It's not every day that you see a company issuing a profit warning and then watch its share price surge. That's what happened with property services group Countrywide (CWD). Half-year turnover was boosted by a series of acquisitions, but sense soon returned to the price: profits for the full year are expected to be down from the previous year.
Trading in the first quarter was pretty strong, benefiting from the scrum of buyers looking to beat the hike in stamp duty. However, activity trailed off in the second quarter, and activity in London, the south-east and other prime areas is expected to slow further in the second half. Commercial transactions also slowed down. But at the same time, residential trading in the rest of the country is holding up well, and the lettings and mortgage businesses have been "largely unaffected".
This says much for the wisdom of a diversified revenue stream, which saw cash profits from the London estate agency business down by a quarter to £9m while income from financial services (principally arranging mortgages) increased by 44 per cent to £10.1m.
Analysts at Numis have downgraded their forecasts for the year to December 2016 and now expect adjusted pre-tax profits of £69.9m and EPS of 25.6p (from £85.8m and 32.2p in 2015).
| COUNTRYWIDE (CWD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 284p | MARKET VALUE: | £614m | |
| TOUCH: | 283.3-285p | 12-MONTH HIGH: | 553p | LOW: 221p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 235p* | NET DEBT: | 51% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 329 | 13.3 | 4.6 | 5 |
| 2016 | 360 | 24.3 | 9.8 | 5 |
| % change | +9 | +82 | +115 | - |
Ex-div: 8 Sep Payment: 7 Oct *Includes intangible assets of £744m, or 344p a share | ||||
