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Goodwin – a 2:40pm “Interim Management Statement” = intra-day profit disappointment

By Steve Moore | Thursday 15 September 2016

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Following Sepura, the intra-day profit disappointment continued (although to a much lesser degree) with a 2:40pm announcement from engineering company Goodwin (GDWN) – this including notice of a current year first quarter (to 31st July) pre-tax profit down £0.75 million from the corresponding 2015 period, to £3.05 million.

This was despite revenue only down by £0.48 million to £33.01 million and with a “continued lack of capital project release in the energy industry, oil and gas in particular” noted. The company added it “remains confident its products and technology will in the long term produce growth in profitability but the current workload is similar to that seen last year”.

Its last year saw Goodwin generate earnings per share of 122.75p, though 32.83p of earnings per share generated in the quarter to 31st July 2016 is more than 17.5% lower than in the corresponding 2015 quarter.

The company’s year-end balance sheet showed current assets over total liabilities of £8.38 million, with there then also more than £62.5 million of property, plant and equipment. This compares to a current market of £142.6 million – with the shares having responded currently 3.7% lower, at 1980p.

The announcement reinforces a recent update from oilfield services technology and equipment supplier, Enteq Upstream – which noted confidence continuing to be undermined by uncertainty of oil and gas prices and “significant lag between initial enquiry and eventual order due to cash flows throughout the industry being constrained”. As concluded there, this sees me remain cautious in this area at present and thus, for now, this is another I currently avoid.

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