Daily Stock Market Report (Fri 25th Sep 2026) - RBN, TND, FNX

Good Morning!

The Xi/Trump summit appears to be going well, with both leaders suggesting a new chapter in their friendship at last night’s state dinner.

Trump said: "We've never gotten along better". Xi urged both sides to explore a "new approach for major countries to get along". Most importantly, the key tariff truce has been extended until 10 January.

Brent fell as traders watch for signs the Strait of Hormuz will reopen. However, global bonds continue to sell off, with the US 5yr holding above 5%:

[Charts: Trading Economics]

And the UK 5-yr is pretty close:

This is not welcome news for anyone coming off cheap mortgage fixes soon, and may be a major dampener on consumer spending.

Overnight market movements:

• The FTSE is up 0.3% at 10,715

• S&P 500 is up 0.1% at 7711

• Brent crude (November) is down 2.0% at $99.05/bbl

• Gold is down 0.1% at $4,271/oz

• Bitcoin is down 0.1% at $84,224

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Spreadsheet accompanying this report: link.

Report is complete.

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Companies Reporting

* Market caps at previous trading day’s close

Mark’s Section

Robinson (LON:RBN)

Down 6% at 120p (£21.4m) - Trading Update - Mark - AMBER/RED =

The last profits warning:

Although Robinson confirms that trading is in line for FY26, that isn’t necessarily good news. When the company released its interim results a month or so ago, it warned, saying:

The Board now expects underlying operating profit* for the 2026 financial year to be between £2.2m and £2.6m. Several pressures affecting the first half are expected to continue for longer than previously anticipated. The conflict in the Middle East has kept polymer, energy and freight costs elevated, and constrained material availability, while recovery through customer pricing remains uncertain.

They didn’t seem to want to give the previous guidance at the time, but their broker Cavendish soon revealed that this meant a 42% cut to FY26 Adj. PBT.

The scale of this miss is visible on the consensus trend:

Cavendish also took 27% out of FY27 numbers at that time, showing there was no easy fix to their woes.

Strangely, the market seems to shrug off such a huge downgrade:

Today’s profits warning:

As many would probably already have guessed from the unscheduled Friday trading update, things just got a lot worse today:

A significant customer contract is scheduled to expire at the end of December 2026 and will now not be renewed. The Group retains a strong and ongoing relationship with the customer and will continue to supply a range of products across its factory network.

Helpfully, they quantify the impact:

The contract generated approximately £3.3 million of annual revenue and £1.0 million of annual contribution to gross profit, and in the absence of any offsetting actions would reduce FY2027 revenue and underlying operating profit* by these amounts.

They say they will try to cut costs to mitigate this loss, but if there was already a lot of fat in the business, they would have used it to offset the previous downgrade. The net impact is:

At this stage, excluding the benefit of any such mitigations, the Board now anticipates that FY2027 profitability will be broadly in line with FY2026.

I can’t see any updated coverage from Cavendish yet, but the impact is pretty clear. Broadly in line means a bit below, so perhaps we are looking at 6.5p EPS for FY27. This is a cut of almost 60% from where we started the year.

Valuation:

One argument for investing here was a strong FY27 recovery. However, recent updates have completely shot that in the foot. With the share price down only 6% to 120p, we have another year where the P/E is in the upper teens. This is the sort of multiple I’d expect from a tech company rapidly growing ARR and repeatedly beating expectations, not a plastic packaging manufacturer repeatedly missing them.

Perhaps what is supporting the price here is the dividend, where family ownership and the ongoing desire for an income means that 6p is forecast for the foreseeable future:

The interim dividend was maintained at the half-year, and they explicitly said they intend to maintain the 6p for the full year. However, net debt rose by £1m in the first six months of 2026, despite the sale of £1.5m of surplus properties.

Net debt increased to £6.4m during the period (31 December 2025: £5.4m). Cash outflows included £2.0m of investment in new plant and machinery (2025: £2.3m), a £0.6m dividend payment (2025: £0.6m) and a £2.1m working capital outflow (2025: £2.8m), partly offset by £1.5m of cash proceeds from completed property disposals. The Middle East crisis has increased input costs and constrained material availability, resulting in significantly higher working-capital requirements.

The other supporting factor is that the company trades at a discount to TBV:

£23.2m of that is PP&E, and the company has flagged further disposals of surplus property.

The sale of two other surplus properties in Chesterfield is agreed for £2.2m subject to contract, and they’ve given an option on Boythorpe Works for £2.85m. Together these would make a hefty reduction in net debt. However, a big question remains: will they actually complete? The market is valuing the consented greenfield land banks of many housebuilders at about 50p in the pound, given the housebuilding market backdrop. In the current environment, will buyers really rush to complete?

The biggest problem is how unproductive the remaining assets are. ROCE has been single-digit for as long as I can remember, and it won’t change significantly even if these surplus property assets are sold. In such circumstances, a company such as this should trade at a discount to net tangible assets, as these simply don’t generate an economic return in their current form.

Mark’s view

It seems crazy to me that the market hasn’t reacted more negatively here. We have now had two warnings that have collectively taken 40%+ out of FY26 EPS estimates, and maybe up to 60% out of FY27 EPS. Yet the market appears to have largely shrugged.

Given the severity of the downgrades, there is now a huge disconnect between the company's earnings and the value the market assigns to the business, making this materially overvalued IMO. For me to consider a manufacturer of single-use plastic packaging, something everyone is trying to reduce their use of, I would want a P/E at most in the mid-single digits, on a debt-free basis. Instead, we have a forward P/E approaching 20 and increasing net debt. Only the fact that they are still profitable and there is a discount to net tangible assets prevents a further reduction in my view. AMBER/RED

Tandem (LON:TND)

Up 8% at 195p (£9.9m) - Interim Results - Mark - AMBER/GREEN =

The market has liked these Interims this morning. These show revenue growing and a return to profitability:

- Group revenue increased 6.7% to £11.9 million (H1 2025: £11.2 million).
- Gross profit increased 15% to £4.0 million (H1 2025: £3.4 million), with gross margin increasing to 33.3% (H1 2025: 30.9%), primarily due to new products, categories and currency fluctuations.
- Adjusted EBITDA profit of £374k (H1 2025: £81k).
- Operating profit before exceptional costs of £220k (H1 2025: loss of £80k).

However, these are still relatively small amounts, so the market may be more buoyed by the strong late summer they have had:

Trading strengthened further post period end, with sales year-to-date to 30 August +9.1% ahead of the prior period.

This perhaps shouldn’t be surprising given the great weather we had, and their product set. Very hot weather wasn’t a panacea for all their categories, though:

Category

In very hot weather, not everyone wants to be doing energetic outdoor activities!

The net result is in-line trading for the full year:

• Trading for the full year remains in line with market expectations.

• The Board’s current intention would, on achievement of full year market expectations, be to declare a dividend in respect of the full year.

Forecasts:

We get an updated note from Cavendish in response, where they say:

We reduce our assumed tax expense for FY26E as Tandem makes use of a deferred tax asset, and we leave all other forecasts unchanged.

The result is a shift to 12.8p EPS, with a 3p dividend.

Valuation:

At the current 195p share price, the forward P/E is around 15, with a 1.5p dividend yield. I can’t help feeling this is pretty punchy for a distributor, where EPS has declined from the previous year. No one is holding this for the yield, either.

Net assets are roughly flat on the FY numbers at £26.1m or £20.1m excluding intangibles, tax assets and a pension scheme “surplus”.

This IAS19 surplus still required them to make £263k of defined benefit pension scheme contributions in this half. The Tanden triennial deficit at year-end, which determines actual cash payments, was around £700k. There is a separate Casket scheme in surplus by a similar amount, but they can’t offset one against the other, nor necessarily access any surplus.

Anyway, they said in the FY25 Annual Report:

The expected contributions in the year ending 31 December 2026 are £532,000 in accordance with the agreed schedule of contributions. The trustees and employer have agreed a schedule of contributions covering the period to September 2028.

Which means there is probably around £1m of cash contributions to me made to the scheme, before hopefully an updated valuation means that no further contributions will be necessary.

The net impact is that the real pro-forma TBV is around £19m. This is still around double the current market cap.

The problem is that these assets are unproductive, with the typical ROCE in low single figures. Clearly, shareholders are betting these assets will quickly become far more productive. Cavendish’s unwillingness to provide a FY27 forecast doesn’t give much confidence in this respect.

Strategy:

In a case like this, the strategy matters a lot. After the high demand for cycling and home products during COVID, they decided to build a large warehouse. But as demand normalised post-COVID, they’ve struggled to use the space effectively. This has driven a number of management changes:

CEO:

• Jim Shears was CEO from August 2020, having been promoted from FD. He left by mutual agreement on 6 May 2022.

• Steve Grant, the chairman, filled in as interim executive chair from April to May 2022.

• Peter Kimberley has been CEO since May 2022. He was promoted from non-executive director.

Chair:

• Steve Grant was chair until the AGM on 17 June 2026, having served six years. He was executive chair from April to June 2022 while the CEO role was vacant.

• Jonathan Crookall was chair from 17 June to about 18 July 2026. He stepped down as chair after roughly a month and left the board on 10 August.

• Mark Taylor was interim chair from about 18 July to 10 August 2026.

• Simon Bragg has been chair since 10 August 2026. He is also the largest shareholder, with about 20%.

Until recently, the strategy was to acquire other businesses to add volume to their warehouse and make it productive. However, their net debt position appears to have prevented them from financing such a strategy, and presumably larger shareholders baulked at providing fresh equity to do so.

With the now largest shareholder taking the Chair role, this comes with a new desire for asset productivity, but without the acquisition focus:

Our priority is therefore clear: to accelerate profitable growth and improve Shareholder returns. Over the coming months, the Board will undertake a review of the Group’s operations, strategic priorities and capital allocation, with a particular focus on the initiatives most capable of driving sustainable sales growth, improving profitability and unlocking the value inherent in the business. We will update Shareholders as this work progresses.

This makes sense. However, it is not clear to me what exactly they can do to change this outlook in the current consumer environment. The risk is that at a 15x forward P/E, the market has already priced this as if they’ve achieved this improvement in the business, whereas in reality, it is still very much a desire rather than a reality.

Mark’s view

Graham rated this AMBER/GREEN recently, as he liked the property backing and clearly believes that it's only a matter of time before these assets are made productive again. I am a little more sceptical. While I recognise the scale of the discount to TBV opens up a lot of opportunities, they have been attempting this turnaround for a couple of years now with little traction. Perhaps Simon Bragg taking the Chairman role, and the size of his holding, means they are finally incentivised to really get on with it. The risk is that the current earnings multiple already prices in a significant recovery, and if it fails to happen, then the asset backing will not make any difference. Still, I can see the appeal for deep-value investors with very long-term investment horizons, so I won’t quibble over Graham’s previous view.

Backlog

Fonix (LON:FNX)

Down 2% at 199p (£198m) - Final Results - Mark - AMBER ↓

Like many similar companies, revenue includes a lot of pass-through, so gross profit matters more to shareholders. Here there is a decent 12.9% rise in trading. However, perhaps a little worryingly, the percentage changes go down as you go through the income statement:

Investors much prefer the opposite and want to see positive operational gearing. Still, the company says that gross profit and adjusted EBITDA were "slightly ahead of market expectations".

This strength is said to continue:

Fonix enters FY27 with real momentum, building on a return to double-digit growth in FY26 gross profit and adjusted EBITDA, ahead of expectations. With Portugal now established, Switzerland live, France advancing, and a sixth market on the horizon, international expansion is fast becoming a genuine growth engine alongside the UK and Ireland. PayFlex, CompsPortal and RichMessaging are all gaining real traction, and increased dividends and buybacks reflect the Board's confidence in sustained, profitable growth ahead.

I'm slightly confused by the accompanying broker update from Cavendish, which says:

After upgrading FY27E and FY28E adjusted EBITDA by +2% at the July trading update, we reiterate FY27E and FY28E adjusted EBITDA growth of +9% and +11%, which reflects gross profit growth of +8% and +11%, and opex growth of +6% and +10%.

So that sounds like the company is trading ahead of its own expectations but not the markets, which already reflect that double-digit growth. Given these results appear to have caused a 12% jump in the share price, presumably because of these exact words, I think some caution is required:

Helpfully, Cavendish gives us their assumptions for opex growth, which this time is forecast to be below gross profit growth.

Valuation:

My other concern is that EBITDA is not a good measure of performance for a company that capitalises intangible spend. We should use EPS as our valuation metric for this sort of business. The forecast EPS growth from Cavendish is far more pedestrian:

• FY25 5.6%
• FY26 7.0%
• FY27 3.6%
• FY28 10.3%

This suggests that fair value should probably be closer to 10x earnings. The current forward P/E of around 18 makes the company look significantly overvalued compared to these growth rates.

However, EPS isn't everything. The company is good at converting EPS to free cash flow, and pays a 5% dividend:

The group maintained a strong underlying cash position of £9.4m at year-end, despite making additional distributions to shareholders during the year, including a £2.4m share buyback. The Board is recommending a final dividend of 6.20p per share, taking the total dividend for the year to 9.30p (FY25: 11.80p per share including the 3.00p special dividend), in line with our progressive policy of distributing at least 75% of adjusted earnings.

This is certainly what I like to see from a company: net cash and excess cash returned to shareholders with a 75% payout ratio, which is particularly impressive. However, I struggle to get excited about a forecast FCF yield from Cavendish of around 6%. And teh presence of a share buyback even at a relatively high multiple makes me wonder if they've drunk their own EBITDA Kool-Aid!

Cavendish comes up with a 300p price target, saying:

We value Fonix at 300p based on 15x FY28E EV/EBITDA or 4% FY28E EFCF yield, and it is currently trading on 12-month forward multiples of 9x EV/EBITDA with +9% EBITDA growth, 7% EFCF yield, and 6% dividend yield.

But again, I disagree with using EBITDA as a valuation metric, and a 4% FCF yield on 2028 numbers is less than UK bond yields. Of course, there is growth which you don't get from bonds, but growth isn't guaranteed.

Growth:

Geographic and service expansion gives them opportunities to accelerate growth beyond current forecasts and perhaps grow into their current valuation. However, a couple of forecast charts from Cavendish also raise some concerns for me:

Mobile payments remains forecast to be the bulk of their gross profits:

As does the UK:

Investors have to be careful not to weigh their own experience too highly, and I may not be their target market, but I don't think I have ever used carrier billing, nor do I know anyone who regularly does. We are spoilt for choice in terms of payment options in the UK, so I wonder whether these payments could plateau or even decline over time. It seems more likely that carrier billing will grow in developing markets with fewer options. Fonix don't appear to operate in these yet.

Mark's view

Having not really looked at the company in any detail before, I expected to see a rapidly growing company that regularly trades ahead of expectations. However, after reading the Cavendish note, I come away questioning both assumptions. This certainly did upgrade slightly in July. However, the broker kept their forecasts unchanged in response to these results. The medium-term EPS growth rate of 6% is ok, but certainly not exceptional, and makes me question if it's worth paying almost 18x forward earnings for such a lacklustre bottom line.

It's hard to be too harsh on a company that generates free cash flow and returns most of it to shareholders as dividends, giving a 5% yield. However, for a company on a growth stock valuation, the EPS performance looks far too pedestrian:

Graham recently rated this AMBER/GREEN. Still, with the share price almost 20% higher, including a 12% jump in response to the ahead/not ahead/ results, I think AMBER is probably closer to where we should be, at least until they can show that they can actually beat EPS expectations and accelerate bottom-line growth.