Profit warning from Alumasc (LON:ALU) this morning. As expected the lowly rated share price has been caned. The company quantifies the effect of the profit warning citing a 5% reduction in revenue and 15% reduction in profit before tax. I am not sure but my best guess is that this translates into EPS of 17p for the year to June 2018. There is also a post tax pension deficit of £17.1m as at the recent interim results.
The dilemma now is whether to sell or sit tight. Stockopedia research suggests the former. Alumasc appears to well managed and the reasons for the profit warning are creditable. On top of which directors hold about 20% of the equity.
All thoughts and observations welcome.
Jonno
I have simple rules on profit warnings especially when the market is so angry about it, sell, relax and wait for a re-entry when\if things start to improve. I know there is always the potential for market overreaction, but in my experience what follows next is more often than not a flatlining of the share price within a narrow trading range or indeed further falls.
I used to spend days trying to determine what to do for the best, and during that time I generally became more anxious about the situation unfolding, the longer I deliberated the more painful it got and the harder the decision. There is no science in my method, it just takes the stress out of it for me and I invariably feel better for it.
