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magazineClouds gather over Somero after disappointing update
Somero Enterprises (SOM:AIM) 286.5p
Gain to date: 0.3%
Original entry point: Buy at 285.62p, 23 March 2017
Shares in construction equipment specialist Somero Enterprises (SOM:AIM) have taken a knock after a disappointing trading update on 5 June. News of a 13.3c (10.3p) per share special dividend has been overshadowed by lack of growth in North America and a slowdown in China.
First half trading in North America has been hurt in part by poor weather delaying numerous projects and ongoing political uncertainty.
Many investors had bought the stock believing it would benefit from Donald Trump’s plans to spend heavily on infrastructure in the US. Lingering concerns that Trump will now fail to push through his key policies have understandably made some investors nervous about Somero’s prospects.
That’s a fair point, but it does have a good track record at growing earnings in the past without a specific infrastructure stimulus programme. It is also enjoying decent growth in Europe.
The latest trading update has prompted some investors who’ve been in the stock for a while to take some profit, as many will have been sitting on significant gains. Somero is up by 80% over the past year and by 350% over the past four years.
We’re sticking with the stock and plan to talk to the company to better understand its opportunities and threats. (DC)
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