Is this the start of a comeback for Carillion plc?

Carillion plc (LON:CLLN) (CLLN.L) closed in the black in Friday’s trading session


After a pretty awful week for its investors, Carillion plc (LON:CLLN) (CLLN.L) enjoyed a more positive day on Friday. At one point during the day its share price was over 10% higher, but it faded during the afternoon to close just 1% higher.

While only a small gain, the company’s investors will obviously welcome this after a decline of around 70% during the last week.

Investors seemed to react positively to Friday’s news that Carillion had appointed HSBC as Joint Financial Adviser and Joint Corporate Broker with immediate effect.

In my opinion, the Carillion share price could remain highly volatile for some time, and I feel it’s far too soon to be talking about recoveries or turnarounds. After all, the company has not yet concluded its review and is without a permanent CEO.

To my mind, it will take time for the company to turn around its current issues, such as relatively high debt and difficulties with its operations. I feel it has a good underlying business which is cutting costs and still winning new business, but it may take a while for this to come through and have a positive effect on its share price.

Therefore, Carillion is not a stock I’m looking to buy just at the moment. Its dividend was a big plus for me, and without that in 2017 I feel it has lost one strong reason for me to buy it. Although it could reinstate dividends next year, I’m not sure at what level they could be at and with a number of other dividend options available, I think there may be better investment opportunities available elsewhere.

That’s not to say Carillion will be unable to improve its financial performance. As discussed, I feel there could be a sound underlying business. However, with its shares so volatile, I’ rather wait for further news flow before buying in.

About Robert Stephens 3395 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email or use one of the other contact methods available on the 'Contact Us' page