#FOOT I’m now bearish

I’m jaded, I admit it. I’ve seen enough wheels fall of the wagon that is AIM  to give newly-floated issues a second chance.

Brokers estimate 2.47p EPS for 2020. That gives is a forward PE of nearly 15. Investors are taking a gamble in the company, and I think that the current price is by far high enough for the risks they’re taking. Personally, this company is a bargepole stock.

Note that the projected EPS is below that for 2016.

I’m taking a look at the operating margins quoted on Stockopedia. Here they are: 2015: 0.6%
2016: 3,4%
2017: 5.8%
2018: 1.1%

They look like rubbish margins to me, and are basically 1/3 that for the specialty retail sector.

Stockopedia also rates the Earnings Manipulation Risk as High. That’s not always a reliable sign; I’m just throwing that out there. I should say, though, that the ROCE for the company was 3% in 2015, 20% for 2016, 124% for 2017, and 4% for 2018. So I wouldn’t put it past them that they’ve been screwing with the numbers.

What’s really convinced me, though, is the RNS put out yesterday that a PDMR bought £5000 worth of shares. These joke purchases after a substantial price fall are decidedly bearish, in my view.

I hear that the CEO is on maternity leave, too. Seeings as the company is circling the toilet at the moment, that’s poor form. And a little whiffy.

And, incidentally, I notice that the auditors are Grant “we’ll sign anything” Thornton.

Qualitatively, I’d say there’s too many red flags to this company. BWTFDIK.

I’ll follow up this company in maybe 6 months or a year’s time to see how it fared.

Stay safe out there.

36.93p

Edit: “… AIM not to give …” changed to “…AIM to give…” Grr. I actually wrote is right the first time, but screwed up in the editing. Sorry about that.

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About mcturra2000

Computer programmer living in Scotland.
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