Speedcast’s Share Price Suffers on Earnings Announcement, Down -70% for the Year

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Today, Speedcast International Ltd [ASX:SDA] is suffering a 13.85% decline in their share price, following yesterday’s unfortunate earnings announcement.

The global leader in remote communications and IT services revealed an estimated EBITDA of US$60–64 million for the first half of the year, and US$140–150 million for the full year. This falls $20 million lower than management’s original forecast for the year, due to weakening market conditions and unfortunate operational circumstances.

Following the news yesterday, the company dropped a massive 40% as investors ran scared. We are not seeing a recovery yet, with Speedcast shares trading at $1.79 apiece, at time of writing.

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What’s expected from Speedcast this year?

Due to a range of complications, including the current market conditions, Speedcast is feeling the heat. While the company has stressed that these issues have been non-structural and they have many exciting opportunities ahead — including the potential for growth in the Globecomm business — it is clear that some have seen this loss to be bad news.

However, Speedcast is remaining positive they will bounce back from this loss. In fact, during the medium term, the company says they:

Expect healthy growth in Maritime…with continued increase in defense spending and revenue synergies from the Globecomm integration expected in 2020 and beyond. Energy’s return to growth will provide an uplift in Underlying EBITDA margin and whilst EEM remains in a challenging environment, Speedcast expects to return to growth due to market share gains as scale matters more and more.

What does this mean for investors?

When it comes to a drop this large, it’s understandable for investors to become nervous, like we’ve been seeing over the last two days. And they’re not the only tech companies to be placed in hot water — we’re also seeing Superloop Ltd [ASX:SLC] and Adacel Technologies Ltd [ASX:ADA] announcing earnings downgrades.

It may be wise to conduct your own research before entering into this cheapened stock.


Ryan Clarkson-Ledward,

For Money Morning

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About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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