Easyjet, DCC and ITE

Archived article

Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

EasyJet’s results are a good example of why it pays to drill down into the numbers," says AJ Bell Investment Director Russ Mould.

"The headline news is record passenger numbers for the first six months of the 2017 financial year at 33.8m, equal to a 9% year-on-year rise. You might therefore question why the shares have fallen 5.9% to £12.33 on the news. The answer is relatively simple. It has reported a record half year loss of £212m which is approximately 9% worse than the consensus forecast. You also need to consider the approximate 40% share price rally since late February until yesterday. Investors are inevitably using the results as a reason to bank some of that profit.

“The worst performing stock on the FTSE 100 after EasyJet is Irish distribution business DCC which falls 4.9% to £70.05. There is nothing fundamentally wrong with its full year results which include 23.7% rise in pre-tax profit to £268.2m. Instead, it seems the shares have also succumbed to a bout of profit taking as well as one analyst downgrading earnings forecasts to factor in investments in France and new foreign exchange assumptions.

“Among the small caps, events business ITE falls 5.1% at 167p as it fails to convince the market with a strategy update. This news coincides with first half results showing a 70.7% decline in pre-tax profit to £3.1m. The company has been badly hit thanks to an oil price related downturn in Russia and political instability in Turkey as the countries are its two core markets. Chief executive Mark Shashoua, who took over in September 2016, is planning a £20m three-year transformation programme which will be funded from existing cash generation. This is expected to depress earnings in the near-term.”

These articles are for information purposes only and are not a personal recommendation or advice.