Oil services company AMFW (Amec Foster Wheeler) released its H1 trading statement today, sending the results down 26%.
There actually looked to be a triple bottom on the charts at 700p, which is often taken as strong support. However, it did not hold. Technical analysis is not perfect.
It shouldn’t be a surprise to many that oil is in the doldrums. I took a look at their finals over on Sharelock, and immediately thought to myself “that looks like a lot of debt”. Sure enough, Stockopedia lists AMFW as an Altman Z-Score candidate.
If only had people had set stop-losses. AMFW reached a high of c 1260p in 2014. If you’d set a 20% stop-loss, you’d be out at c1000p, well above the current price. The price did bounce heavily in early 2015 from c800p to close to 100p, but it petered out.
In some ways, this company reminds me of CHG (Chemring), a company that built itself up, had a lot of debt, but then went nowhere when its markets declined.
There could still be a bounce in AMFW, but it would require more skill than me to make a decent go of it.
A lot depends on where oil prices go, of course. Answers on a postcard on that one, please.
Update 06-Nov-2015: RS6m=-32.2%, putting it in the bottom decile. This is very bearish.