What’s Going on with the Vocus Communications Share Price?

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What happened to the Vocus Communications share price?

After a stellar 18 months, the wheels have fallen off the Vocus Communications [ASX:VOC] share price. Hitting a peak of $9.40 in April, the share price has since fallen a massive 40%.

After acquiring Amcom Telecommunication in July last year, and merging with telco M2 Group in February this year, Vocus has been one of the growth stories on the ASX. Its results in August showed a 461% jump in net profit after tax.

Why did Vocus Communications do this?

Despite the massive growth in its business, it’s now apparent that all was not well behind the scenes. In particular, the decision about who will run the business in the future. In September, Vocus’ CFO resigned; and more recently, two board members have resigned, including the company founder.

Those that resigned were looking for a new CEO to take over next year, while the other board members were happy with the status quo. Another factor was that the share price had gotten ahead of itself. Even after the huge fall, Vocus still trades on a P/E ratio of just under 20, compared to Telstra’s relatively cheaper 14.4.

What now for Vocus Communications?

Despite the turmoil, Vocus is getting on with the job. It recently received ACCC approval for its next acquisition — Nextgen. The board of Vocus is hoping to have the deal completed before the end of the year.

And in a recent update, Vocus confirmed its corporate and wholesale business is continuing to perform strongly, exceeding its first quarter targets for the 2017 financial year. But what the market likes is stability. Once Vocus comes out of the sin bin, the market should be ready to give it another chance.

Matt Hibbard,
Money Morning

Matt Hibbard

Matt Hibbard

Matt Hibbard is Port Phillip Publishing’s income specialist. While most investors focus on making money in the short term, Matt takes a different view. He’s focussed on how you can invest today to grow wealthy in 10 or 15 years’ time. You can find more of Matt’s work over at Total Income where he’s hunting down the next generation of companies that could pay you more each year than you initially invest.

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