The 10% drop includes a number of items (such as procurement savings and sale of minor surplus assets) that do not directly contribute to ongoing earnings. There will also be a downgrade on intangibles and usually new CEOs overdo this in a bad year (look at Alan Joyce) to then make themselves look like superstars in subsequent years.
Moody downgraded Speedcast International's rating to B3 - junk status. It has high leverage so only option is an asset sale. Asset sales will be the good assets that other want to buy presumably.
I'd be avoiding - I'm short as part of a portfolio quant strategy so doesn't worry me either way what happens to SDA but risks are more to the downside. I'd be buying stocks pushing new highs and generating higher returns on equity and capital.
Only fools average down. You add to a winning position. Not a losing position.
SDA Price at posting:
79.0¢ Sentiment: Sell Disclosure: Held
