Shares in consumer goods company PZ Cussons (LSE: PZC) have slumped by over 10% today after it released a rather mixed first half update. Although pre-tax profit was marginally higher than the first six months of the previous year, PZ Cussons continues to experience very challenging trading conditions in its key market Nigeria.
Looking ahead, the uncertain economic outlook for Nigeria seems set to continue and when this is combined with currency weakness in Africa and across Asia, the future for PZ Cussons remains unpredictable. Although performances in Europe and Australia continue to be robust, PZ Cussons’ revenue slipped back slightly in the first half of the year and its focus on Nigeria is set to mean that earnings rise by just 3% in the current year.
With the company’s share price having fallen by 21% in the last year, it’s clear that investor sentiment is weak. However, with growth in earnings of 8% being pencilled-in for next year and a price-to-earnings (P/E) ratio of 13.3, PZ Cussons is now beginning to appear attractive for long-term investors. Certainly, more pain could be on the cards in the short run, but PZ Cussons may prove to be a sound long-term buy for less risk-averse investors.
Spirited valuation
Also reporting today was Stock Spirits (LSE: STCK) with the Central and Eastern European-focused alcoholic beverages company seeing a share price rise of almost 10% at the time of writing. Encouragingly, the company’s fourth quarter trading was in line with previous expectations and Stock Spirits now expects earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the upper half of the range €50m to €54m.
Looking ahead, Stock Spirits is conducting a review of its business in Poland, as well as its wider corporate strategy. Clearly, this brings a degree of uncertainty to the mix since Poland is Stock Spirits’ largest market. But with Poland having been a challenging place to do business in recent years, mainly as a result of changes to excise tax, a new strategy could help to boost profitability over the medium term. And with the company’s shares trading on a price-to-earnings growth (PEG) ratio of just 0.9, there appears to be further capital gain potential, too.
Gains ahead
Meanwhile, Sigma Capital (LSE: SGM) has also been a strong performer of late, with its shares having soared by 73% in the last year. As its most recent update showed, Sigma Capital is making encouraging progress with its strategy and its increase to full-year guidance has caused investor sentiment to improve.
Looking ahead, Sigma Capital remains well-positioned for 2016 with work in progress being ahead of plan. Its second phase of private rented sector delivery with Gatehouse Bank for 900 new rental homes is now underway in Manchester and Liverpool, with Sigma Capital aiming to launch two similar sized projects in the Midlands and the South. With its shares trading on a PEG ratio of 0.1, more capital gains are very much on the cards over the medium-to-long term.
