Six months ago, I wrote (http://is.gd/hWropz) that whilst BLNX was a Magic Formula stock, it should be avoided: ” despite the PE of 7, this one’s going down. Avoid.”
Six months is, perhaps, too short a time to determine if any theory is good, but I’m pleased to see that it at looks like I was on the right lines. Its shares are only up 1.7% over size months, as opposed to 10.8% for the Footsie.
Paul Scott, on Stockopedia, saw both positive and negatives, but seemed heavily weighted torwards negatives. Edmund Shing was bullish. I respect both posters highly.
For my money, though, I thought there were a number of red flags. It’s an AIM company, all the directors had foreign-sounding names, returns on capital were low, lots of stock was issued with little value creation for shareholders, and the company seemed uncessarily awash with cash. Also, supposedly great growth companies should not trading on single-digit PE ratios. It is ground for suspicion.
I notice that TTM figures reported on Stockopedia now show BLNX in loss. So that cheap PE turned out to be illusory.
I see that on April 16 BLNX completed its acquisition of All Media Network. The market reacted very positively. I remain unconvinced. Not all acquisitions add value. Most probably do not.
My opinion: you may make money on this stock, you may not. In my mind, though, it’s uninvestable.