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Eddie Stobart's shares plunge on return to the market

The shares have been suspended since August, and it seems investors were in no mood to welcome them back to the market
February 26, 2020

It has been an eventful six months for Eddie Stobart Logistics (ESL). The shares were suspended in August after a review of its accounting practices led to a signicant profit warning and the departure of the chief executive. They were reinstated with the announcement of the half-year results in late February. So, while much of the details outlined in the results had already been flagged in mid-November, the more than 90 per cent share price plunge can be seen as the crystallisation of a half-year of investor frustration.

IC TIP: Sell at 5p

The biggest new information was the size of the group’s impairments, coming in at £169m for the six months to May 2019 having previously been flagged at “no less than c. £50m”. A considerable jump, to be sure, but the share price dive probably has as much to do with shareholders’ significant dilution at the hands of private equity rescuer DBAY, which took a 51 per cent stake in Greenwhitestar Acquisitions (the subsidiary company that holds the group’s trading entities) in exchange for £70m in much-needed liquidity.

Adjustments following the auditor’s review put paid to any earnings in the period, with the group posting an underlying operating loss of £11.6m. The group expects to report a small loss at the full year, but noted it “could be greater”, and was subject to potential adjustments by the group’s auditors. 

EDDIE STOBART (ESL)   
ORD PRICE:11pMARKET VALUE:£18.4m
TOUCH:10.75-11.25p12-MONTH HIGH:101LOW: 4.5
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:*NET DEBT:£158m
Half-year to 31 MayTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2018 (restated)335-15.1-3.801.54
2019421-200-51.3nil
% change+26---
Ex-div:na   
Payment:na   
*Negative shareholder equity, Last IC view: na, 6 Dec 2019