Q: Thoughts on earnings and future prospects please. Is this stock worth keeping long term. I am down significantly.
Thanks
Thanks
5i Research Answer:
Everytime we think it is safe to look at ARE, they come out with cost overruns on contracts and the stock gets hit. It has now almost done a round-trip back to last year's lows. The balance sheet is fine and it is still expected to be profitable, but with continued problems it will have a hard time getting a higher valuation multiple. The stock has fallen the most in 16 years. We think, at 8X earnings, it can be kept and we would caution against a quick reaction in a downturn that has already happened. But we think it can be 'targetted' for elimination as the stock settles in. It was almost taken over a while back (the deal was blocked) so there is always that possibility. But it is hard to endorse on that alone.