Stock of the day 18/06/2015 – Telecom Plus PLC

It’s been a rocky road for Telecom Plus in the past two years, with the utility company not being too useful to investors; it announces its full year 2014 earnings release on Tuesday 23rd June.

The company’s steady declines began way back in March 2014; after opening last year at £17.60 towards the end of March Telecom Plus was trading at £18.56. Flash-forward to July 2014 and the stock had fallen to £11.80. A slight recovery in the second half of 2014 saw it enter 2015 at £12.69, but since then much of the same pattern has returned; a low of £9.70 at the end of January appeared to be clawed back by the middle of February, but a resumption of the company’s declines now sees Telecom Plus at a current trading price of £7.97 (18/06/2015, IT-Finance.com), just above the £7.29 intraday low it hit on April 16th.


(Source: IT-Finance.com 18/06/2015)

Its most recent precipitous fall came on the aforementioned April 16th; the announcement that Telecom Plus had discovered an £11 million black hole in its accounts, with important, and negative, ramifications for its full year results sent the stock tumbling by nearly 20% on that day in April alone. Whilst the stock has seen some marginal growth since then that profit warning in April compounded a tough 13 month period, and saw the company cut its full year pre-tax profit guidance from £63 million to £53 million. An improvement on the previous year of around 17%, but still 16% less than what investors were expecting.

In terms of less negative news, Telecom Plus introduced a new two-year tariff in March, that is part-funded by nPower, in order hold off rivals like Centrica and SSE, whilst has continued to reward its loyal customer base in order to gain publicity through word of mouth rather than expensive marketing means. Of course, for all this positive business investors will be most interested in the progress of Telecom Plus’ new auditing team, and whether any more unpleasant surprises have been discovered.

Thursday’s stock news:

Premier Farnell took a tumble this morning after the tech specialist warned that its half year operation profits would be lower than expectation due to restructuring costs. Of course, investors weren’t too happy about this news, even with the sweetener of a 5.4% sales rise, and combined with the added downer of a 1.2% fall in gross margins for the first quarter the stock fell by around 7.7% to a 3 and a half month low of £1.76.

It was a disappointing morning for Poundland; despite an 11.9% increase in sales to a personal record of £1.12 billion, a warning that its first half results for the current fiscal year will be ‘relatively subdued’ has taken the shine of that billion pound best, pushing the stock 3% lower with it at one point hitting a 2015 low of £2.92.