Following a dramatic slide in the final quarter of 2018, one that saw the FTSE 250 firm fall from £7.55 at the start of October to 20-month nadir of £5.09 at the end of December, the Electrocomponents share price has managed a mild rebound in 2019.
February’s trading statement – more on that below – had taken it to £5.98 for the first time in around 3 months, only for the stock to pull back in the subsequent weeks. Electrocomponents PLC shares now sit at a current trading price of £5.57 (Spreadex, 29/03/2019).
Though February’s aforementioned update was solid it did mark a slowdown from the company’s first half performance. In both Q1 and Q2 Electrocomponents posted like-for-like growth of 10%; in comparison, for the 4 months to January 31st covered in its most recent statement, its comparable sales came in at 6%.
The most dramatic drop-off was in its emerging markets division. From a 10% rise in the first quarter, to a 5% increase in Q2, the region was flat over the 4 month reporting period, with Electrocomponents blaming lower Raspberry Pi sales.
Nevertheless, these results saw the company ‘outperform the market’, with CEO Lindsley Ruth confident in its ‘ability to drive share gains irrespective of the market backdrop’. It is also on track to deliver £4 million in savings by the end of the financial year.
As for Thursday’s trading update, investors will want to hear that is set to deliver the 10% rise in full year revenue to £1.88 billion, and 16% surge in adjusted pre-tax profit to £210.2 million forecasts by analysts. If they are to do so, then a further like-for-like slowdown in the rest of H2 needs to have been avoided.
Electrocomponents PLC shares have a consensus rating of ‘Hold’ alongside an average target price of £7.22
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