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Why wasted? The company bought its own shares, haven't we all here bought in RWS too?
Certainly an ex-growth company, that's for sure. They were well over-valued 2 years ago., with the sp having now crashed by over 70%. The question is whether the business will continue to deteriorate with revenue now forecast to fall for a second year running, and £50 millions wasted recently on a fruitless share buyback. Not good!
The share price may fall further, almost a certainty. However most of the fall is done in my opinion. RWS is making £45mln PBT in H1, which is quite a respectable figure and the current share price already underprices the company. That is... in absence of skeletons in the cupboard. The modest percent fall in revenue does not warrant too much worry at the moment.
The positive comments at the AGM have not been proved to be accurate. This company is clearly not doing well and the sp will surely fall further.
The trading statement doesn't say much about the outlook. Customers are cutting costs, it doesn't explain it they are turning to cheaper service providers or simply reducing demand for services. In the latter case it will create a healthy backlog for RWS. RWS wouldn't have the information as that will sit with the customers.
It would be interesting to see how (RWS) peers are doing. Who are the major players in the filed?
Spent a fortune on Share buybacks at much higher levels while business struggling and share price collapses. Who cares it is only shareholders money. Brrr. The wording of RNS gives the impression that AI is the saviour. One wonders as every Tom Dick and Harry also chasing this.
CEO statement: "It has been disappointing that we have not seen the recovery in Regulated Industries as quickly as we would have hoped and that sales in some parts of our content management software business have been slower than planned. We expect both to show some recovery in the second half.
Delivery of the Board's full year expectations remains dependent on continuing to successfully leverage our growth initiatives and AI offerings to compensate for ongoing headwinds in some areas."
Laying the ground for tough times?
Why has the share price dropped so dramatically?
Despite the positive comments at the AGM. The shares have now been falling steadily for five weeks from a weak starting position. Seems the market does not believe the messages from the BOD.
My opinion is that there are algos running here that are taking this down. Loads of A trades day after day. I also suspect the culprit. Still hold here and buy when I think they overplay the position. Definitely getting into top up territory for me. May see what the next report brings first as this will probably be taken down again regardless.
The company needs to focus on profit first, and improving EPS. Think AB was a great visionary, however, not sure about current chair and CEO. Still to prove themselves IMO.
I still believe this company could emerge stronger from the SDL integration.
Hi,
Does anyone have any insights / thoughts into the continued weakness of RWS? I realise there is some uncertainty around the impact of AI, and integration risk from SDL still, but other than that I see this as a potential to top up as opposed to crystalise losses and run for the hills.
However, I'm always conscious there may be something I'm missing - thoughts / input appreciated.
TIA
Thanks. Sorry normally think to check ex divi but forgot today!!
It's ex-dividend today for 9.8p of the drop. Sometimes you see a follow through from that where those holding for the divi then sell to move some capital elsewhere short term and the price drop will then overshoot, sometimes taking out a few tight stops on the way. Could be that contributing?
It's currently sitting on the base of a shallow long-term uptrend that's offered support since June last year, and the short-term uptrend since the dip in October last year crosses it around this point, so may recover from there soon enough? Or not...
Any idea what’s happened? Saw the announcements on share options etc and a small share sale but doesn’t look like a reason for such a big drop?
P ss off with ramping other shares on another stock.
It's hard to say right now if subdued trading is the beginning of a decline as free AI models replcae their specialised products. Or, if a tough macro environment is causing a temporary slowdown in clients discretionary spend. If it's the former then it is like a print media business in slow decline and should be priced as such. However if it's the latter then it's an easy double from current market cap and possibly much more if the company's assertion of an AI tailwind is accurate.
They are still highly cash generative and the dividend is around 195% covered from adjusted earnings. It also wasn't highly generous at a 4% increase. This company has a great record of a progressive dividend.
Is a generous increase in the Divi. wise at this time ?
It's not a spike in revenue. Its because they took over SDL. Paid in cash and around 100m shares (from memory), when priced at £7 a share. Now buying those shares back at an average of £2.40 with cash.
They need to stabilise still after the SDL purchase and integration. Should be starting to realise the operational synergies.
There is a massive spike in turnover (+50%) in 2022 and 202ars3y compared to 2020 and previous , which is reflected in profits and dividend payout, whereas the share price has declined significantly in the same period (70% down).
The market clearly is not buying into RWS investment case, as shares were previously exchanged at a significant premium price tag compared to today.
What has changed investor's sentiment? 1. Has revenue trend going to continue on the upside from current levels (despite the short term challenging market, as recently announced by the company) or growth should be considered from 2020 levels?
Why adjusted earnings are almost 50% higher than non-adjusted? I assume that the adjusted earnings have the cost of acquisitions added back.
With acquisition comes the challenge of integrating operations and optimizing costs. Yet the share price seems to be too much severely affected.
To consider is the higher interest rate environment. RWS doesn't seem to have a significant cost of financing, however any return should be considered interest-discounted going forward - Is this sufficient to explain the share price decline?
Last year the AGM statement included:
"The Group produced cash-generative, profitable growth in line with market expectations, continued its unbroken record of dividend growth and made good progress on the actions and investments that we set out at our Capital Markets Day (CMD) in March 2022."
They look like delivering again within market expectations in 2023, albeit at the lower end. So I assuming that they will continue their unbroken record of dividend growth.
The news reports seem to be focusing on the statement "reported revenue for the year declining by c.2% (c.6% decline in organic constant currency ("OCC")²) as a result of a continuing challenging market environment". They seem to ignore the record PBT, improving from last year by a considerable margin.
Yield rates for individual equities are immaterial if dividends cease to be paid.
While long term bond yields rise, stock markets will not be able to regain composure. As soon as they fall, then it will be the catalyst for growth. I fear we are in for a muted remainder of the year with the potential for war extending in Middle East and American boredom with Ukraine and Russia.
Politics in advance of 2024 election across the pond adds further unease with a senile and doddery President that is disliked and a challenger from a former president who is a liar but with such a huge command over the party that any challenge becomes impossible.
At the moment it is only a paper loss
Considering we've already been sold down this year, the update was pretty positive IMO. I've also topped up. Looks like over 6% yield here. Incredible.
Happy to double up my holding at these bargain prices.