What Happened to the Elders Share Price?
Elders Limited [ASX:ELD] has two key components to its business: rural services and automotive services. The rural business operates the supply of physical products, financial and advisory services, and marketing to help Australian and New Zealand farmers. The automotive side of the business, conducted through Futuris, supplies Australian automotive components. They design and manufacture seating and interiors for vehicles. This business is also trying to break into the Asia Pacific automotive industry.
Elders closed Friday 12.14% higher
Why Did This Happen to ELD Shares?
Elders’ share price has traded between 12 cents and 15.5 cents since positive half-yearly financial data was released in May.
Since then, volume has remained relatively steady. The better than expected half year results have kept investors interested in what many may believe is an undervalued stock.
What Now For Elders Limited?
If investors are looking for a bargain stock to bounce back, this isn’t it.
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Elders’ tragic tale of decline began in 2007. From the company’s high share point of $27.80 per share in June 2007, it has traded as low as 6 cents. Another way of looking at it is the company has gone from being a $2 billion market cap Aussie icon to $66 million small-cap market punchline.
ELD is debt heavy, with debt to capital ratio of 86% based on the full year 2013 financials. Also, Elders keeps hitting up shareholders to top up the balance sheet. In 2007, there were $73 million shares on.
According to analysts surveyed by the Financial Times, it is a ‘strong sell’.
It might look cheap, but there’s a reason for it.
Shae Smith+
Editor, Money Morning
