Quote for the day -
"For if the TRUMPet give an uncertain sound who shall prepare himself to the battle?"
(1 Cor 14:8)
A few more bumps along this road, I guess. |
A single trade at the wrong price 1st thing.. |
Was It really up 23 percent? |
What the!!! |
Not surprising that the share is well up this morning.
Revenue nearly 5% over the concensus forecast, record 2H figures, increased dividend and a healthy order backlog to work into for the remainder of 2025. |
Final results: |
BOD not disclosing price sensitive information?
15% up in 48hrs without any broker upgrade and in a bear market! |
Yes but usually a sign that things are going well in recent trading. I am hoping that their US business continues to flourish. |
It is odd that it's perked up like this given the results are almost two weeks away. Then again, who can understand the thought processes of Mr Market. |
Volume is high.
Bid coming? |
UP ON NO VOLUME. MIGHT BE A GOOD FORERUNNER OF RESULTS IN A FORTNIGHT. |
M&A target? |
A good update. Fears allayed, normal service resumed. |
Such events are bound to lead to speculation. Management of this company has been very good historically, particularly their negotiation of the Covid period which should have earned them some grateful customers.
There are so many possible reasons for his early departure - one could invent a list but it wouldn't have much value.
However, it does sound as if it either took the company by surprise or that it resulted from an event that required immediate action.
The essential thing now is for the company to provide a further update on progress sooner rather than later. Typically it issues a preclose statement in the last week of January. In the circumstances (which may be difficult with a gap at the top) it is rather important that this should not be delayed. |
He started in 2023 - so new to the job and its mechanisms.
May be on something he didn't agree. |
What skeletons did he find is the question |
Why such a drop in last few weeks |
2*
Computacenter issued a Q3 trading update which indicated that performance for the Group during Q3 was broadly in line with the prior year. After a strong start to the quarter, Technology Sourcing volumes in September were below expectations reflecting a more cautious corporate spending environment and slower completion of committed product orders in North America. Overall performance in Germany met expectations with the UK ahead of last year but below management’s expectations for this year. So a pretty decent but mixed bag...
...from WealthOracle
wealthoracle.co.uk/detailed-result-full/CCC/787 |
sr8 - Many thanks for your trouble in crafting a well-reasoned response to my query. I had a feeling that rough times might be ahead especially with changes of administration in UK and US to muddy the water. However the path taken by this company through the covid epidemic was well chosen and I have confidence in the management to negotiate a way through any current difficulties which are presumably shared by many of their competitors. |
 All I would suggest is that the US market is the most competitive and most of their US competition are dollar based US companies so they won't be able to do much if anything on pricing. I think their US business is just that - a US business, input and personnel costs mostly in dollars I assume. It is their supply chain and service capabilities in a complex market that is their strength. That would really only leave further increased efficiency and currency hedging as palliatives to the sterling strength impact on the N American business. I assume they will be hedging to some extent but I think we have to accept that this year's numbers will be hit. To be frank (I don't think many individuals own this stock and I am no expert anyway)I was much more concerned about the shift in corporate IT spend to direct AI integration into software systems. But they went a long way to alleviate my concerns in that presentation on the Capital Markets Day (June 6th 2024). The presentation is on the investor website (esp from 1hr 59 min). When I previously queried the impact of AI on their business this was part of the brief answer they sent
'We recently held a Capital Markets Day which you may find useful - the webcast is available on our website: Capital Markets Day - Computacenter plc. The topic of AI was covered notably in the section on North America and how we are serving hyperscale customers.'
Back to currency. The trading update early July stated 'At current exchange rates we expect a negative c.£7m translation impact on adjusted profit before tax in the full year.' That was after a £2mn negative impact in H1. £/$ was 1.28 on 6/7, now 1.33. I would guess (only guess) that the negative impact for the FY will be closer to £15mn. But they implied that on a constant currency basis revenues/profits would be slightly better than last year. The order book sounds solid, the real problem seems to be in the UK. The US is still (or has been) only about 20/30% of adjusted OP though it has been really growing strongly from a low base. Personally I guess they will declare around £180mn net for the full year. Stockopedia has £193mn against £198mn actual for Dec 23.
In the meantime we (personally) have been here a long time as investors, the company is very well funded and they are prominent in three big markets and growing in the biggest of the three. I think I am prepared to sit it out but not terribly optimistic for the next six months or so. |
The pound is now into the upper half of its trading range against the USD over the past few years. As a company that accounts in USD this will not flatter a conversion into sterling. However I find it difficult to work out the likely effect on margins which will depend on the balance of input/output currencies. One hopes that dollar accounting was chosen because it gives a better match and balance of risk.
Anyone thoughts on the subject? |
a pretty dispiriting interim release. although lower revenues and profits were signalled well in advance I am bound to say that the drop is more severe than I - and I think the market - expected. Of the three main markets the UK seems to have been the worst affected though all saw a drop in revenues. Increased spending on software by clients - largely as they adjust and prepare to AI driven business - has affected demand for upgraded systems. The company is indicating a better H2 on a 'constant currency' basis but the fact is that the pound has been rallying quite strongly and this will crimp dollar and other overseas earnings this year. The stock is again at the bottom of its trading range, brokers will be in the process of downgrading estimates for this year and probably next. This is a serious British tech mechanic which is equally strong in three markets - the UK, Germany and the US - and there is a strong balance sheet. But this appears to be a pretty severe slowdown. |
srichardson8 - Yes, I think the current softness is probably related to expectations of a negative reaction to (well-explained) flatish figures for the first half year.
However, I view this company as being on the picks and shovels side of the AI gold rush. |
this doesn't get a lot of pi comments though it does have a pretty remarkable and consistent profit record to date and doesn't look at all expensive on most counts. That said, it seems to be trading in a range - basically 2200 to 2900 - and has taken a sharp drop today, down more than 3% and once again failing to overcome the £30 'barrier'.
I can offer only two possible reasons.
Firstly a possible reaction to the trading update at Softcat which is in a similar business, of similar size, and reacted badly to a recent statement that expected 2024 ernings were likely to be in line with market expctations (flattish at net level).
Secondly, and perhaps more pertinently given that CCC seems to me to be so much cheaper than Softcat, some concern as to how these VAR companies are going to deal with AI.
Finally I had a quck look at trading. It was mostly very small lot until two trades posted just after the close, one for 95k and another 19k - that first one has a nominal value close to £3mn so will likely be a biggish holder crossing with a broker imo.
JUST A REMINDER (from the May TU) THAT ' Given the first half comparison we have previously highlighted, adjusted profit before tax for the first half is expected to be below the equivalent in 2023'
Interims are due September 9th. |
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