National Fittings Limited

🔴 Bear CaseWhat could go wrong?

1. Sales are being booked faster than collected
   Receivables are up 54% against revenue up 6%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
2. The price already assumes success
   The stock trades 46% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
3. Growth barely outpaces inflation
   Revenue compounding at 1.9% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
4. Earnings are hard to forecast
   Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
5. Size brings its own risk
   Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.