Is SMS Management a value trap?

Hot on the heels of last week's exposé of value traps, James Carlisle asks if this IT services provider may be a case in point.

Last week we wrote about ‘value traps’ – declining businesses that always look cheap but are never quite cheap enough. One that can be added to the list is DWS, which we got sucked into a year ago in IT Services under a cloud on 16 May 14 (Buy – $1.12), thanks to its price-earnings ratio of about 10. Thankfully we baled in February following this year’s interim result (see DWS: Interim result 2015 on 18 Feb 15 (Sell – $1.09)). The chief executive has since left, earnings are expected to fall 20% this year, and with the stock down 28% since, that PER is still 10.


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