Are Renishaw plc, AFC Energy plc And Mitie Group PLC Worth Buying After Today’s Results?

Should you pile into these 3 stocks right now? Renishaw plc (LON: RSW), AFC Energy plc (LON: AFC) and Mitie Group PLC (LON: MTO).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in engineering company Renishaw (LSE: RSW) have fallen by over 10% today after it released a profit warning. It now expects sales for the full year to be in the range of £420m to £440m, with pre-tax profit due to be between £67m and £83m. Although Renishaw had already made clear that the current year would see a fall in revenue versus last year due to the lack of large orders from the Far East, today’s update indicates that operating conditions are much more challenging than had previously been anticipated.

While this is disappointing, Renishaw’s track record of profitability has been relatively volatile. In other words, it’s not an especially stable company, so ups and downs regarding its bottom line are perhaps to be expected. However, with its shares trading on a hefty premium to the wider market, they could come under further pressure in the near term. For example, even after today’s fall Renishaw trades on a price-to-earnings (P/E) ratio of around 18, which indicates that it may be prudent to await a lower share price before buying-in.

Not so Mitie?

Also reporting disappointing news today was support services company Mitie (LSE: MTO). Its shares have fallen by around 9% after it stated that the company has seen revenue shortfalls in the second half of the financial year, as some work has been either delayed or cancelled as a result of increased economic pressures and uncertainty. This means that revenue will be below previous guidance, but with Mitie having effectively managed its cost base and focused on maintaining margins, it expects profitability for the full year to be within the current range of expectations.

Clearly, investors are somewhat nervous regarding the scope for further pressure on the company’s top line. As such, Mitie now trades on a P/E ratio of just 9.2, which indicates that it could be due for an upward rerating. And with the company forecast to post 6% earnings growth in the next financial year, and 7% the year after, now could be an excellent time to buy Mitie for the long term. That’s especially the case since it has a flexible and relatively resilient business model.

Power pack

Meanwhile, alkaline fuel cell specialist AFC Energy (LSE: AFC) has today released its full-year results, with its shares rising by up to 6% as a result. 2015 was a positive year for the company, with it achieving a number of key milestones such as the successful testing of 25, 51 and complete 101 fuel cell stacks, plus the completion of Milestone 10 and the POWER-UP programme.

Looking ahead, AFC Energy appears to have considerable potential to deliver improved share price performance this year. It ‘s focused on the delivery of international contracts for the deployment of its fuel cell system, while also implementing improvements to further enhance the operability of the fuel cell system. And with demand for cleaner energy increasing across the globe, interest in working with AFC Energy could be relatively high. As such, and while it remains a high-risk play, AFC Energy could be worth buying for the long term.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of AFC Energy. The Motley Fool UK has recommended Renishaw. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

Is the S&P 500 going to 10,000 by 2030? This expert thinks so

One stock market strategist sees animal spirits taking hold and driving the S&P 500 index even higher by the end…

Read more »