This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Temporary power supplier Aggreko (AGK) is the standout underperformer this morning after a 3% fall in 2016 revenues was eclipsed by a 24% plunge in profits. While lower oil prices hurt it in 2016, especially North America, the challenging year was capped off with some nasty margin contraction.
2016 results may well have been in-line with consensus, a weak GBP/strong USD offering some cushioning, but today’s real kick in the teeth is the unpalatable 2017 outlook. One which can only be described as a profits warning with management forecasting another drop in pre-tax profit despite top-line growth and continued cost savings. Legacy market Argentina continues to hinder with lower volumes and big discounts seen weighing heavily.
This, and a slow start to the year for Power Solutions Utility, casts a shadow over stabilisation in North America following the oil price rebound and expectations for a decent 2017 for both Power Solutions and European/Australian rentals. And while FX moves boosted the P&L, they also worsened net debt.
Having plumbed fresh 2017 lows (911p), the shares are already off their worst levels thanks to some helpful bargain-hunting around the traditionally supportive 100-day moving average (923p). The question now is whether there is enough power in reserve to engineer a bounce?
Mike van Dulken, Head of Research, 7 mar
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
Comments are closed.