Is Now The Perfect Time To Buy WM Morrison Supermarkets PLC, Rotork p.l.c And Merlin Entertainments PLC?

Shares in actuator and flow control manufacturer Rotork (LSE: ROR) have fallen by as much as 16% today after the company released a profit warning. It now expects revenue for the full-year to be in the range of £530m to £555m, with adjusted operating profit due to be between £120m and £130m as a result of a challenging trading environment in the second half of the year.

In fact, Rotork has seen an increased number of project deferrals and cancellations, with trading in August being especially weak. And, while Rotork continues to have a bright long term future, it is suffering from increased uncertainty in the wider industry. For example, a number of orders which the company expected to be placed in the third quarter of the year are now expected to occur in 2016 rather than in the current year.

Clearly, today’s update is disappointing for the company’s investors and, while it means that the company’s shares are cheaper, they still trade on a price to earnings (P/E) ratio of over 15. This indicates that, while in the long run they may produce a comeback, in the near term they are likely to come under further pressure.

Similarly, Merlin Entertainments (LSE: MERL), the owner of Alton Towers and various other attractions, today released a rather mixed trading update. While its Midway Attractions and Legoland Parks performed well, Alton Towers and other resort theme parks were a disappointment. Still, revenue was up by 2.2% in the first 36 weeks of the year, with it increasing by 0.3% on a like-for-like basis.

And, while it expects profit to be at a similar level to that achieved last year, Merlin Entertainments stated that it expects the trends from 2015 to be carried into 2016. This could mean that there are downgrades to the 16% earnings growth that is being forecast for next year. Although Merlin Entertainments trades on a price to earnings growth (PEG) ratio of just 1.2, it may be worth waiting for confirmation of a pickup in the company’s resorts division before buying a slice of the business.

Meanwhile, Morrisons (LSE: MRW) released a rather downbeat update last week. It included the sale of its convenience stores for £25m, as well as confirmation that its sales figures continue to come under pressure amidst increasing competition from no-frills rivals such as Aldi and Lidl.

Looking ahead, though, Morrisons is expected to post a rise in its earnings of 18% next year. This, of course, could be revised downwards in the months ahead, since the pace of change at Morrisons is rapid and its future, therefore, is somewhat fluid. The company, though, seems to be becoming more efficient, more focused on delivering what customers want and is also removing unprofitable, loss-making parts of the business. This is likely to have a positive impact on its future financial performance and, with Morrisons trading on a price to book value (P/B) ratio of just 1.1, it appears to be well-worth buying right now.

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Peter Stephens owns shares of Morrisons. The Motley Fool UK has recommended Rotork. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.