Financial Trading Blog
Stock of the day 07/12/2015 – Hornby PLC
After a disappointing end to 2014 Hornby started 2015 at £0.77, chugging along at around this level until the middle of February, when the announcement of a 7% jump in year-on-year group sales helped send the stock above £0.80 for the first time since December.
A surge at the end of March and start of April then lifted Hornby above £0.90, with news at the start of May that the company was to post its first annual profit (of £1.5 million) for 3 years cementing the stock’s growth. Hornby’s investors then got a huge dose of nostalgia in the middle of May, with the model maker announcing it was re-launching its Thomas the Tank Engine range to celebrate the 70th anniversary of the smiling steam locomotive. This fed coal into the belly of the stock’s engine, leaving it to cross the £1 mark for the first time since 2012.
(Source: IT-Finance.com 07/12/2015)
However Hornby began to trickle away from its £1.07 peak as May turned into June, before the stock lost all of its Thomas the Tank Engine good-will with its full year results. Falling over 6% on June 18th, Hornby revealed that it was switching to the AIM stock market in order to cut costs and preserve its position as a public company despite an as-expected 13% rise in sales to £58.1 million.
After loitering below £1 for the rest of June and first half of July Hornby resumed its climb as it announced it had struck a deal with Doddle that would let customers pick up their orders at local railway stations, culminating in its aforementioned 3 and a half year high of £1.09 at the end of August.
Yet Black Monday soon send Hornby in the wrong direction before a September profit warning, with disruptions caused by a new computer system and problems supplying model railways to Europe damaging first half revenue, sending the stock to a 6 month low of £0.90 towards the end of October.
A recovery at the start of November appeared to put the stock back on track to reach £1 only for another profit warning in the middle of the month, with an expected £2 million full year loss on the horizon against analysts’ expected £1.7 million pre-tax profit, ending Hornby’s brief resurgence.
The model train, Airfix kit and Corgi car producer sits at a current trading price of £0.95 (IT-Finance.com, 07/12/2015).
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