Flexigroup (FXL)

I would love to know your view as to FXL’s steadfast decline over the last two years.

I don’t see any dire announcements or circumstances and FWIW I think at least Morningstar has had a BUY recommendation on it all the way down.

Thanks and all the best.

A: Thanks for the question about Flexigroup (FXL).

It is one of those very  interesting stocks. A chronic underperformer, very cheap, and  with a relatively new (and accomplished) CEO in Symon Brewis-Weston.

Morningstar is not the only analyst to be wrong. According to FN Arena, the current consensus broker target price is $2.48 compared to la last traded price around $1.72. There are 3 buys, 3 neutrals and 0 sells.

At the beginning of May, Flexigroup marginally downgrade their profit guidance (from range of $90m to $97m to a range of $90m to $93m). They cited issues with their Certegy business in Ireland.

Flexigroup is trading on a multiple of 6.9 times forecast FY17 earnings and 6.4 times FY18 earnings. Notwithstanding that the company has under performed in the past, I would probably tough it out and hold on. I wouldn’t, however, double down.

 

Regards


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