FTSE 100 Stock Loses, Then Regains £600 Million on Wild Day


(Bloomberg) — By any standards, it’s been a choppy earnings day for electronic-components maker RS Group Plc.

The FTSE 100 member lost, and then regained, more than £600 million ($737 million) of market value in Tuesday trading, as initial dismay over its results was replaced by optimism over cost savings.

RS Group Shares Recoup Plunge on Wild Earnings Day: Street Wrap

According to Morgan Stanley analyst Annelies Vermeulen, the cost program was one area of focus on the post-results conference call. With much of the savings coming from permanent reduction in headcount “there is opportunity for more accelerated margin improvement when growth returns to the business,” Vermeulen wrote in a note.

Bloomberg has reached out to RS Group for comment on the share price movement, which saw the stock fall as much as 19% at the open before closing 2% higher.

Tuesday’s wild swings are in keeping with what’s been a rollercoaster year for the company formerly known as Electrocomponents. In August, RS narrowly avoided relegation from the blue-chip FTSE 100 index, although it has declined since. Even after Tuesday’s rally, it’s still down 22% year-to-date, reducing the firm’s market capitalization to about £3.3 billion.

“Management has done a good job on gross margins and variable costs and with the new cost savings plan, it is doing the right things,” RBC Capital Markets analyst Andy Brooke wrote in a note.

–With assistance from Lisa Pham and James Cone.

(Updates with analyst comment in last paragraph)

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