Financial Trading Blog
Stock of the day 18/09/2015 – A.G. Barr PLC
After a fairly flat 2014 Barr opened the New Year at £5.85, things got off to a good start for the drinks company. January saw the stock re-cross the £6 mark for the first time since the start of December, boosted by the announcement of strong winter results that saw the company forecast its full year revenue at a 2% increase to £259 million. The stock price only improved going in February, as Barr bought cocktail mixer company Funkin for £21 million in an attempt to diversify away from the soft drinks sector.
(Source: IT-Finance.com 18/09/2015)
This meant that on the eve of its full year results at the end of March Barr was trading around £6.78. However, a warning from the company that its market conditions ‘remain challenging’, with ‘price deflation’ the key issue weighed on the minds of investors, despite Barr reporting a 2.7% jump in revenue to £260.9 million alongside a 10% increase in pre-tax profits to £41.9 million, both of which were slightly higher than expected.
This sent the stock back down to £6.10, and whilst it briefly pulled itself back up to £6.50 by the middle of April a long, steady decline soon kicked in, with the end of May reveal of a 1.1% fall in sales for the company’s second quarter helping to sustain its slide. Its half year update at the end of July merely made things worse, as a 5% drop in sales to £128 million year-on-year pushed the stock all the way to an 18 month closing price low of £5.50 by the end of August.
A.G. Barr is at a current trading price of £5.71 (IT-Finance.com, 18/09/2015), with a consensus rating of ‘Hold’ and an average target price of £6.32.
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