I think the next trigger could be the dividend. Last year's dividend cover was 1.7, which indicates there is some margin that would allow the dividend to be maintained, even with a lower final profit figure. A dividend cut could be the final straw for many investors.
We are currently at about the same level as after the September Trading Update, which is disappointing having now lost all of the interim recovery. What I did notice is that the traded volume was /is considerably higher than the three previous SP slumps, possibly indicating that many have had enough and are jumping ship.
I held in September, and will continue to do so unless the SP dips below 160. However, I do not feel confident enough to add further. I think SFE is now firmly in the "speculative" category.
Getting into very interesting territory as still generating plenty of cash and market share albeit at the cost of margin, but the thing that bothers me probably comes under the heading of reputation..... SFE issued fairly bland and re-assuring info in interviews, with the IC for example and within 4 weeks we had the first profit warning. (Memories coming back of ACRL here). I know many people were let down then. It takes a long time to build trust / a good reputation and it can be destroyed in a second. While they did then advise the outlook was uncertain, today's announcement doesn't give any real roadmap to improvement until 2019 at the earliest.
Well, inertia is occasionally a good thing. I could not find a good reason for rushing in to a disposal, since I was hopeful of a little recovery first, and there were signs that the drop may have been a little exaggerated. Today's move makes me hopeful that may get back to a 220 - 250 range. I have only held this since February, and I usually like to give a share a year to make good. I think I will hold without modification, for a bit longer.
"While many companies have been riding high in 2017, it's been a year to forget for others. A plethora of profit warnings from consumer-facing companies has hit many, none more so than LSE:SFE:Safestyle.The windows and doors specialist was going ..."
Well it seems their advice was correct! Today's 30% + drop seems very harsh, and a little more than I had expected when I read the RNS this morning. Hopefully it is oversold and will retrace some of the initial drop. However, I will have to reassess my holding, and potentially cut my losses on this one.
Loss of faith in management given fairly neutral stance in an interview with IC just a week ago.....
Re-assessing my views. Normally would sell on profit warnings (have a nasty habit of coming in 3s) but did feel this may not be as relevant here as actually increasing market share. Got to be honest not totally sure which way to lean.
Agree, the drop from the peak this year is quite large. However looking at the long-term chart would indicate a return to the 270 level would not be unexpected, especially if the dividend is maintained and the results improve from here.
Profit warning - Half-year trading update forecasting no profit growth for current year is probably the main cause for the drop. Potentially this could drop further over the next couple of days, but if one believes in the long-term potential of the Company then this could pose as a good buying opportunity.
Liberum: more upside to come at Safestyle
Liberum sees upside Safestyle (SFES), which it believes is strengthening its grip on the double-glazing market.
Analyst Charlie Campbell retained his buy recommendation and share price target of 335p after a year-end trading update. The shares closed 11p or 3.5% lower at 299.75p.
Safestyles year-end trading update shows that the group ended 2016 well, with profit before tax expected to grow around 14%. Margins improved in 2016 as it successfully recovered higher costs, he said.
Looking forward, management is confident that it can recover another step-up in input costs due to weak sterling as well as other inflation, so that margins are protected. We have left estimates broadly unchanged.
We still see upside in the shares after their re-rating and highlight the 7% free cash-flow yield, too high for a growing business with strengthening market leadership.
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