Q: Hi 5i,
In your opinion, did CHR's recent quarterly report justify the significant drop in share price, and is there any sensible reason to think it might recover to at least where it was recently ($3.30 range) any time soon, or would you expect it to pretty much stay flat?
Sign me: wondering if I should have ignored the analysts who thought the name had legs and sold sooner.
Thanks.
In your opinion, did CHR's recent quarterly report justify the significant drop in share price, and is there any sensible reason to think it might recover to at least where it was recently ($3.30 range) any time soon, or would you expect it to pretty much stay flat?
Sign me: wondering if I should have ignored the analysts who thought the name had legs and sold sooner.
Thanks.
5i Research Answer:
Results were bad; EPS missed estimates by 17%, sales missed by 1.5%. Free cash flow was decent, at least. But revenue growth remains very weak (1.1%) which is less than inflation. Investors are disappointed also that its Fund III has yet to be launched. The stock is no doubt cheap at 6.6X earnings, but with very high debt, its small size and very little growth, as well as its small size and cyclicality (and weak record of creating any shareholder value), we would expect it to stay flat, or 'drift' and we think their are better small cap options out there.