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Speedcast shares on watch after trading update

The Speedcast International Ltd (ASX: SDA) share price will be worth watching this week after a management and trading update from the Aussie group.

What did Speedcast announce yesterday?

Speedcast shares remain in a trading halt after yesterday’s update which includes the resignation of CEO PJ Beylier. 

A global search for a new CEO is now underway with two Board Directors appointed as co-CEOs in the interim. Speedcast shares will be under pressure when it returns to trade in the coming days after a weak trading update.

Speedcast’s preliminary FY 2019 result is expected to be around 10% below prior guidance. The results include several items that management does not see as contributing to underlying earnings.

There’s the potential for further non-cash write-downs which are being discussed as well as what additional market disclosure is appropriate.

Speedcast shares are under pressure and don’t look like climbing any higher after yesterday’s update. The group’s share price is down 16.85% in 2020 alone and down 88.19% since late August 2018.

Are Speedcast shares good value?

Given the ASX company’s recent woes, I’d be brave to buy into Speedcast at the moment.

I think I’d be waiting for the new leadership changes to kick in and to see a turnaround in earnings before buying Speedcast shares.

In the meantime, there are some alternatives to the $189 million satellite communications group available.

Nearmap Ltd (ASX: NEA) shares could be good value after crashing 30% lower last week. Despite the earnings downgrade, Nearmap could prove to be good value if investors have overreacted to the news.

It’s not just Speedcast shares being sold off, with ASX travel shares also being hit hard. This comes as concerns over the coronavirus outbreak have spread to global travel markets including the likes of Webjet Limited (ASX: WEB).

While there may be a temporary hit to earnings for these groups, a long-term perspective could mean Webjet is a good tactical buy at the moment. Either way, it looks like Speedcast shares could be headed lower when they return to trade this week.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia has recommended Webjet Ltd. 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 Scott Phillips.

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