Good morning! Very quiet for results today, and the FTSE 100 is set to open roughly flat, at 6,524. Toy company Character (LON:CCT) has issued a trading update this morning. It looks pretty good. They indicate that trading in H2 has been "satisfactory" (they have a 31 August year end), and results will be in line with market expectations. I can't find any current market forecasts, but a little while back they were only for around breakeven, which looks consistent with last year's H2 profit (assuming a similar profit this year), and this year's H1 loss offsetting each other.

Checking our archive here, here is the link for my comments on Character's H1 profit warning on 31 Jan 2013. What is interesting, is that they said then that a strong H2 was anticipated, to reverse the H1 loss, and that is exactly what has since happened. So it appears that this is a company whose outlook statements can be relied upon, in the recent past anyway.

I then reported on their interims on 2 May 2013 here, and wasn't impressed with a very poor performance. However one year's poor results are the following year's soft comparatives, and in today's statement CCT give a positive outlook as follows (my bolding):


Although we are only at the start of the new financial year, we are encouraged to report that the Group's forecasted sales remain on track for the 2013 calendar year, which should lead to a substantially better result for the 2014 financial year.


Remember that they have reasonably good visibility, from trade shows, and forward orders from retailers. So it looks like this could be a good time to buy their shares, providing one accepts the high risk of profit warnings. This is because, being subject to the vagaries of fashion amongst children, their products may or may not appeal to the target market from one year to the next.


At 140p the market cap is £32.3m, and aside from (understandably) two bad years in the aftermath of the credit crunch in 2008 and 2009, either side of that period they have tended to make typically around £6-7m p.a. in profit. So the usual level of profit appears to be c. 20-25p EPS. So if we go for the lower figure, that means…

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