Why Shares In BrainJuicer Group PLC Jumped

BrainJuicer Group PLC (LON: BJU) announces a special dividend on exceptionally strong cash flow.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 21 March, 2014 11:52 am GMT

| More on: SYS1

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Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What: Shares in the market research agency BrainJuicer (LSE: BJU) surged 11% to 472p during early trade after announcing plans to return another £1.5m to shareholders.

Brainjuicer has a £6.2m cash pile and no debt, and has therefore elected to pay out a special dividend of 12p per share. This follows a previous 12p dividend in October.

So what: Brainjuicer is a capital light business and in 2013 spent just £139,000. As such, the firm tends to have strong cash flow, and the amount was particularly high in 2013 (£4.6m).

The firm’s revenue and operating profit have grown at an average annual rate of 21% and 22% respectively. During this period the shares have climbed nearly 400%.

As we’ll see, looking ahead the chief executive is cautiously optimistic.

Now what: BrainJuicer has been a long-time proponent of applying behavioural sciences to improving market research. In 2013 the industry “woke up” to this, according to boss John Kearon, and leaves the firm well positioned to grow in the near term.

Mr Kearon added:

“We have made a promising start to 2014. As always, however, given our limited revenue visibility we cannot predict with any certainty how the year will unfold. What we do know is that the coming years will be exciting.”