Today I am running the rule over three midweek movers.
Panic at WANdisco
Information technology play WANdisco (LSE: WAND) shocked the market in Wednesday trading following the release of a disappointing trading update, and the stock was last seen dealing 29% lower on the day.
WANdisco advised that revenues in 2015 are likely to have fallen below analysts’ expectations due to “new sales bookings continuing to show variability.” Although the Sheffield firm advised that deferred revenues from previous bookings mitigated these problems, variability in new contract wins remains a headache for the firm.
On the plus side, WANdisco advised that marketing and co-selling activity with industry giants like Amazon, IBM and Oracle picked up between July and December. And behind the scenes, massive cost-cutting is helping to mitigate current revenues troubles — indeed, extra measures during the second half should result in a smaller adjusted earnings loss than the City is predicting, WANdisco advised.
The number crunchers expect the business to have experienced losses of 87 US cents per share in 2015, and additional losses — this time by 77 cents — are predicted for the current year. While WANdisco’s products show great promise, unless the firm can get to grips with revenues choppiness I expect investors to continue heading for the exit.
Housebuilder heading higher
Housing star Bellway (LSE: BWY) provided the market with a much-bubblier trading update in midweek trading, a factor that helped drive shares 3% higher from Tuesday’s close.
Bellway advised that housing completions surged 11.6% between August and January, to 4,188 units. And average selling prices rocketed 17% in the period to a record £257,000.
The Newcastle firm noted that “trading conditions continue to be favourable,” fuelling expectations that volumes should surge 10% in the year to July 2016. Bellway’s order book currently stands at a robust 4,434 homes, up from 4,213 homes last year, the company added.
The City expects Bellway to enjoy a 17% earnings advance for 2016, leaving the business dealing on an ultra-cheap P/E rating of just 9.9 times. And Bellway’s ultra-progressive dividend policy is expected to throw up a decent 87.8p per share payout, yielding a chunky 3.4%. I fully expect terrific profits growth to keep powering dividends in the years ahead.
Commodities play still crashing
Diversified resources giant Glencore (LSE: GLEN) has failed to benefit from the relief rally currently washing over the FTSE indices in Wednesday trading, with an extra 3% decline pushing it to levels not visited since last week.
And I expect Glencore to re-visit the troughs of last autumn, around 68p per share, as there are no signs of improving supply/demand dynamics in any of its key commodity markets. Data from China continues to disappoint, while other major material producers remain reluctant to follow Glencore’s lead and cut production across chronically-oversupplied markets like copper and coal.
The City expects Glencore to recover from a predicted 63% earnings slump in 2015 — the third dip on the trot if realised — with a 19% rise in the current period. I cannot see such a situation arising, despite the firm’s ambitious self-help measures, thanks to the enduring down trend in commodity values.
And with a prospective P/E multiple of 14.8 times failing to factor in Glencore’s high risk profile, I reckon the stock has much more ground to concede, particularly in an environment of intensifying market jitteriness.
