Are Senior plc, William Hill plc, Computacenter plc & Ladbrokes PLC About To Issue Profit Warnings?

Roland Head explains why Senior plc (LON:SNR), William Hill plc (LON:WMH), Computacenter plc (LON:CCC) and Ladbrokes PLC (LON:LAD) could disappoint on profits this year.

| 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.

Profit warnings usually catch investors unaware — but the clues are often there, if you read the wording in company updates carefully enough.

In this article, I’ll explain why I think Senior (LSE:SNR), William Hill (LSE: WMH), Computacenter (LSE: CCC) and Ladbrokes (LSE: LAD) are likely to deliver profits below current forecasts this year.

Senior

Shares in defence and aerospace engineering firm Senior fell by 6% in the first hour of trading on Thursday. Why?

The classic giveaway was that the firm said that although the board’s expectations for full-year profit were unchanged, they were “more second half weighted than historically”.

In other words, profits are expected to fall short of expectations in the first half, and the firm hopes to be able to make up the shortfall in the second half. However, Senior’s comments suggest to me that this is unlikely: the firm says demand is likely to be weaker than expected in its aerospace division, which is the company’s biggest.

William Hill

This week’s trading update from William Hill triggered a 3.5% slide in the bookmaker’s share price.

The news wasn’t great: win margins were below expected levels during the first quarter, which included a £14m loss from the company’s largest ever loss-making week.

The firm warned that the shortfall from this loss has not yet been made up, and also said that recent changes to planning guidelines could slow the firm’s expansion programme.

Conspicuously, there was no mention of full-year expectations.

Ladbrokes

Fellow bookmaker Ladbrokes has just got a new boss, Jim Mullen.

In the firm’s first-quarter update, Mr Mullen announced that he would complete his review of the business “quickly” and would present the changes he intends to make in June, “earlier than planned” — all of which sounds like bad news, to me.

The final warning note was Mr Mullen’s comment that shareholders should expect him to focus on “the medium term” — suggesting to me that the near term could be pretty dire.

Computacenter

IT infrastructure firm Computacenter appears to be going through a sticky patch. The outlook statement in the firm’s first quarter update was a masterpiece of contradiction.

For example, the firm said that “2015 should be a year of progress for Computacenter” but “the business is not without its challenges”.

Like William Hill, Computacenter made no mention of full-year expectations, suggesting it isn’t confident of meeting them.

Today’s best buy?

Although I believe these four companies are decent business, I’m not sure now is the right time to buy.

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.

Roland Head 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

Here’s how much I’d have if I’d bought 1,000 shares in this FTSE 100 defence stock 5 years ago

I could have made a pretty penny investing in this leading FTSE 100 defence stock. Now I’m looking at a…

Read more »

Investing Articles

1 potential millionaire-maker UK stock I’d like to buy for the long haul

For long-term investors, here’s 1 UK stock to consider buying right now with the potential to help power a growth…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

These cheap UK shares look way too good to ignore right now

With the UK stock market reaching new highs recently, this Fool plans to grab these two remaining cheap shares before…

Read more »

Young Woman Drives Car With Dog in Back Seat
Investing Articles

This unloved UK stock could rise 120%, according to a City broker

Some City analysts reckon a once-popular UK stock can recover from its massive recent decline and go on to more…

Read more »

Investing Articles

These FTSE dividend shares all offer 6%+ yields!

Paul Summers highlights three FTSE dividend shares that offer big yields. But is the passive income stream sufficient to offset…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Is Legal & General Group one of the FTSE 100’s greatest value shares?

Legal & General shares boast low P/E ratios and massive dividend yields. Could they be one of the London stock…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

I’m looking for the best FTSE 100 value stocks to buy now. Have I found them?

Barclays, NatWest, and Imperial Brands shares are recovering strongly. But these FTSE 100 stocks still trade on rock-bottom earnings multiples.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Where on earth will Nio stock be in 1 year?

Nio stock has demonstrated extraordinary volatility over the past 12 months, but where will it be in a year's time?…

Read more »