Today’s small-cap winner is Plus500 (LSE: PLUS), which has seen its shares jump this morning after the company unveiled a better than expected set of third-quarter results.
In particular, during the third quarter Plus500’s revenue jumped 23.5% to $56.2m, compared to the second quarter. For the first nine months of the year, the company’s revenues totalled $162.4m, 151% higher than the figure reported a year ago. The company also reported that its customer base had grown by 17% year on year. The group’s user acquisition costs remained flat at $1,005 per client, while the average revenue per user jumped by 10% to $1,290.
A surprise for some
Along with today’s trading update, Plus500’s management stated that it is confident that the company will exceed City expectations for full-year profitability.
However, for some this will come as a surprise, as Plus500 has been criticised for its high growth rate, which seems impossible to sustain. Indeed, some believe that the company is in fact a scam, although there is no proof to back up these claims.
With Plus500 on target to beat City expectations, the company is likely to offer investors a hefty dividend payout next year. The City already expects Plus500 to support a dividend yield of 6.7%, followed by a payout of 7.3% the year after.
Additionally, at present levels and according to current forecasts, Plus500 currently trades at a forward P/E of 10.3. It’s likely that after today’s results City analysts will revise full-year earnings forecasts higher, which will put Plus 500 on an even more attractive earnings multiple.
Falling out of favour
As Plus500 impresses, investors are turning their back on Premier Foods (LSE: PFD).
Premier Foods is slated to report its third-quarter results on Thursday but investors are already expressing their concern. Indeed, as supermarkets go to war over prices, suppliers like Premier Foods are finding it hard to avoid the squeeze and this is likely to be reflected within results.
Premier reported a 6.3% decline in second-quarter revenues and analysts are a expecting a further 3% to 4% decline in revenue during the third quarter. This improved performance is expected after favourable weather in August and September, as well as a number of product launches backed up by additional advertising.
Unfortunately, falling sales are the least of Premier’s worries. After the company completed a radical restructuring earlier this year, raising £353m, refinancing debt and restructuring its product offering, Premier has failed to turn things around. Since the March refinancing, Premier’s shares have collapsed by more than 50% as investors fret about the company’s trading.
Ahead of Thursday’s results Premier’s shares have fallen by as much as 10% today.
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.