Why the Bradken Share Price is Down 20% Today

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What happened to the Bradken share price?

The bad news keeps rolling in for Bradken Ltd [ASX:BKN], as its share price loses more than 20% this morning.

Today’s fall follows a 30% one-day loss on January 28, when Bradken announced that takeover talks with private equity groups Pacific Equity Partners and Bain Capital Asia had fallen through.

Why did this happen to BKN shares today?

This morning the mining services group reported half yearly earnings results that disappointed shareholders. Over the first six months of the financial year, the company’s net profit is down a whopping 64%.

BKN also announced that it will not pay an interim dividend. This is disappointing for shareholders considering that Bradken had been trading on an 8.25% dividend yield.

What now for Bradken Ltd?

The mining services sector has faced plenty of bad news of late, as it struggles in the face of falling commodity prices.

Today’s results follows another disappointing result in the mining services sector yesterday. Coffey International [ASX:COF] reported a 50% drop in net income for the half year. Its share ended the day 17% lower.

And the removal of the Bradken’s dividend is a clear sign that the high yields on offer from resources sector stocks are unsustainable.

Regards,

Meagan Evans,
for The Daily Reckoning Australia

Join The Daily Reckoning on Google+

Meagan Evans
Meagan Evans, has seen from the inside of the investment industry how easy money can lead to bad management decisions. She holds a degree in Finance and a Master’s in Business Administration and, as a Certified Financial Technician, Meagan employs both technical and fundamental analysis to make solid investment decisions
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