By Steve Moore | Tuesday 6 June 2017
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.
Shares in provider of digital TV and cloud products and services to network operators, Amino Technologies (AMO) have recovered strongly from an October 2015 profit warning, to recently above 200p. However, they are currently sliding back below this level on the back of a “Trading Update” announcement.
This includes that six months ended 31st May trading was at record levels, including circa 21% revenue growth, “strong” margins and “positively impacted by the timing of delivery of larger orders”-net cash of £13.1 million. So why the current share price decline?
Well, it is also noted that at constant currency the revenue growth reduces to around 5%, that the “record levels” trading is only “in line with management's expectations” and then later in the announcement, on margins, that “we anticipate that they will be lower in the second half of the year as the product mix shifts towards new product lines. As is typical with the launch of new products these will be lower margin, optimising over time as scale is reached”.
The company though considers “expectations for the full year remain unchanged”, with broker to it, finnCap, looking for full-year earnings per share of 13.7p and a dividend per share of 6.7p. These compare to 13.5p and 6.1p for the prior year and it will be interesting to see how they compare to the half year results scheduled for 11th July.
However, a more than 200p share price, giving a market cap of circa £145 million, looks to demand decent growth, not margin retreat. Thus, while there are attractions such as the cash and prospective dividend, the stock for now just remains on the watchlist.
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