Its been tough going forinvestors in car retailerMotorpoint (LSE:MOTR) and identity data intelligence specialistGB Group (LSE: GBG). The formers share price has declined by 38% since it entered the market back in mid-May. Shares in the latter are down by a third in just two months. With both companies releasing interim results this morning, willtoday mark the start of a turnaround or does more pain lie ahead?
Losing its identity?
BeforeSeptember, shares in GB Group wereon an almost relentless rise upwards. However, this climb came to an abrupt halt whenthe company warned that the roll-out ofthe GOV.UK Verify projectacross central Government departments was proceeding slower than intended. Factor in the impending departure of its long-standing CEO and many investors headed for the exits.
Todays interim results from the 311m cap were encouraging, however.Revenue rose 16% to 37.5 million and adjusted operating profitsincreased by 15% to 5.2 million. Positively, the latter figure was slightly ahead of the 5.0 million estimate set in the companys last trading update in October. Thanks to its acquisition-focused strategy, GB Group also expects to see increased growth in the second half of viagra sildenafil 100mg side effects the year.
Any negatives? Profit after tax came in at 1.2 million compared to 2.3m over the same period in 2015.Furthermore, net debt now stands at 4m compared sildenafil tablet india to the companys net cash position of 1.2m in the previous year due to the need to finance recent acquisitions and pay dividends. Nevertheless, the business expects cash balanceswill return to surplus at year end.
On a forecast price-to-earnings (P/E) ratio of 24, shares in GB Group arestill undeniably expensive, even after the fall since September. However, theres a lot to like about this company. Its best-in-class products and growing revenuescombined with the increased need for identity fraud protection shouldsee its share price recover significantly over the medium term, in my opinion.
Broken down?
Results from Motorpoint couldnt be more different. Although revenue increased by 11.5% to 408.9m, operating profits before exceptional items (such as costs relating to the companys recent IPO) were down a disconcerting32% to 7m compared to results in first half of the year. Once these costs are factored in, Motorpoints profits before tax slumped to 2.4m, down from 10.2m in the first half of the year. Although the company did announce a significant increase in repeat customers and a maiden interim dividend, Im not sure this will be enough to cushion the blow for some investors.
That said, on a forward price-to-earnings ratio of 11for 2017, shares in the Derby-based business are now looking fairly cheap. Dividends also look likely to rise quickly, with a jump of 77% to 5.5p per share predicted for 2018. The companys 39m net debt isnt great but Motorpoint does have almost 12 cash on its books.
So, is Motorpoint a decent contrarian bet? Not for me. Despite the cialis 15 mg positives mentioned above, there can be no denying that the company operates in a highly competitive industry that is also highly susceptible to any Brexit-related anxiety.In contrast, international revenues now represent 31% of GB Groups turnover following a number of global deals.With the companys products and services now installed in 70 countries around the world, its this level of geographical diversification that makes GB Group afar saferchoice.
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Paul Summers has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe https://sildenafilcitrate-100mg-rx.com/ that considering a diverse range of insights makes us better investors.
