There was certainly nothing wrong with Cordiant's first-half results. Despite the loss last year of large accounts such as Compaq and Texaco, revenues were up by 4 per cent when adjusted for currencies. Operating profits rose by 11 per cent on the same basis.
Turmoil in the Far East has forced the company to make 200 staff redundant at a cost of pounds 1m, to be taken in the second half. But Cordiant remains on track to meet its own target of achieving 10 per cent operating margins next year. First-half margins were just 5.7 per cent, although the company does make most of its profit in the latter part of the year.
Investors remain unconvinced, however, knocking Cordiant shares down 1p to 107.5p yesterday. Given the advertising industry's natural propensity towards hype, this is understandable.
However, the City's reaction may be excessive. Even the most gloomy forecasts predict a slowdown in advertising spending rather than a decline. What's more, unlike its former parent in the late 1980s, Cordiant is not carrying a huge load of debt.
Panmure Gordon forecasts full-year profits (excluding the redundancy payment) of pounds 27m, putting the shares on a forward earnings multiple of about 17. Although investors will probably steer clear until the industry outlook becomes more clear, the shares offer good long-term value.