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Why the Adacel share price fell 10% today

Adacel Technologies Limited (ASX: ADA) saw its share price fall 9.6% today to $1.80, and shares have dropped 15.8% in the past 5 business days.

Shareholders probably won’t be too disappointed though. The share price is still up 575% since the start of this year.

Adacel share price 2015

Source: Yahoo Finance

As I outlined in late November, Adacel has had a strong year with a number of accomplishments pushing the share price higher, including a forecast of a 50% rise in profit before tax for the 2016 financial year.

Investors may be taking some profits off the table after such a strong run. After all, the company is trading on a trailing P/E ratio of 36x.

But if the air traffic control systems and simulators developer can achieve its forecast, the P/E ratio could drop much lower. It’s definitely one to add to the watchlist.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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