Yesterday, the All Ordinaries (INDEXASX: XAO) was up 0.8%. But failing to match this rise were iSentia Group Ltd (ASX: ISD), Freelancer Ltd (ASX: FLN) and Navitas Limited (ASX: NVT) which all had their share prices crunched by 21%, 23% and 10% respectively. Navitas Navitas reported slowing group revenue of 5% and a fall in reported net profit of 11%, or $80.3 million. Impacting these results were the closure of the Macquarie and Curtin Sydney colleges which contributed roughly two thirds less to…
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Yesterday, the All Ordinaries (INDEXASX: XAO) was up 0.8%.
Navitas reported slowing group revenue of 5% and a fall in reported net profit of 11%, or $80.3 million. Impacting these results were the closure of the Macquarie and Curtin Sydney colleges which contributed roughly two thirds less to EBITDA than in the 2016-17 financial year. Despite a 2% hike in the dividend, the share price is now down another 4% trading under $4.30.
iSentia has had a rough year. Its King Content business was purchased for $48m in 2015 and yesterday it was announced that the value of the business is being written off and the King Content brand being discontinued.
At the time of the acquisition, the CEO and Managing Director of iSentia, John Croll, stated that King Content “ … provides a great fit for our existing clients, with further opportunities to extend our relationships into the marketing channel and access new clients across the region and globe”.
It simply hasn’t worked out and, when you add a revenue and profit downgrade to the mix, is it any wonder the market has lost patience?
Although group revenues were flat, its online payment services revenue was down 28% and its operating cash flow fell by 66%. For a highly valued stock, these performance figures just aren’t good enough. There’s still a lot of potential with this business though but a lot of execution risk as well.
Regulatory risk has always been my main concern with Navitas, and Freelancer needs to put some runs on the board before I’d consider buying shares in it.
As for iSentia, I think its core media monitoring business is solid but management capital allocation decisions are letting shareholders down. I bought these shares at a price that’s much higher than today, but I’ll continue to hold for a recovery in the core business which will hopefully lead to an increase in its share price.
It’s also interesting to note that the Commonwealth Bank of Australia (ASX: CBA) and its related entities increased its stake in the business after yesterday’s market update.
The risks with these three businesses are high and for now, if you’re looking to buy shares, I’d rather direct you towards our number one dividend idea which you can read about in the free report by clicking on the link below.
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Motley Fool contributor Edward Vesely owns shares of iSentia Group Ltd. 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.