Nobody said that the stock market has to be rational. Nevertheless the few remaining publicly-listed UK print companies must be feeling more than a little exasperated at the moment.
Take Printing.com, the print franchise firm which has posted pre-tax profits well in excess of £2m for the last two years. Following its recent announcement that its latest profits should meet expectations (forecasts range up to £2.5m), there was barely a sneeze in its share price.
Now I’m not suggesting that a buying frenzy should have been in order, but if I was Tony Rafferty (chief executive of the Manchester-based firm) I might have expected more of an upwards movement than the 1.2% rise that this revelation elicited.
Bear in mind we’re talking about the same firm whose shares, with a 7.3% yield and an 8.5% prospective return, “offer a better rate than most high-street savings accounts”, according to a recent article in The Independent.
Not convinced? What about St Ives then, whose interim results showed a £14m increase in revenue, despite the “challenging market conditions” in which the firm has been operating. How did its shares react to this news and the equally welcome £1.8m rise in pre-tax profits (to £12.5m)? In actual fact they fell. That is to say, they rose from 237p to 243p on the 31 March (when the results were published) and have subsequently fallen to 230.5p.
Perhaps investors are fearful of some sort of post-Potter malaise setting in at Clays, the company’s Bungay-based subsidiary. After all, JK Rowling’s ludicrously popular seven-book series has been a print and publishing phenomenon, and has no doubt been hugely beneficial to both Clays and Bloomsbury.
Nevertheless, one would have thought that St Ives acquisition of SP Group, together with its recent mammoth Royal Mail contract win, would be enough to convince would-be doubters that there is considerably more substance to the firm’s success than there is to Ms Rowling’s novels.
Perhaps print just isn’t in vogue anymore? Well, what of print management then – once the darling of private equity and the city alike. Profit margins aren’t what they once were in this much maligned sector, but try telling that to Communisis. In its latest full-year figures, published in February, Communisis posted a 472% increase in profit – after restructuring costs – to £10.5m.
Chief executive Steve Vaughan was “pleased with the results”, as he had every right to be. Shareholders on the other hand, weren’t. Since publication of its FY 2007 figures, the company’s share price has fallen over 12%, to 63.25p. The days of print management may not be over, but apparently the days of investing in it are.
Finally, there’s TripleArc, whose share price bounced along at around the 3p mark for the best part of two-and-a-half years (pretty much regardless of its results) until yesterday, when rumours of a buyout caused a sudden surge. The buyer has since been revealed as Office2Office (O2O), who put in a 6p per share offer this morning.
Chief executive Jason Cromack has said that the deal would provide “certainty and value” for shareholders and he must be privately praying that O2O’s stakeholders approve the acquisition and rescue TripleArc from the vagaries of the stock market.
The alternative – a rapid return to the 3p mark for TripleArc’s shares – doesn’t bear thinking about. Because if a 472% jump in profits isn’t enough to raise a tent in the stock market’s unusually-conservative trousers, then what are the odds of TripleArc escaping from the basement without some M&A stimulation?
Not very high, it would seem.