Colorpak gets yellow carded

We have downgraded our recommendation on packaging company Colorpak (CKL) even as the stock made a comeback this afternoon.

We have downgraded our recommendation on packaging company Colorpak (CKL) even as the stock made a comeback this afternoon.

Colorpak jumped 8.8% to 80 cents after crashing 11.8% on Monday when management posted a surprisingly weak half year result.

Management is promising a turnaround in 2014-15 after posting a 44% decline in half-year net profit to $2.7 million due to higher-than-expected restructuring costs and weaker customer demand.

While the stock doesn’t look expensive as it is trading on a 2014-15 price-earnings multiple of around eight times and a yield of close to 7% once franking credits are included, I suspect the stock will be range trading over the next few months until there is greater evidence of an earnings recovery.

You can read a more detailed report on the downgrade in today’s earnings season article. Colorpak is part of the Uncapped 100.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles