The Motley Fool

Can the Ferrexpo share price recover from 30% price crash?

Image source: Getty Images.

FTSE 250 iron ore miner Ferrexpo (LSE:FXPO) has fallen on pretty hard times recently, with its share price dropping 31% in a period of two weeks following the news of a disputed relationship with a Ukrainian charity.

The company’s auditor Deloitte heaped pressure on the shares after resigning its relationship with Ferrexpo following an investigation into its CEO Kostyantin Zhevago’s relationship with a charity called Blooming Land.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

However, Ferrexpo has come out fighting in relation to the issue, accusing Deloitte of quitting prematurely and for “innocuous” reasons.

So where does that leave the future of the Ferrexpo share price? Is this the first step to uncovering more uncomfortable relationships or merely a sideshow that presents a great buying opportunity?

No smoke without a fire

Clearly the whole situation doesn’t look good for the FTSE 250 company. It delayed its annual results twice in order to conduct a review of the $33.5m in payments made to Blooming Land, eventually concluding that the charity is not related to the group or any of its executives.

Deloitte obviously wasn’t convinced, and its stance is hard to argue with considering the last-minute results scrambling and a lack of a full independent investigation into the payments.

However, it must be noted from Deloitte’s statement that rather than alleging that Zhevago or the Ferrexpo board have any link to the charity, it simply states that it was unable to discount that conclusion.

It is not immediately clear what Zhevago or any other board member would stand to gain as a result of any misappropriation of funds, which makes me think that the fall in share price may be a little overdone.

That said, buying Ferrexpo at this stage would be one for those investors with a high appetite for risk.

Buying opportunity

Yet the miner has a lot of factors going in its favour. It’s one of the few stocks listed on the FTSE 250 with little to no exposure to the UK’s departure from the EU with most of its income coming in US dollars.

When its full-year results eventually arrived on 23 April, revenue was strong, with a 6.4% rise to $1.3bn compared to 2017, despite lower net profits for the year of $335m.

Production remained steady and commenting on the remainder of 2019, the company said prices of its iron pellets were to remain high for the rest of the year.

Ferrexpo has traditionally been known as a high dividend stock and announced a  dividend of 23.1 cents per share, 40% higher year-on-year, and the improvement here suggests that the company is in a strong position financially going forward .

Considering the financials, dividends available and the potential value of the shares following the crash, I believe it could represent a buying opportunity for investors looking for a stock with a little more risk built in. Ultimately though, it boils down to whether you believe there are any further unsavoury details to emerge about the Blooming Land relationship.

Only time will tell…

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.