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

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »