Stocks are floored, but keep an eye on carpet firm as it plans to roll out growth

THE shares of flooring group Victoria were £8.35 in November 2017. On Friday, they closed at £4.60. Yet the business has grown substantially since then.

The company recently unveiled half-year figures to September, showing a 44 per cent increase in sales to £273 million and an 82 per cent increase in underlying profit to £28million. Brokers predict further strong results for the full year, with sales of £600million and profits of more than £66 million.

The company came a cropper in October, when it tried to raise money in the bond market and admitted that profit margins were growing less rapidly than chairman Geoff Wilding had previously indicated. The shares fell almost 40 per cent in less than a week and the bond issue was pulled.

Wilding has been trying to reassure the market ever since and the interim figures gave him the chance to show in numbers that the company is financially robust. He also bought a million shares in Victoria, spending almost £5million to underline his faith in the business. Two other board directors also bought shares, dipping into their own pockets to do so.

So who is right, Wilding and his colleagues or the market?

There is little doubt that Victoria is doing a lot of good things. It is gaining market share, driving down costs and moving into fancy tiles to complement the core carpet business. The group has also launched a value range, to broaden its appeal and sales have responded well. Yet the shares continue to be pummelled, as investors fret about economic conditions and Wilding’s

MIDAS VERDICT: Midas first recommended Victoria shares in 2016, when they were the equivalent of £2.75. In November last year, we suggested investors reduce their holdings. The stock had probably risen too far too fast. Now it has gone too far the other way. Sceptics remain to be convinced but it is worth keeping a close eye on the shares, as the underlying business is making solid progress.