Steel & Tube shares recover from 15-year low
Steel & Tube Holding's [NZX: STU] share price has recovered from a fifteen-year low after a flow of bad news ceased.
The stock last traded at $2.20, having gained 18 percent so far this month, and rising 4.3 percent today, making it the top performer on the S&P/NZX 50 Index for this session.
"On the back of relatively low volumes this week it's recovered, in my view, closer to fair value, having been hammered after a long period of bad news," said James Bascand, equity analyst at Forsyth Barr. "It got to a price which appears cheap compared to what the market thinks the profitability will be and what the dividend and hence yield will be. And a month out of the spotlight of negative news probably helps as well."
The shares have a prospective yield of 8.3 percent for the next 12 months according to Reuters data, compared to 5.1 percent for its peers.
Steel & Tube shares hit a fifteen-year low of $1.82 in late June. They began falling in March, when the Commerce Commission announced it would investigate the company after the building products company's chief executive admitted selling "many thousands of sheets" of earthquake reinforcing mesh with certificates that wrongly used an independent laboratory's logo.
That decline worsened in May, when the steel products distributor cut its full-year guidance and said underlying earnings could fall 10-to-15 percent as margins contracted and it incurred costs related to quality issues for the mesh.
There was some recovery in the share price early last month, before the fifteen-year low on June 24 as Steel & Tube said it was in talks with "multiple agencies" in New Zealand and China over pile casing that was to be used in bridges for the Huntly bypass that was found to be too weak for four bridges on the bypass after being cleared by earlier inspections.
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