Hobson: Carpetright Will Keep Falling

THE WEEK: Morningstar columnist Rodney Hobson say shareholders in Carpetright should prepare for more bad news

Rodney Hobson 4 May, 2018 | 3:18PM
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Something seems to have gone astray at medical equipment maker Smith & Nephew (SN.) over the past three months. As recently as February, sales were projected to grow at an underlying rate of 3-4% this year with improved profit margins. Now the projection has been cut to 2-3%, with margin improvement less than expected.

At first that doesn’t look too serious a downgrade. What is worrying, though, is that after a weak first quarter S&N is working on the assumption that the rest of the year will be fine. What if management has been as overoptimistic about the next few months as it has been over the past four? Revenue growth of 5% in the first quarter was entirely due to favourable currency movements, so the underlying figure was flat.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Howden Joinery Group PLC960.80 GBX-0.27
Sainsbury (J) PLC282.40 GBX0.14Rating
Smith & Nephew PLC1,328.50 GBX-1.67Rating

About Author

Rodney Hobson

Rodney Hobson  is a columnist for Morningstar.co.uk and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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