Why WiseTech Share Price Fell on Positive Earnings

Stocks in WiseTech Global Ltd [ASX:WTC] fell 17.40% at time of writing today after what appeared to be positive earnings.

WiseTech is a AU$300 million logistics and supply chain software company. It’s headquartered in the US and is currently trading at AU$12.10.

Why the drop in WiseTech share price?

WiseTech trades at a high multiple to its earnings, with a P/E of around 113. This high multiple represents the large growth investors expect from the firm, so the implicit downgrade in full-year earnings guidance forces investors to question whether the firm will achieve its expected growth.

While the guidance range has not changed and remains between AU$207–217 million, this figure includes contributions from additional acquisition. This gives the impression that the company is struggling to meet the growth and expectations the market had in place.

WiseTech financials

Total revenue was up 31% and gross margins increased 30%, translating to a net profit after tax of AU$15.5 million, up 7%.

CEO Richard White said:

Our global operations continued to deliver quality growth with revenues up 31% to $93.4m and EBITDA up 32% to $31.8m for the first half 2018, while we rapidly and relentlessly delivered significant new product innovations and extensive geographic expansion to accelerate our future growth.

White continued to affirm the company was driving its ‘five levers of growth’ across the business while accelerating organic growth through ‘targeted acquisitions in new geographies and logistic adjacencies.

WiseTech listed on the ASX at AU$3.41 in April 2016, hitting an all-time high of AU$16.270 earlier this month.

The current price represents a 25.63% fall from this high.


Ryan Dinse,                                       

Editor, Money Morning   


Jack Cameron,  

Junior Analyst, Money Morning

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Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

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