Shares in Hargreaves Services (LSE: HSP) are down by as much as 10% today after the company released a disappointing set of results. In fact, the UK’s leading supplier of solid fuel and bulk material logistics reported a 29.1% fall in underlying operating profits for the first six months of the year, with the company facing a number of significant challenges including a weak coal price, as well as difficult trading conditions within the coal and coke markets.
Following today’s fall, shares in Hargreaves Services now trade on a forward price to earnings (P/E) ratio of just 6.6. As such, they seem to offer a considerable margin of safety even when forecast falls in profit over the next two years are taken into account. As such, and while the short term could see further pressure on the company’s share price, Hargreaves Services could be worth buying for the long run.
Shares in Sports Direct (LSE: SPD) have been up to 4.1% weaker today as the market digests news that the company’s Mergers and Acquisitions Director, Jeff Blue, is leaving the company at the end of March. Although disappointing, his departure does not change the long term outlook for the company, which remains positive, although it now means that a new Finance Director is also needed, as Jeff Blue was filling this role on a temporary basis, too.
Due to their recent weakness, now could be a good time to buy shares in Sports Direct, since they appear to offer strong growth potential at a reasonable price. For example, the sportswear retailer is forecast to increase its bottom line by 16% this year, followed by a further 15% next year. And, with it having a P/E ratio of 17.8, this equates to a price to earnings growth (PEG) ratio of just 1.1, which indicates that Sports Direct could deliver strong capital gains moving forward.
InterContinental Hotels (LSE: IHG) (NYSE: IHG.US) is down around 5% today after the company reported a slightly disappointing set of full-year results. While it experienced strong demand from its most important region, the Americas, overall pretax profit was flat on the year as a result of hotel disposals and liquidated damage receipts in 2013 that were not repeated in 2014. And, while the market was hoping for further news on potential asset sales, InterContinental was relatively quiet in this area, which may have contributed to the decline in investor sentiment today.
With shares in the company trading on a P/E ratio of 20.8, they seem to be rather overvalued even though the bottom line is forecast to rise by 15% this year, and by a further 12% next year. So, while the outlook for Intercontinental is undoubtedly positive and its shares are down today, now may not be a great time to buy a slice of it, since much of its future growth appears to already be priced in.
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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Sports Direct International. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.