I’m currently studying for the CFA Level 2 Exam and I don’t have as much free time as before to read annual reports and try to find attractive companies to invest in. I’ve been following a few companies in the news, however, that have gotten into trouble recently and that I would like to look deeper into, simply because their share prices dropped like a brick and they may be cheap (if their problems prove to be temporary). I would read all their annual reports in a week, if I had the time, but right now I think I can only manage one report every two or three weeks, and I haven’t decided which one to start with.
Which one of the four companies below would you be more interested in?
AA is based in Basingstoke, UK and provides roadside assistance in the UK and Ireland. Its main segments are: roadside assistance, insurance services, driving services, Ireland, insurance underwriting, and head office costs. According to the FT, it has a market capitalisation of £497.22 million, a PE ratio of 4.96, and its share price dropped 68.30% in the last 12 months, from a high of 274p in April 2017 to about 80p today. In 2015 it traded above 400p.
Capita is based in London, UK and is an outsourcing company which creates and delivers services to public and private sectors such as business process management, customer management, digital and software solutions, financial services, information technology, legal services, property and infrastructure, travel and events, human resource and recruitment, debt solutions, and corporate and administration services. According to the FT, it has a market cap of £1.01 billion, a PE ratio of 189.26, and its share price plummeted 74.67% in the last 12 months, from a high of 721p in June 2017 to about 147.50p today. In 2015 it was trading above 1,200p.
Dignity is based in Sutton Coldfield, UK and provides funeral related services through three main segments: funeral services, crematoria, and pre-arranged funeral plans. It operates about 720 funeral locations trading under established local trading names, has about 40 crematoria, and about 374,000 active funeral plans. According to the FT, it has a market cap of £444.39 million, a PE ratio of 7.7, and its share price dived 64.45% in the last 12 months, from a high of 2,777p in May 2017 (close to the all time high it reached in 2016) to about 872.50p today.
Interserve is based in Reading, UK and is a global outsourcing and construction company that offers advice, design, construction, equipment, facilities management and frontline public services. According to the FT, it has a market cap of £134.08 million, no PE ratio since it had a loss in the previous fiscal year, and its share price crashed 56.77% in the last 12 months, going from a high of 250p in May 2017 to about 93p today. In 2014 it traded above 700p.
What say you? Which company would you like to find out more about first?
Please write your answer in the comment section below.