Mears Group plc recent growth, strong balance sheet and valuation highly attractive(LON:MER)

Mears Group plc

Mears Group plc (LON:MER) was the subject of conversation when DirectorsTalk caught up with Fund Manager, Gervais Williams. We asked Gervais which companies had impressed him recently in The Diverse Income Trust plc (DIVI) portfolio. 

“Within the DIVI investment trust, we’ve got several companies which are not just succeeding, but hopefully are in a position where they can ultimately thrive. A good example of that might be Mears Group, it’s involved in social housing repairs. It’s had a slower period during COVID as some of the optional stuff hasn’t been done. It’s focussed on the essential stuff, but most particularly, they’ve also grown pretty well. They’re taking market share, they’ve got new customers coming on stream and they’ve been dealing with quite a lot of the extra asylum seekers and that’s driven extra volume for them. The valuation is not very demanding at all, it’s only just over a £225 million market cap company, but it’s still on a valuation of less than 10 times earnings and it’s yielding over 4.5 and it has a nice strong balance sheet. As that company succeeds, it generates more cash, drives dividend growth and that drags up its share price over time.” 

Mears Group recently announced on 15 August 2022, the acquisition of IRT Surveys Limited (IRT) for a total consideration of up to £4.1m. 

Commenting on the acquisition, David Miles, Chief Executive Officer of Mears, said:

“I am delighted to have completed the acquisition of IRT, as we look at ways of providing greater scale to Mears, drive our ESG agenda, and provide a broader range of services to new and existing clients.  This deal is completely aligned with our strategy, utilising innovation and technology to drive positive change in the sphere of carbon reduction. We are excited to welcome IRT and its employees into the Group.”

Mears Group plc is a housing and social care provider. It repairs and maintains over 700,000 social homes across the UK.

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