Why Brammer plc, Rentokil Initial plc And Computacenter plc Are Falling Today

Brammer plc (LON: BRAM), Rentokil Initial plc (LON: RTO) and Computacenter plc (LON: CCC) are falling today, here’s why.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Brammer (LSE: BRAM), Rentokil Initial (LSE: RTO) and Computacenter (LSE: CCC) are all falling today, although each company is heading lower for a different reason. Here’s what you need to know.

Profit warning 

Brammer is one of the market’s biggest fallers today. The company’s shares have fallen around 12% at time of writing, after the company issued a profit warning on the back of weaker than expected trading in the UK and Europe.

Indeed, during the four months to the end of October, Brammer’s UK sales per working day dropped 3.1%, as several key customers reduced their business with the company in a bid to lower costs. 

Still, during the period, at constant currency, total group sales grew by 15.5%, with sales up nearly 15% in both France and Spain and by nearly 10% in Germany. 

So, despite a small set-back Brammer’s sales are still expanding and for this growth investors are willing to pay a premium. At present levels the company trades at a forward P/E of 14.5, which may be too rich for some investors. City analysts only expect the company’s earnings to grow by 5% this year.

Disappointing update

Like Brammer, Rentokil also issued a trading update today. However, Rentokil’s trading update was relatively upbeat. 

For example, during the three months to the end of September the company’s revenue ticked higher by 3.3%. Pre-tax profit increased by 16.7% during the period as a number of small acquisitions across Europe helped boost profitability. 

Unfortunately, the company’s outlook disappointed investors as management warned that: 

“… we expect Q4 operating performance to be in line with Q3 … “

It seems as if the group is unlikely to report any growth during the fourth quarter. 

But like Brammer, with growth slowing Rentokil looks expensive at present levels. In particular, City analysts expect the company’s earnings per share to contract by 4% this year, although at present levels, the company trades at a P/E of 15.1, a multiple usually assigned to a high growth company. 

No news

 Finally, Computacenter is falling today, although there has been little in the way of news to fuel declines. 

Computacenter’s growth has been impressive over the past five years with the company growing earnings by more than 50% since 2009. However, the company’s growth has started to stagnate this year, as revealed within the group’s interim management statement for the four months to October.

During the quarter, revenue declined 3% at constant currency. Management still expects the company to achieve to achieve 7% earnings per share growth for the full-year. 

Nevertheless, just like Brammer and Rentokil, Computacenter appears expensive at present levels compared to the company’s projected growth. At present, Computacenter trades at a forward P/E of 13.1, which means that the shares are trading at a PEG ratio of around 2. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »