Are Monitise Plc, Tui AG And Cambian Group PLC Too Risky To Buy Today?

Shares in behavioural health services provider Cambian (LSE: CMBN) have slumped by over a third today after it released a profit warning. The company has failed to meet its guidance for 2015, having set itself an ambitious target of recording EBITDA of £49m. It now expects to report a figure of £46m, with higher-than-expected costs being a key reason for this.

In response, Cambian has put in place a number of changes in order to improve on its recent performance. For example, it expects to reduce capital expenditure by around £20m in 2016 and will restructure a number of business areas, including its human resources function. It will also seek to boost efficiency through better communication between its divisions, while cost reduction remains a key focus for the business moving forward.

Although today’s profit warning is disappointing, Cambian remains a highly profitable business with a bright future. As such, today’s share price fall appears to be an overreaction by the market and with Cambian trading on a price-to-earnings (P/E) ratio of just 7, it seems to be a strong buy for the long term.

Taking a roasting from Turkey

Also reporting today was Tui (LSE: TUI), with the travel company reporting a smaller loss in the first quarter of the year versus the same period last year. It continues to expect to report a rise in EBITA of at least 10% for the full-year despite weakness in demand for summer bookings to Turkey. In fact, they’re down by 40% versus the prior year, but with Tui having a relatively diversified business model, other areas should be able to pick up the slack.

With Tui trading on a forward P/E ratio of around 11.8, it seems to offer good value for money at the present time. Certainly, there are doubts surrounding the performance of the global economy and while there is the potential for downgrades to forecasts across the travel sector, Tui appears to have a sufficiently wide margin of safety at the present time to merit investment.

The burden of proof

Meanwhile, shares in mobile payment solutions provider Monitise (LSE: MONI) continue to disappoint, with them falling by 40% in the last month and showing no proof it’s mounting a successful comeback.

Clearly, it’s extremely difficult to catch a falling knife in terms of knowing when a turnaround will come, but progress regarding Monitise’s share price seems likely to be linked to its profitability rather than its potential. In other words, the market is waiting for confirmation that Monitise not only has a great product, but is a viable business too.

With the company having changed its management team and refreshed its strategy recently, its long-term outlook remains relatively positive. However, until it can provide evidence of its long-term sustainability as a business through a black bottom line, it may be prudent to watch, rather than buy, Monitise.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.