Shares in Speedy Hire have lost 55% of their value this year. They are worth 97% less than when they peaked in 2007. Pretty much the only Speedy Hire investors still in profit are those who bought between 2010 and 2012, when the shares regularly dropped below 30p.
Speedy Hire blamed this year’s woes on inept management, poor customer service and misallocation of resources. We don’t really know how this strange situation came about, but it was serious enough for the firm’s chief executive and finance director to be shown the door in July.
A second profit warning then followed in September, advising investors that fixing these problems would take longer than originally expected.
More recently, two of the firm’s non-executive directors resigned. Their departure came in the wake of reported merger discussions with fellow big faller HSS Hire. According to Sky News, which reported this story, the proposed merger had the backing of a number of major shareholders. This deal might have made sense, as it could have provided improved scale and significant cost-cutting potential from de-duplication.
As things stand, however, Speedy Hire remains single. The firm does at least have a decent balance sheet and a fairly reliable dividend history, but is it a buy?
Rank decline
Stockopedia’s algorithms have turned steadily against Speedy Hire this year.
In June, just before Speedy’s first profit warning, the shares were up 50% on the year-to-date and had a StockRank of 76.
Today, the shares are worth 55% less than at the start of 2015 and have a StockRank of just 24. Value, quality and momentum scores are all poor and getting worse. Speedy Hire looks like a falling star that’s at risk of becoming a sucker stock.
Is this a fair view, or should investors take heart from the more positive commentary in November’s interim results?
Value?
Speedy Hire has a ValueRank of just 39. The only possible bright spots, according to Stockopedia, are a price/book ratio of 0.8 and a price/sales ratio of 0.5.
Personally, I’m not sure these are reasons to buy the stock. In my view it’s unlikely that Speedy could ever realise full book value for its fleet of rental assets if it was forced to sell them, so I’d view…
