Shares in defence company Cobham (LSE: COB) have fallen by up to 20% today after it released a profit warning and details of a rights issue. Trading in the first quarter of the year was behind previous expectations, with trading profit being just £15m versus £50m in the same quarter of the previous year.

There are three main reasons for the disappointing performance this time around. The first is operational issues in the Wireless business which have resulted in delayed shipments and a one-off charge of £9m. The second is increasing headwinds in the commercial fly-in fly-out business. And the third reason is cost increases in a small number of development programmes in the Advanced Electronics Solutions Sector.

Even though the rest of the company is trading in line with expectations, the impact on earnings of the overall business means that Cobham’s leverage could be close to the net debt-to-EBITDA covenant ratio of 3.5 times at 30 June 2016. As a result of this, Cobham is seeking to raise £500m so as to reduce net debt to EBITDA to around 2 times.

While Cobham is clearly experiencing a very challenging period and its shares are likely to remain volatile in the short run, it remains a high quality business. Therefore, today’s share price fall could present an opportunity for any long-term investors who are able to live with an above-average degree of volatility in order to buy-in at a relatively low price. And with the outlook for the wider defence sector being upbeat, Cobham could prove to be a sound purchase at the present time.

Falling profits

Also falling by up to 20% today are shares in RPS Group (LSE: RPS). As with Cobham, it has released a profit warning today, with it expecting profit for 2016 to be lower than in 2015. The key reason for this is weakness in the oil and gas sector, with many of RPS’s customers announcing cuts to capital expenditure. This has affected RPS’s level of new commissions in its energy business in particular. In response it’s continuing to reduce its cost base, with 14% of staff being made redundant in the current year.

Clearly, this is a difficult period for RPS and further pain in the short run can’t be ruled out. However, cost-cutting measures seem to be an appropriate step to take, as does the acquisition of DBK for £13m. It’s a project management consultancy and should help to further diversify RPS away from the oil and gas sector. However, recent rises in the oil price could be beneficial to RPS and with it being a high quality business despite its current problems, it could be worth buying for investors who are able to take a long-term view.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.