An investment at 121p looks even be7 Oct 2010 11:31
Promethean World (LSE: PRW) may be just such a share. Shares in the maker of interactive whiteboards for the classroom were floated on the FTSE in March at 200p. As I write, they go for 121p.
What did Promethean World do to fall from grace? Has it posted a loss? Have teachers abandoned their toys and returned to chalk and blackboard?
Not so far. In August, Promethean World reported six-month revenues up 35% to £122 million, and operating profit 31% higher to £12.6 million. Strip out exceptional costs related to the IPO, and adjusted profits rose 42%.
It's true that Chief Executive Officer Jean-Yves Charlier recognized that:
"... the economic environment is uncertain and some government budgets are under pressure."
But that was far from a formal profit warning, given that he added:
"Following a good first-half and having covered start-up losses from [recent acquisition] SynapticMash, we expect the group's full-year trading to remain strong and in line with expectations."
The share price has reacted far more than the analysts. The consensus for earnings per share for 2010 of 11.9p is merely 0.09p lower than their estimate three months ago -- and up 0.06p over the past month, according to Company REFS. That makes for a P/E of 10, falling to less than 9 if 2011 estimates of 13.8p are achieved.
An investment at 121p looks even better when you consider Promethean World has more than doubled its pre-tax profits in recent years, so there has to be the chance of a positive earnings surprise. The most bullish analyst is looking for adjusted earnings per share growth in 2011 of more than 20%.
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