Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Today's Falling Knife: Volex Slides 30%

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

LONDON -- Shares in Volex  (LSE: VLX  ) slipped over 30% from last night's close of 140.25 pence, with early morning trading seeing the price fall to 98.03 pence at the time of writing.

This follows a trading update in which the provider of cables for electronics manufacturers announced a "general softening of demand across all sectors as well as delays in specific project timelines." This has led Volex to revise its full-year-revenue forecasts to fall within the range of $470 million-$485 million, and full-year normalized operating profit to be in the range of $11 million-$14 million.

Management has revealed a three-point plan to improve profitability:

  • reductions in operating expenses actioned to date exceed the initial 10% target
  • underlying consumer gross margin improvements are on track
  • revenue pipeline continues to grow, but conversion to revenues delayed

Elsewhere within the company, further action is being taken to combat the reduced revenues and plans are under way to widen the scope of the cost-reduction initiatives, strengthen the senior sales leadership, implement programs to "better align the sales organization with current and future customer needs" and accelerate Volex's move to a higher-margin product portfolio.

In the trading update, the company also declared that former Fiberweb group finance director Daniel Abrams would succeed Andrew Cherry as Volex's group finance director and executive director of the board on Dec. 17. Karen Slatford, currently a non-executive director of the company, will assume the role of deputy chairman.

Encouragingly, the board also emphasized that the project delays does not include its largest customer. So with the response to the revised forecast, many private investors will be asking the question: "Is Volex a falling knife?" In the depths of the financial crash in 2008-2009, its share price hit a low of 16.5 pence; however, it recovered significantly to reach a peak of 377 pence near the end of 2010. 

Setbacks in small caps like Volex are not infrequent, but that's the risk you run when trying to spot growth shares. It may well have the potential to rebound, but would warrant further research from ambitious investors only! If you are keen to earn such handsome returns from fast-growing but higher-risk shares, this free Motley Fool report could help you on your way.

The report explains how backing high-growth companies enduring temporary problems can put you on the path to the magic £1,000,000 milestone. Maybe one day, a recovering Volex could be the share that transforms your wealth. Just click here to download the report today. But hurry, all Fool reports are free for a limited time only.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2154512, ~/Articles/ArticleHandler.aspx, 10/22/2016 1:23:21 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 4 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 11:35 AM
VLX $40.00 Up +2.25 +5.96%
Volex CAPS Rating: No stars