Falls In Armorgroup (ARG)

I see no reason to expect a profit warning

Armorgroup, a company I own and have posted about before, has now fallen to 49p with a lurch down to 39p on Thursday. I contacted the company to see if they know what is going on.

To paraphrase their response:

(1) The fall on Thursday was caused by the LSE’s electronic trading system and corrected itself very quickly.

(2) They can’t explain the wider fall but attribute it to (a) the market’s perception that revenues and profits from Iraq should be heavily discounted because it is a “risky” market; and (b) fallout from the Blackwater affair.

My sense - and talking to management is often misleading - is that trading has not deteriorated. Given the tone of the interim statement, and the bias toward the second half, I think a small but respectable profit is likely for this financial year.

The stock now trades on 7-8x last year’s earnings and about 0.9x book value ex goodwill. Despite the many risks I still think that is an attractive price.

Disclosure: I own shares in Armorgroup

November 23, 2007 | Filed Under Companies

 

Comments

4 Responses to “Falls In Armorgroup (ARG)”

  1. Jackart on November 26th, 2007 1:27 pm

    I agree, I think there is an opportunity for ARG. I know a number of people in the military and who work for PSCs in Iraq. ARG is reckoned to be one of the better ones. Cowboys like blackwater, who employ arrogant, sunglass-wearing meatheads who strut around with low-slung pistols are becoming discredited providing an opportunity for the likes of Kroll, CRG and Armorgroup to pick up the contracts.

  2. Armorgroup (ARG) : The Rogue Analyst on November 27th, 2007 12:59 pm

    […] has come out with a profit warning today which makes my note last Friday look pretty stupid. As I noted then, talking to a company can be misleading. If they do their job […]

  3. Corn on November 27th, 2007 3:20 pm

    yes very misleading and you have in turn msiled others with your all is well story.

    Got any other tips?

  4. 10/10 for Rogue Analyst : Interactive Investor Blog on November 27th, 2007 4:47 pm

    […] Here’s Rogue Analyst talking about Armorgroup last Friday: “I see no reason to expect a profit warning.” […]

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