Half-year results from RBG (RBGP:87p), a professional services group that encompasses one of London’s mid-tier law firms (Rosenblatt and Memery Crystal), litigation funding arm LionFish and corporate finance boutique Convex Capital, highlight a glaring valuation anomaly with peers.
Despite the directors reiterating guidance in line with Singer Markets’ expectations of 21 per cent growth in annual pre-tax profit and earnings per share (EPS) to £12.9mn and 10.8p, respectively, the shares trade on a forward price/earnings (PE) ratio of 8, a 45 per cent discount to sector peers. Moreover, analysts expect a full-year payout per share of 5.9p, which underpins a 6.8 per cent prospective dividend yield. Having delivered free cash flow (FCF) of £3.1mn (3.2p a share) in the first half, analysts expect RBG to report FCF of £8.3mn in the second half to help pay down net debt of £17.3mn.
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