Electrocomponents Rises in Longest Winning Streak: London Mover
Electrocomponents Plc (ECM), a distributor of more than 550,000 electronics and maintenance products, rose for a 13th day, the longest streak ever, as investors bet that resurgent business in Europe and North America will continue.
Shares of the seller of products from batteries to semiconductors have gained about 13 percent since May 2 in the most sustained jump since they began trading in 1989. The stock rose as much as 0.4 percent today to 279.5 pence, a two-year high, and was up 0.3 percent at 9:15 a.m. in London.
“Electrocomponents has demonstrated good momentum in terms of top-line growth, especially in the U.S. and Europe,” David Greenall and Andrew Brooke, analysts at RBC Capital, said in an April 23 report. “The company has emerged from the downturn,” said the analysts, who raised their recommendation to outperform from sector perform.
Electrocomponents, which sells RS Components and Allied Electronics items through a catalog and online, had a 2 percent gain in underlying sales in continental Europe in the fiscal fourth quarter, a quicker pace than the 1 percent growth for the full year, it said in March. North American sales were flat, improving from a 3 percent drop for the year. The Oxford, England-based supplier is scheduled to report full-year results tomorrow.
Even so, revenue growth eased in the U.K. in the last quarter, and Britain will probably account for 42 percent of Electrocomponents’ full-year profit, Andy Brown, an analyst at Panmure Gordon & Co., said in a May 20 note. The U.K. purchasing managers index for services was at 52.9 in April, indicating expansion, while the construction index and the PMI manufacturing gauge were below 50, signalling contraction.
“PMI and industrial data continues to paint a mixed picture, which forms the basis of our cautious stance,” said Brown, who recommends selling the shares and has a target price of 175 pence, the lowest among analysts surveyed by Bloomberg.
U.K. revenue declined in the fourth quarter excluding sales of the Raspberry Pi. The credit-card sized computer was developed by a charity that promotes global education in computer skills.
Of the analysts who report their recommendations to Bloomberg, nine advise holding the shares, five have a sell recommendation and three recommend buying. Electrocomponents shares have gained about 17 percent this year, valuing the company at 1.2 billion pounds ($1.8 billion).
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