Gains on the horizon
Shares in financial adviser Lighthouse Group (LSE: LGT) have fallen by over 10% today after AFH Financial stated that it does not intend to make an offer for the company. While this may be viewed as disappointing for investors in Lighthouse, since it means that its shares could fall back to the level at which they were trading prior to AFH’s initial approach, Lighthouse states that it is continuing to perform in-line with expectations.
Looking ahead, Lighthouse is forecast to increase its earnings by 32% in the current year, and by a further 22% next year. When combined with its price to earnings (P/E) ratio of 17.9, this rate of growth puts the company on a price to earnings growth (PEG) ratio of just 0.7, which indicates that capital gains are on the horizon. Clearly, Lighthouse is a relatively small and high risk play, but for less risk averse investors it could be worth a closer look.
Also in the news today is Cenkos Securities (LSE: CNKS), with the stockbroking company reporting a fall in revenue and pretax profit for the 2015 financial year. The former declined by 14% in the 2015 financial year, while the latter slumped by 26% due in part to an unfavourable sales mix. While the total volume of funds raised by Cenkos increased versus the prior year, sales were hurt by a bias towards investment fund tap issues and larger average deal sizes.
The impact of this decline in profitability has been a reduction in dividends, with them being cut by 18% versus the previous year. And with the company’s shares being down by 10% today, it is clear that investor sentiment has come under a degree of pressure. As such, and while Cenkos could deliver improved performance, it seems to be a stock to watch rather than buy at the present time.
Meanwhile, shares in BATM Advanced Communications (LSE: BVC) are also down today, falling by 4% following the release of a disappointing set of results for the 2015 financial year. Its pre-tax loss widened to $11.4m from $3.6m in the prior year, with higher financing costs being booked and a stronger US dollar also hurting its overall performance. In fact, the stronger greenback contributed $14.6m to the company’s fall in sales, and at constant currencies BATM posted a small rise in its top line.
Despite a disappointing 2015, BATM has a higher backlog now than at the same time last year and expects to maintain the momentum of last year across all of its divisions. And with BATM forecast to move into profitability in 2016, investor sentiment could pick up in the coming months and help to reverse the share price fall of 15% which has been recorded in the last six months. As such, for less risk averse investors BATM could be of interest.
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Peter Stephens 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.