Harvey Nash
Shares in Harvey Nash (LSE: HVN) have tumbled by as much as 14% today after the recruitment company released a profit warning for the current year. Indeed, the company now expects operating profit to be flat on last year, with the market having expected an increase of 8% prior to today’s announcement.
Harvey Nash has cited weakness in the permanent recruitment market in mainland Europe as the key reason behind the warning, with the strength of sterling also a contributory factor. Despite this, its third quarter showed an increase in revenue of 1.5% (at constant currency), with the UK, US and Asia showing strength.
Meanwhile, the company has also decided to appoint advisers to make recommendations on the strategic options for its European telecom outsourcing business, with Harvey Nash seeking to focus on more profitable, higher growth divisions moving forward.
While today’s profit warning is a disappointment for investors, Harvey Nash continues to offer good value for money and upbeat longer-term prospects. For example, it trades on a price to earnings (P/E) ratio of just 8.8 and, with a QE programme set to be put in place by the ECB in the near term, its European performance could stabilise in 2015. As such, it could be a worthwhile buy for longer term investors.
Advanced Computer Software
Shares in Advanced Computer Software (LSE: ASW) have surged by as much as 15% today, after a bid by Vista Equity Partners has been recommended by the company’s board. The offer is for a total consideration of £725 million and works out at 140p per share, a 17% premium to Advanced Computer Software’s closing price on Monday.
The directors of Advanced Computer Software plans to vote in favour of the offer in respect of their 15.1% stake in the company, and will further recommend that other shareholders do the same. At the present time, Vista has an acceptance rate for the offer of around 48% and, if it goes through, the deal would represent significant gains for the vast majority of the company’s shareholders.
Indeed, shares in Advanced Computer Software have risen by a whopping 249% in the last five years and, with the offer valuing the company at around 21.4 times current year earnings per share, it seems to be a good deal for investors in the company. As a result, the chances of it being accepted seem relatively high.
Of course, finding shares that could be strong long term performers is no easy task and, of course, unearthing hidden gems such as Advanced Computer Software is an even more difficult challenge.
