Yesterday’s trading update was positive, with the key takeaway that earnings are tracking ahead of market expectations.

In our book, this is a very cheap stock, and one we own in our direct equity portfolios.

Given that estimates for FY21 are set at $41m, vs $43m achieved YTD, GEM do seem set for a comfortable beat. Mind you, on small companies, and for those that offer a formula to a number, mapping it to consensus is somewhat hit and miss.

The share price reaction, positive on the day, does help cement the idea that things are tracking above consensus.

Minimal embedded expectations for earning growth, commensurately easy hurdles to generate a “market like” rate of return….


and concomitantly low valuations…


…make for an attractive investment proposition.

The underlying factor thematic is essentially a COVID reopening play, as more people return to work, and put the kids back into daycare, which bolsters occupancy…

and Value (as a factor premia).

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