What: Shares in Fleetwood Corporation Limited (ASX: FWD) fell 8.3% on Tuesday after the company reported a weak result as expected.
The provider of manufactured accommodation, caravans and after-market car accessories reported a 10% rise in revenue to $366.5 million. However it also reported a 67% fall in net profit after tax but before impairments of $5.5 million, with both the Manufactured Accommodation and the Recreational Vehicles division not performing so well.
So what: The highlight of the results was the 10% increase in revenues which was driven by Fleetwood's success in winning business from government education departments. This was particularly timely given its Searipple village in Karratha only achieved 40% occupancy throughout the year.
The continued payment of a 2 cent per share fully franked dividend – although lower than the previous corresponding period – was also a positive.
Now what: On a positive note, management noted that the outlook for FY 2015 included a strong demand from the education sector for buildings. It also reported that the group would benefit from the acquisition of Bocar and that the award of a contract to build a camp in Queensland had been secured.
Less positively, management commented that conditions would remain challenging in the resources sector.
After Tuesday's fall the shares closed at $2.22 which implies a FY 2014 price-to-earnings ratio and dividend yield of 24.1x and 1.8% respectively. That's certainly not cheap, however if it represents the bottom of the earnings cycle then it's quite possible Fleetwood is undervalued.
