Is now the time to buy Carillion plc?

Should I add Carillion plc (LON:CLLN) (CLLN.L) to my portfolio?


I’ve been watching Carillion plc (LON:CLLN) (CLLN.L) intently in recent weeks. It’s a stock I’m interested in because I consider myself to be a value investor at heart, so a company which has fallen 70%+ in a matter of months naturally gets my attention.

Carillion is a share I’ve held in the past in my portfolio, and I’ve always felt it has a sound underlying business. According to a recent update from the company, it has the potential to cut costs and as recent contract wins have shown, it seems to have the potential to make progress from an operational perspective.

However, the main appeal for me was always its dividend. From what I remember, Carillion was a relatively high yielder in the past, so the suspension of its dividend for 2017 makes me a lot less optimistic about its investment case.

In terms of when its dividend will be reinstated, this is not known at the time of writing. It could be next year, or further down the line. I also think the level of dividend payment adds more uncertainty, as from my experience dividends are often reintroduced at more cautious levels following profit warnings.

As well as a lack of a dividend, Carillion also an interim CEO. While he may perform an excellent job, the lack of a permanent CEO following the resignation of the previous CEO adds another layer of uncertainty to the company’s outlook in my view. I’d rather wait for some more clarity on this area before buying shares in the company.

Then there is the review which was announced recently. This puts the company in more uncertainty in my eyes, and could lead to more volatility in the short run to my mind. This factor, as well as a lack of a dividend and CEO at the moment mean that while Carillion is one for my watchlist, it’s not a stock I’m looking to buy at the moment.

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