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Is it time to buy Computershare Limited, Lifehealthcare Group Ltd, and Ardent Leisure Group?


Results season has a way of winnowing out the weak, and indeed the lists of companies hitting 52-week lows and highs have been flooded with new names in recent weeks.

Here are a few of the most recent 52-week lows, and my take on whether they present value at today’s prices:

Computershare Limited (ASX: CPU) – last traded at $8.94, down 27% for the year

Computershare took a hit earlier this month after the company’s interim results revealed declining earnings despite an increase in revenue. A strengthening US dollar – the currency which Computershare reports its results in – negatively impacted the company’s global earnings, while a softening operating environment hinted that the company’s outlook could worsen over time.

Computershare does have an attractive business model, but the company has been struggling to generate organic growth and in recent times, costs have been rising faster than earnings. Computershare also faces competition from the likes of Link Administration Holdings Ltd (ASX: LNK), and truth be told I have trouble differentiating between the two when I use their services. With some softening in the operating environment flagged by management, I wouldn’t be surprised to see Computershare shares head lower in the near term.

Lifehealthcare Group Ltd (ASX: LHC) – last traded at $1.54, down 47% for the year

Lifehealthcare shares were smashed yesterday after a shocking half-year report revealed declining profits thanks to higher costs and despite acquisitions made in the previous half. Debt increased thanks to the recent acquisition, dividends were cut by a third, and the company may have to fund the dividend with debt thanks to poor cash flow. Investors also face the uncertainty of possible regulatory changes to the sale of prosthetics – which are reportedly unnecessarily costly – in Australia. The sale of these devices is a major source of higher-margin revenue for Lifehealthcare.

All in all, it’s easy to see why shares have been smashed and unfortunately, there doesn’t appear to be an easy recovery – much depends on regulatory changes and the company’s performance over the next half. I believe shares could head lower in the near term as investor uncertainty mounts.

Ardent Leisure Group (ASX: AAD) – last traded at $1.89, down 18% for the year

Like the other companies above, Ardent shares fell most recently after an ordinary set of interim results released to the market earlier this month. Revenues rose substantially thanks to new centre openings, yet ‘core earnings’ declined by 5% and it seems this was the metric that spooked shareholders. Ardent is increasingly hitching its wagon to its US Main Event business, which makes sense as it appears to be the company’s biggest hit.

Although Ardent shares are down somewhat this year, the company remains priced for growth with a Price to Earnings (P/E) ratio in the low 20s and shares will likely fall further if a stronger second half doesn’t materialise like management predicts.

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Motley Fool contributor Sean O'Neill owns shares of LifeHealthcare Group Limited. 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 owns shares of Computershare. 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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