Surfstitch Group Ltd
SRF Details
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Heavy impairment costs impacted the stock:Surfstitch Group Ltd.’s (ASX: SRF) stock nosedived 54.35% on August 30, 2016 as the group’s EBITDA for fiscal year of 2016 was way below than their estimates. SRF earlier forecasted to deliver an EBITDA in the range of $15 million to $18 million. On the other hand, the group came out with an EBITDA loss of $18.8 million, shocking the investors. As a result, the Profit before tax dipped over 560% yoy to $(18.9) million during the year while gross margin fell to 40% as compared to 46% in the prior corresponding period. However, SRF stock already corrected over 81.5% in the last six months (as of August 29, 2016). Despite bottom line pressure, the group’s top line rose over 18% yoy to $235.6 million in FY16.
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Recommendation:We give a “Hold” recommendation on the stock at the current price of $0.105
FY16 results (Source: Company Reports)
Slater & Gordon Ltd
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SGH Details
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Weak bottom line impacted the stock sentiment: Slater & Gordon Limited (ASX: SGH) stock fell over 15.2% on August 30, 2016 as the group came out with lower than estimated results. The group reported a net loss of $1.017 billion in fiscal year of 2016 as compared to $ 62.4 million profit in prior corresponding period. Accordingly, the Net Operating Cash Flow fell to a loss of over $104.2 million during the year from $40.8 million in prior corresponding period. However, the group’s top line improved to $908.2 million in FY16 as compared to $598.2 million in the prior corresponding period.
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Recommendation:We maintain our “Speculative Buy” recommendation on the stock at the current price of $0.475
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FY16 results overview (Source: Company Reports)
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