, the company maintained its gross profit margins, with profitability in the second half of the year being higher than in the first half. The company also showed an improvement in profit and operating profitability in the quarter compared to the corresponding quarter and the previous quarter, even though the company, throughout the period, did not outsource employees, even during closure periods, in order to retain and retain its veteran and experienced employees.

We assume that with the gradual exit from the crisis, at a global level, and the recovery in economic activity, we will continue to see a recovery in the company’s results, but at the same time the corona is still with us.

Future potential in the company’s activity in the US market: Scope’s operations in recent years have been based in three geographical areas. While the company’s operations in Israel and Europe continue to suffer from a lack of significant growth and a very challenging competitive environment, in the US the company’s operations continue to expand, with a gradual improvement in profitability, and constitute a major growth engine for the coming years.

We estimate that given the company’s quality management and the establishment of another logistics center on the US West Coast, which ended earlier this year, further expansion in this market is expected. Of course, as in the rest of the world, the US’s response to the corona crisis is affecting the economy. Seen on the horizon, it is difficult to estimate when economic activity will return to the series.

In our opinion, the company is expected to continue to present a high dividend yield: Although the company does not have a declared dividend policy, based on the past, it distributes a significant portion of its current profits as a dividend, all while maintaining cash levels that will allow financial flexibility, even during challenging periods.

The Bottom Line: Scoop is a long-standing company, which operates in the field and in a very competitive environment, but manages to grow and improve profitability thanks to quality management and a unique business model. The corona crisis did not miss the company and hurt its results throughout the year, but at the same time, the recovery of the world economies, according to estimates, as early as 2021, is expected to lead to growth in activity, especially in the US market, while improving overall profitability.

We are updating the investment recommendation in its Company-to-Buy share, at a target price of NIS 93 per share