Is wand which suspended today after fraud
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Halving their forecast eps leaves them plenty of room to beat the new forecast. Pretty early on in the financial year to have much idea of out-turn so best to be, as Cenkos said, 'very conservative' at this stage. Lots of uncertainty out there but their biggest customer is saying that orders are delayed not cancelled so they have to go with that |
Sickening fall
Hope they don’t warn second and third time |
 The current price only makes sense if you think that 3.6p is representative of this company's future potential earnings. If you think that it's more likely that next year, if it even pans out to be 3.6p, isn't representative of this company's future earnings then it can be ignored as an outlier. The company has been resilient in the face of some challenges in 2022 and Cenkos's ultra-conservatism and Spirent's reference to delays in ordering could just as easily reverse either later in the year as they are hoping (without any evidence for that hope, I hasten to add).
5G is here to stay and whether that translates into softer orders this year that are pushed back into the following year, the tailwinds for this company remain. I see no reason why future earnings cannot recover pretty quickly to a minimum of 5p with the anticipated progress to 7p merely being delayed.
On that basis, 120p is too cheap and the risk/reward looks quite good here. If earnings do recover to 5p for the coming year and forecasts are raised to 6p or so the following year, then a multiple of 25x seems okay to me and a consequent recovery in the price.
Valuing this as if 3.6p is the maximum eps in the future is crazy. |
Calnex Shares Fall on FY 2024 Financial Performance Warning
Shares in Calnex Solutions PLC fell after the company said that market-driven delays are likely to hurt its financial performance in fiscal 2024, with revenue more heavily weighed toward the second half, and that its financial performance will be below that achieved in the year ended March 31. |
...much later breakfasts 😊
apad |
FWIW THE FOOL
Calnex Solutions
Finally, check out Calnex Solutions (LSE: CLX). It provides testing and measurement services to the telecoms industry.
This is an AIM stock I’m very bullish on. In the years ahead, the rollout of 5G networks (and the emergence of new technologies such as self-driving cars) is going to create high demand for test and measurement services that help companies prove that new systems operate effectively and conform to rigorous international standards.
As a leader in this space, Calnex is well positioned for strong growth. It’s worth noting that for the six months to 30 September 2022, revenue was up 38% year on year.
Looking beyond the growth potential here, one thing I like about Calnex is the fact that the company is led by founder Tommy Cook. Research shows that founder-led businesses often turn out to be good long-term investments.
This is another stock that isn’t particularly cheap. Currently, the forward-looking P/E ratio is about 26. The valuation risk doesn’t put me off however. I see huge potential here.
Could Calnex Solutions Plc grow your wealth after 50? |
Indeed,forward PEs died with EBITDA but its difficult to teach an old dog new tricks!Cash flow is my obsession,Warren Buffet inspired.This stock will inevitably be oversold and enjoy a bounce....but will it last. |
Agreed that valuing the company on one year's depressed earnings when the future prospects remain the same would be odd. I will keep some powder dry though in case that's what happens |
I'm not a fan of 'forward multiples' for this type of company.
Three and a half years of revenue buys the whole of CLX.
apad
ps
I was a bit quick buying at 121p this morning. Later breakfasts in future. 😊 |
Yes,i agree.It’s difficult to see how the stock can command a forward multiple of over 30 times that implies a price around a quid tops.One to watch though,well managed tiddlers like this could prove takeover targets in time.
Those well timed director sales reaffirm my faith in closely watching ‘insider’; dealing! |
Posted elsewhere, riv.
"I was hoping/expecting for a CLX markdown and this subsequent response. 5G roll out will be with us for years and increasing in complexity - so more testing. No instant gratification, but cheap for its quality, management and sector.
I came close to trimming my holding (113p Book Cost) but decided to hold back some cash instead (I guess it should've been 'as well'. 😊
I'm expecting something of a rise over the day."
I bought at 121.08 over breakfast 😊
GLA
apad |
Thanks for the comments chaps, appreciated. Getting lucky takes practice!
CLX shareholders were fortunate to have a proxy company like SPT to follow. I was amazed the share price held and then bounced as it did (and was starting to doubt whether it had been correct to sell). Those left in had a wonderful opportunity to take profits before today's warning.
I can see the price dropping to anywhere between 80p-100p given that the forecast for the coming year has been slashed in half to 3.6p EPS (mitigated a little by the forecast £17m cash pile).
As RP19 states, CLX is a very good company, but affected by short-term factors. It had to trade perfectly to justify its premium rating. The negative outlook might perhaps encourage bid interest I suppose, but that's no reason to invest in itself. |
It would appear that 5G is proving to be something of a damp squib and not proving the catalyst for all sorts of new mind boggling applications.We have the macro economic climate concerns but also this nagging worry that 5G is simply going to fall short of expectations. |
Like the company, sector and management but sold my remaining holding today after some sales at higher prices at end of '22/start of '23. 'Very conservative' view noted in the Cenkos Note but revised EPS at 3.6p for '24 still means it is on a pretty lofty rating at £1.25. Watching brief now. (edited dates). |
No position myself but really well played by Rivaldo, CLX Cenkos note today actually references the Spirent January 20th TS that he acted on. |
Spirent, the largest customer for Calnex, have their full year results out today. Whilst referencing "some delays" and "a challenging H1 in 2023" they also state that "We have proactively engaged with our customers and the feedback reiterates their intention to continue to develop and implement their 5G infrastructure, and we therefore expect momentum to improve in the second half of the year. As increasingly sophisticated, complex technologies are deployed to drive faster, more reliable, more secure networks, demand for comprehensive assurance solutions will continue to grow." |
There were some canny director sales in January in the 190s. |
Reminder to self - bad news travels more slowly than good |
Unfortunately there will be more updates like this from companies this year. Not there fault, just a consequence of the macro picture. |
Yep looks like Rivaldo's strategy worked out well here. Could be a decent opportunity to add this morning. |
Ouch! unfortunate warning on 2024 with Cenkos substantially scaling back on forecasts. I guess we will take a bit of a hammering this morning. |
Update expected, no date for it confirmed by company. Now overdue compared to previous two years |
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