Brammer(LSE: BRAM),Rentokil Initial(LSE: RTO)andComputacenter(LSE: CCC)are all fallingtoday, although each company is heading lower for a different reason. Heres what you need to know.
Profit warning
Brammer is one of the markets biggest fallers today. The companys shares have fallen around 12% at time of writing, after the company issued a profit warning on the back of weaker than expected trading in the UK and Europe.
Indeed, during thefour months to the end of October, Brammers UK sales per working day dropped 3.1%, as several key customers reduced their business with the company in a bid to lower costs.
Still, during the period, at constant currency,total group sales grew by 15.5%, with sales up nearly 15% in both France and Spain and by nearly 10% in Germany.
So, despite a small set-back Brammers sales are still expanding and for this growth investors are willing to pay a premium. At present levels the company trades at a forward P/E of 14.5, which may be too rich for some investors. City analysts only expect the companys earnings to grow by 5% this year.
Disappointing update
Like Brammer, Rentokil also issued a trading update today. However, Rentokils trading update was relatively upbeat.
For example, during thethree months to the end of September the companys revenue ticked higher by 3.3%. Pre-tax profit increased by 16.7% during the period as a number of small acquisitions across Europe helped boost profitability.
Unfortunately, the companys outlook disappointed investors as management warned that:
we expect Q4 operating performance to be in line with Q3
It seems as if the group is unlikely to report any growth during the fourth quarter.
But like Brammer, with growth slowing Rentokil looks expensive at present levels. In particular, City analysts expect the companys earnings per shareto contract by 4% this year, although at present levels, the company trades at a P/E of 15.1, a multiple usuallyassigned to a high growth company.
No news
Finally, Computacenter is falling today, although there has been little in the way of news to fuel declines.
Computacenters growth has been impressive over the past five years with the company growing earnings by more than 50% since 2009. However, the companys growth has started to stagnate this year, as revealed within the groups interim management statement for the four months to October.
During the quarter, revenue declined 3% at constant currency. Management still expects the company to achieve to achieve 7% earnings per share growth for the full-year.
Nevertheless, just like Brammer and Rentokil, Computacenter appears expensive at present levels compared to the companys projected growth. At present, Computacenter trades at a forward P/E of 13.1, which means that the shares are trading at a PEG ratio of around 2.
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Rupert Hargreaves 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 that considering a diverse range of insights makes us better investors.
