SIG - Sigma Healthcare

[CanOz]

Yep, absolutely love it, but personally thats because I find i trade a hell of a lot better with it, just my view.

My accounting view on this stock - these guys have performed super well for a very long time, they have the lions share of the generic drug sector and a chemist chain to distribute the drugs, so long term it will perform. All areas of fianancial performance gets a tick. They are however a little expensive P/E wise, especially considering that I would have thought it will be hard for them to grow without expanding via M&A activity and they will pay a high premium in this market to do it.

Always bare in mind however that fundamentals and technicals can have a significant time lag and other risks can affect stocks. If you are a fundamentalists, then this is a great stock to be in - I just don't like it short term....

Cheers

I love it when an accountant uses T/A!

Great call Reese, i can't read your short list, but was SIP on it?

For those who are longer term hopers...err i mean holders...look for some absorption volume, maybe the smart money will come back in where they think its undervalued.

Cheers,

 

[Awesomandy]

For those who are longer term hopers...err i mean holders...look for some absorption volume, maybe the smart money will come back in where they think its undervalued.

Looks like we might have found it - 40 orders of total 594,097 quantity @ 1.70. It is currently at 1.72.

Guess I misread it earlier today - bought them in at 1.82.

 

[reece55]

even more woeful news for me,.. share price is at $1.76
(i'm losing 30%!)



Shares in Sigma Pharmaceuticals have tanked in opening trade after the company cut its full-year earnings forecast. In a bid to soften the news, Sigma also announced an on-market share buyback of nearly 10 percent of its issued shares. Sigma said it expected earnings before interest, tax, depreciation and amortisation (EBITDA) to increase by 5 percent for the full year ending Jan. 31, 2008. It expected underlying net profit after tax for 2007/08 to be in line with the previous financial year, excluding the interest impact associated with the buyback. Shares in Sigma have tumbled 15.33% to $1.79 and a half cents.

Quarky
I do feel your pain (we have all been there, definitely me included) , but as I said previously, SIP was looking sick.

The one thing to remember here is that news travels in the direction of the trend - it had been under performing for so long and low and behold, we have a profit downgrade. Normally, unless there is an unforeseen event, the chart will reflect the issues surrounding the business, indeed it usually is a leading indicator.

All the best
Reece

 

[Nicks]

Interestingly Huntley's had a Buy recommendation on SIP prior to yesterdays news, with High Value and Income. They now say since yesterdays news it is a Hold.

I dont think the news was significant enough (read it carefully, it actually was not really bad) that if they had a Buy at > $2.20 to $2.35 before yesterday, that it now isnt even better value at a 30% discount to the previous share price. Given the returns I like this stock even more at this price plus there could be some consolidation in the industry coming or perhaps a private equity bid at these low prices.

In other words, the share price has dropped 30% - far more than warranted, so it is a better buy now than before, and before it was good buying.

So rather than just say this, I put faith in my reason and bought some more.

.... of course all in my own opinion and do your own research....

 

[Nicks]

even more woeful news for me,.. share price is at $1.76
(i'm losing 30%!)



Shares in Sigma Pharmaceuticals have tanked in opening trade after the company cut its full-year earnings forecast. In a bid to soften the news, Sigma also announced an on-market share buyback of nearly 10 percent of its issued shares. Sigma said it expected earnings before interest, tax, depreciation and amortisation (EBITDA) to increase by 5 percent for the full year ending Jan. 31, 2008. It expected underlying net profit after tax for 2007/08 to be in line with the previous financial year, excluding the interest impact associated with the buyback. Shares in Sigma have tumbled 15.33% to $1.79 and a half cents.

Exactly - it is still forecasting an increase! one of those situations where investors expected more, and sold when it didnt meet the expectation. Still not really bad news funnily enough.

 

[Awesomandy]

9 brokers/analysts have now rerated SIP after the drop, with the mean being around $2.03 in 12 months time (the range generally being 1.89 - 2.10). Even so, most of them have recommended a hold, and only about 2 or 3 have recommended a buy. Personally, I am leaning towards a buy, although only in small quantities. If they meet their earnings target, the upside is looking pretty bright. But then, given their current performance and profit downgrade, I'm not quite sure how they are going to meet the target.

Note: I am currently a holder (and so is a friend of mine who has lost 25% of his money on this)

 

[FinalFantasy]

It looks pretty good to me right now, but it might be a bit slow to get up to $2; other shares probably do better I think @_@

 

[Nicks]

At this P/E is it not a darn good deal? I mean there is actually not really any downside now, thats already done. Just upside and a good dividend payout ratio to boot and potential industry consolidation in a drug indulgent western society. Perhaps we will see (or have justed started to see) an albeit quite delayed bounce, my eta $2 by Aug minimum.

 

[Mutley]

I bought in at $1.73 on the strength of coverage in The Intelligent Investor. The stock has been strong this past week despite much market uncertainty, so I think the worst is behind us and there's a level of bargain-hunting activity sustaining SIP.

Hold on...it could get ugly out there :

 

[Nicks]

I think it just needs to break through this 1.70 - 1.80 barrier.

Lets face it, there is the most minute risk left of any downside left with this stock, but plenty of upside. I suspect the next good news or next set of financials will see this stock set off for above $2 again very quickly.

In the meantime i'll happily hold whilst getting dividends, 10% of the stock bought back increasing my stocks EPS and enjoy the gradual capital gains until the next financials come out and we see the result of this large Buy Back, which inevitably will be an increase in EPS.

 

[jet328]

10% of the stock bought back increasing my stocks EPS and enjoy the gradual capital gains until the next financials come out and we see the result of this large Buy Back, which inevitably will be an increase in EPS.

How are they funding the buyback?

If a buy back is funded through spare cash, yes EPS will increase. However, if they borrow the money to fund the buyback then obviously there are interest costs.

Cheers

 

[Nicks]

How are they funding the buyback?

If a buy back is funded through spare cash, yes EPS will increase. However, if they borrow the money to fund the buyback then obviously there are interest costs.

Cheers

Spare cash from what I can remember, check out the announcement about a month ago.
That being said sometimes it is good to buy with interest as well to establish a target D/E ratio for tax benefits and funding projects that give a +NPV.

 

[quarky]

markets have tumbled.
i don't even know whether to hold SIP or any other stock for that matter.
bought SIP @ $2.55
now it's at $1.60+


maybe i should put a deposit down on a house.

 

[quarky]

SIP just dropped another $0.19 (11%) today, to $1.465
damn!


i haven't been able to find why this is happening?

 

[Nicks]

The Friecking CFO chose today as the day to resign from SIP. Coward and insensitive. What I mean is that he didnt do shareholders any justice at all.

 

[mark_au]

The Friecking CFO chose today as the day to resign from SIP. Coward and insensitive. What I mean is that he didnt do shareholders any justice at all.

Yea great timing, double whammy, market going splato and him resigning
so i bought some more LOL

mid - long term it would be logical that the business should do well, but geeze they need to get their finger out

 

[Alien]

At least the price fall has been good for the share buyback. Company is soaking plenty up. Good value at these prices IMO.

 

[Awesomandy]

I've given up on this a little while back. Although I agree that there is potential for the mid - long term, surely, there have to be better opportunities elsewhere while this mob sort themselves out.

 

[Nicks]

Mr Elmo aint doing a good job imo. Pretty disappointing today. Damn good business but not being managed too well. I want to see his resignation and see the back of him and his CFO. I'd be eyeing this one off now if I was someone interested in the business.

Anyway 3c dividend is pretty good and looks like the future does hold well. Would prefer fresh management team to capitalise on the good fundamentals and market position to take Sigma into the future.

 

[Awesomandy]

It's down to $1.32 at the moment. Definitely in a breakdown mode. After the half-year profit announcement a few days ago, the only way it has gone is down. Surely, heads will have to roll soon if this company is to be resurrected.