DWS's post-election bump

The technology solutions group says political stability will fuel earnings in the current financial year after they slid amid low business confidence in 2012-13.

Enterprise technology solutions group DWS (DWS) believes it will be a beneficiary of the post-election environment after it posted a slide in earnings and sales.

But the outlook didn’t do much for its share price as it slipped 3.3% to $1.48 in early trade with investors focused on the 8% decline in the group’s earnings before interest, tax, depreciation and amortisation (EBITDA) to $24.3 million and the 1% slide in revenue from continuing operations to $109.5 million.

Both figures were largely inline with consensus expectations as the challenging operating conditions in the IT space has been well flagged with the low business confidence and government spending cutbacks taking their toll on demand for business technology.

Clients are focused on cost control and have put off project spending, while a delay in start of DWS’ offshore business is also not helping confidence.

Management is trying to paint a more upbeat picture about its future by saying it expects “improvements in calendar 2014” once the political instability is overcome.

That might not be enough to win over investors as management declined to give an earnings guidance and most analysts feel the stock is fairly priced at current levels.

DWS is part of the Uncapped 100.

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