Utilitywise(LSE: UTW) has been lighting up investment radar screens all around the country -- for the wrong reason.
The consultancy that supplies multi-utility packages to businesses had seen its shares topping 350p back in early 2014, but the price has plunged as low as 36p as I write.
That includes a 40% fall today, on the back of another profit warning.
Its business model had attracted criticism, with its policy of recording commissions from energy suppliers as income a year or even more before the cash actually arrives.
In this case the energy firms are surely not going to renege on their commitments and not pay. But it can bring uncertainty and can lead to rising debt.
At the interim stage however, net debt stood at a relatively modest £9.6m (down from £16.8m at the same stage in 2016). That's close to adjusted EBITDA of £9.7m, and would not alone cause me any sleepless nights.
On 29 June, the firm revealed a hit to its commission levels due to anticipated "material levels of under-consumption" against a major energy contract, with the overall result likely to be a total charge in the current year of around £11.2m -- £7.7m being an exceptional charge and £3.5m a reduction in underlying profit.
And now we hear that Utilitywise has lowered its revenue predictions for the full year to between £4m and £4.5m below previous expectations -- apparently down to "same supplier renewals contracts which form a substantial proportion of the revenue secured by the group in the final months of the financial year."
The company has also now adopted IFRS 15 accounting standards, and we were told that had these rules already been in operation we wouldn't be seeing the same drop in expected revenue. But it's surely going to take some time to get the full picture under the new regime.
Should we buy?
The big question for investors now, of course, is should we buy? Or even sell?
The shares were already on very low P/E ratings, but after today's price collapse we're looking at a forward multiple of a tiny 2.2, dropping to a minuscule 1.8 based on the 19% EPS rise forecast for 2018.
And the mooted dividends would now yield 18%.
What it will all look like once forecasts are reworked in accordance with the latest news (and based on different accounting standards) is something we can only guess at, but there would have to be something pretty catastrophic coming out of any reworking to make valuation levels like these look too expensive.
On the plus side, ace investor Neil Woodford owns Utilitywise shares, so he clearly saw value in its business model. I'd also say we're looking at a classic growth story that's gone off the rails a little, with the resulting desertion of the shares -- and that could well mean an oversold bargain.
What would I do? I'd worry about whether future customers might have second thoughts having seen the series of problems this year -- would they put their trust in a firm whose market capitalisation has now plunged as low as £27m?
I'd like to see full-year results (ideally with a restatement of previous results) under a more conservative accounting regime before I'd consider buying. But at the same time, if I owned the shares I don't think I'd be selling.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.