interesing read14 Sep 2021 14:14
The management team of Amigo Holdings filed for a Scheme of Arrangement to repay its creditors as well as to satisfy the complaints made against the firm. This is often a last-ditch effort made by companies allowing them to restructure their balance sheet and save it from insolvency. The shares were also suspended from trading when the court hearing took place.
However, things are looking better for Amigo Holdings recently as the company reported its first-quarter results for the year. Encouraging signs from this result included the suspension of additional lending, causing the revenues to suffer by 33%. However, more customers are paying their bills as indicated from their impairment ratio which has been decreased from 37.9% to 23.4%. The lender also noted a £15 million rise in profits before tax this quarter as no new complaints have been filed against it in the last three months.
Should You Buy AMGO Shares?
The recent rise in AMGO share prices has been mainly caused by the positive report mentioned above. However, this does not give enough reasons for investors to jump in
as the company has piles of debt to repay. The company’s profit margin will take a sudden hit when the suspension of interest payments which the company negotiated last year, comes to an end later in September. The new board does have confidence, evidenced by several members acquiring shares of the company throughout 2020.
However, considering all of the above factors, Amigo shares are back on track. As the company tries to claw itself back to a good financial position, investors may expect significant volatility. Because of this exact reason, it’s not the right time to add AMGO shares to one’s portfolio.
Sign In
Follow the stocks
