Mortgage Choice's div blunder

The markets negative response to Mortgage Choice's full-year results worsenned by the company having to correct its final dividend payout from 13 cents to 7 cents a share in a second announcement.

The crash in Mortgage Choice’s (MOC) share price on a weaker than expected result was exacerbated by a mix-up in its dividend.

The mortgage broker first took a 1% plus hit to its share price at the start of trade when management posted a 5% uplift in cash net profit to $15.8 million for 2012-13 when consensus estimates was forecasting a slightly higher figure of $16.4 million.

However, the stock plunged by over 8% a few minutes later when management said it had misstated its final dividend as 13 cents a share when the real figure was 7 cents a share. The 13 cents was meant to refer to its 2012-13 full year dividend.

The reason why investors took this blunder to heart is because the stock is priced for perfection ahead of its results with the stock rallying close to 80% over the past year and was trading close to a six-year high of $2.72.

Even with the big plunge in its shares, Mortgage Choice is still trading on a relatively high price-earnings multiple of around 16 times for the current financial year.

Management didn’t give guidance for 2013-14 but said it was looking to sell its aggregation services and software business LoanKit – a business that was showing good improvement. The deal will likely force analysts to lower their sales forecast for the next few years given that LoanKit accounted for 7.3% of total settlements in the last financial year.

Mortgage Choice is the worst performer on the Uncapped 100 this morning.

Source: Bloomberg

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