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Capita (CPI): what's it worth?
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- Lemon Half
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Re: Capita (CPI): what's it worth?
SwissPaul wrote:Stupid question but when is the divvi?
It's been cancelled. That along with a profits warning has caused the share price to plummet.
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- 2 Lemon pips
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Re: Capita (CPI): what's it worth?
with this company you have to account that they have been underinvesting for many years. it's generated decent free cash flow in the past but in 2016 the dividend was effectively financed with debt.
it delayed cutting the dividend which caused the business to avoid the painful measures that were needed at least a year or two ago. typical of many companies before them that deteriorated, but kept paying the dividend which kept many investors in line. looking at the operating margin it was in 2012 that the company started on the slippery slope of rapidly decreasing margins.
it is a poor quality business, but is cheap at a certain price - the question is what is that? now that carillon went bust, it seems unfathomable to me that this will not change the standard industry practice of fixed price contracts with outsourcers taking all the risk but none of the reward.
looking forward i think they forecasted £250-300m of operating income. on the rights issue, is this £700m raised at the £3.60 odd price or the £1.80 or so it is today? we aren't given this information. if it doesnt account for the lower share price, the dilution will be double.
there will be significant restructuring costs, and there will be asset sales. the restructuring will clearly reduce the income going forwards, but by how much?
their costs are bloated and i have no doubt they will be able to drive costs down. it is a horrendously complicated and inefficient business. i don't know where to start on valuing it.
when i can't get my head around the accounting of an industry, i pass.
it delayed cutting the dividend which caused the business to avoid the painful measures that were needed at least a year or two ago. typical of many companies before them that deteriorated, but kept paying the dividend which kept many investors in line. looking at the operating margin it was in 2012 that the company started on the slippery slope of rapidly decreasing margins.
it is a poor quality business, but is cheap at a certain price - the question is what is that? now that carillon went bust, it seems unfathomable to me that this will not change the standard industry practice of fixed price contracts with outsourcers taking all the risk but none of the reward.
looking forward i think they forecasted £250-300m of operating income. on the rights issue, is this £700m raised at the £3.60 odd price or the £1.80 or so it is today? we aren't given this information. if it doesnt account for the lower share price, the dilution will be double.
there will be significant restructuring costs, and there will be asset sales. the restructuring will clearly reduce the income going forwards, but by how much?
their costs are bloated and i have no doubt they will be able to drive costs down. it is a horrendously complicated and inefficient business. i don't know where to start on valuing it.
when i can't get my head around the accounting of an industry, i pass.
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- 2 Lemon pips
- Posts: 140
- Joined: February 2nd, 2018, 11:06 pm
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Re: Capita (CPI): what's it worth?
resisting this, i had a quick look through their latest annual report.
so everything is fine!
Adjusted profit before tax
2018: £282.1m
2017: £383.1m
so everything is fine!
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