The Investment Column: Cobham looks over-rated
Wednesday 08 October 1997
The group's share price has soared recently, rising from 550p in April to 847.5p, up 1p yesterday, as the group posted a 20 per cent rise in half-year profits to June at pounds 25m, beating expectations. The market was also cheered by news of Cobham's strong order book and a string of niche buys.
The year ahead for Cobham looks pretty solid. Its FR Aviation arm, which sells aircraft components, is currently refurbishing 21 Nimrod planes and looks set for more orders from the Ministry of Defence.
Demand is growing for its traditional flight refuelling services, including more business with the Singapore Air Force, and Chelton, which supplies radio antennae, looks set to benefit from the recent acquisition spree. Even problem child Westwind should have a good year, with a variety of innovations like low-cost scanners in the pipeline.
Cobham plans to splash some cash in the months to come. The group is budgeting for pounds 15m-pounds 20m of capital expenditure in the second half, most of which is earmarked for infrastructure improvements. Neither is the company ruling out further acquisitions. Gearing is expected to jump from 6.6 per cent to 40-5 per cent.
The real problem with Cobham is not its growth prospects or even its increased gearing level. The company is simply over-rated. Forecasts put it on a prospective p/e of more than 22, too high for a business predicted to grow profits by 19 per cent this year. Now may be the time for shareholders to sell out.
- 1 Edward Heath 'raped 12 year-old boy at Mayfair flat'
- 2 London is the most googled city in the world
- 3 Porn block in India: hundreds of sexual websites banned, internet outraged
- 4 Giant Minion terrorises drivers in Ireland as 40ft inflatable blocks traffic on Dublin road
- 5 Richard Dawkins ridicules Sabrina Corgatelli for claiming her giraffe kill was 'ethical'
Edward Heath 'raped 12 year-old boy at Mayfair flat'
'Gene drive': Scientists sound alarm over supercharged GM organisms which could spread in the wild and cause environmental disasters
Gwen Stefani and Gavin Rossdale divorce: One of music industry’s most enduring couples announce split after 12 years of marriage
Dutch King Willem-Alexander declares the end of the welfare state
Giant Minion terrorises drivers in Ireland as 40ft inflatable blocks traffic on Dublin road
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Chris Leslie: Jeremy Corbyn's anti-austerity agenda will harm the poor, says Labour shadow Chancellor
Landlords renting properties to illegal immigrants to face up to five years in prison
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
Labour leadership race: Jeremy Corbyn could be the next Prime Minister, says Ken Clarke
iJobs Money & Business
£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...
£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...
£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...
£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...