Spirent Communications Share Discussion Threads

[bobsidian] 22/11/2013 11:40

Fair point.

Doldrums being characterised by contract deferrals.

[kiwihope] 22/11/2013 10:44

By market I didn't mean the equity market. I meant the specific market that SPT operates in. The same thing was seen recently with the construction market, which is now recovering and driving up prices of CLLN and the like. Also in the doldrums is the defence market (companies like CHG). Even when indices are near a top there are always some markets that are depressed. I believe SPT is in one of those. At least I hope so and that it is not too company specific.

[bobsidian] 22/11/2013 10:02

The problem is this is not a bad equity market. Rather this is an equity market which is priced for more than perfection.

It can be a bit unnerving to be buying any share when indices are so elevated and vulnerable to correction. All you can see is the best of shares being run higher and higher and beyond their underlying fundamentals.

And then you hear fund managers justifying this practice by commenting on equity markets having the scope to price in not just 12 months forward guidance but as much as 24 months forward guidance. It just smacks of extremes of greed.

All that may be happening with SPT is that it is experiencing a valuation correction to reflect its own commercial realities. And there are a number of shares being sold down to allow scope for the best to be driven higher and higher in various sectors where the sector indices are currently testing their own all time highs.

Scary. But if you try and go short of these markets you can easily find yourself on a losing trade. I look at the S&P500 and just shake my head in disbelief. U.S. markets are just in "La la land" epitomised by the absurdity of the recent Twitter IPO.

[kiwihope] 22/11/2013 08:44

Hi bobsidian,

I think longer term than that. I am quite happy to hold these for 3-4 years if need be, provided I still think the company is worth more than the current share price If they go down another 20% or so I might buy some more (I tend to buy/sell in 20% steps). I like companies with solid financials (this has net cash) and strong market positions. OK, the current market is bad, but that's why we can buy the company cheap. I'd much rather a good company in a bad market (which I think will recover) than a bad company in a good market.

I actually bought SPT first time for 4p 10-years or so ago. I remember it well, it was a Friday and they issued a profit warning. Sold them much too soon as I still tend to do.

[bobsidian] 21/11/2013 17:01

Indeed.

But when individuals take a cursory look at the fundamentals in the ADVFN page for SPT they see a low P/E ratio and a PEG factor which suggests undervaluation.

However, the EPS for the last full year was positively impacted by the one off gain on disposal of the Systems Division. Stripping out that influence on EPS revealed an absence of growth in continuing operations. And then the most recent IMS revealed a significant deterioration in EPS for the 9 month period up to the end of September of this year. At some point the share price was going to be moved to reflect the scale of earnings deterioration.

The present share price may be trading on a current P/E ratio of 25 - a bit steep for a company about to reveal a year on year decline in EPS whilst struggling to provide visibility on future earnings. However, year on year comparisons with the full year for 2013 going forward may be more supportive of the share price for SPT. It is just where the share price is to be taken in the near term that is a little tricky to gauge.

It is noticeable that brokers have been slow to change their price targets for SPT to reflect the business climate impacting SPT. And this can be a source of confusion to new investors in SPT who may be using broker recommendations to inform their investment decisions. Brokers will probably only revise down their price targets on SPT on release of the 2013 results. But long before then the share price will have been moved by market forces to price in not just 2013 results but also a revised assessment of 2014 results.

[kiwihope] 21/11/2013 08:59

The Systems division only earned 8% of the group's profits before tax. And the cash received, together with other retained cash is still sitting on the group's balance sheet. Whilst the sale of systems may account for a very small part of the fall in SP, I think it's much more to do with current environment and the effect this is having on group earnings.

[bobsidian] 21/11/2013 08:10

However, SPT is one of those shares which equity market participants seem able to move suddenly and sharply in either direction on relatively low volume. The inexplicable surge up to £1.60 earlier this year is certainly a good example.

[bulltradept] 21/11/2013 06:21

75p? Christ, that's low, I was thinking more high 80's.

[bobsidian] 20/11/2013 15:59

Because the remainder of SPT after selling its Systems Division is too expensive relative to earnings and the absence of growth in those earnings.

Were the share price to fall to around 75p then SPT may then be entering the realms of fair value.

[sg1972] 20/11/2013 13:59

This is getting smashed, why?

[kiwihope] 06/11/2013 16:41

Finally, after 12-days, an up-day!

[kiwihope] 06/11/2013 08:42

Down every day since Oct 21. Has to stop sometime, maybe today?

[kiwihope] 01/11/2013 10:29

What do you mean? When did they issue new shares and how many?

[constantine] 01/11/2013 09:45

The company issued new shares? This is a real con. For the past month they was purchasing shares in order to increase its price and now they are issuing new one?
I hope in the near future like in 100 years this kind of action will be illegal as it show a clear price manipulation and it is not fair to its shareholders.
I do not hold the shares, I was interested, but not now. Good luck whoever holds them.

[bulltradept] 31/10/2013 16:11

"God knows what those brokers do to justify their existence. All those 160/165 price targets with 25% upside etc etc ........"

I think they exist for rich clients, not those who can read..

[kiwihope] 30/10/2013 16:38

...No!

Couldn't hold gains. But they will come ... eventually.

[kiwihope] 30/10/2013 08:36

...is today going to be the first up-day since the trading statement?

[dalesiders] 29/10/2013 18:47

God knows what those brokers do to justify their existence. All those 160/165 price targets with 25% upside etc etc ........

This has got to go sub 100 before I have the slightest interest again in SPT unless it becomes a bid target.

D.

[bulltradept] 29/10/2013 10:27

£1.10 calling?

[picsous] 25/10/2013 14:10

Directors seem to think so. Wait is probably wiser.

[nobell] 24/10/2013 12:33

Is this share worth a buy at this level or the risk exceeds the benefit?

[irenekent] 24/10/2013 08:18

Same problems as Anite.

[hervey] 24/10/2013 07:43

lower revenue + lower margins = share price tank

[bingowing] 03/9/2013 10:24

pro, LOL.


i took my profits mate ;-)


was a lovely bounce and my gamble paid off.

[rabain] 03/9/2013 10:15

Good work pro!