The Vocus Group Ltd (ASX: VOC) share price is in a mega-bear market, down 28% today and 73% in the past year. A profit downgrade this morning revealed that full year profits will come in some 20% lower than was previously forecast, which sent shares into free-fall:
Investors weren't just concerned about lower profits, with the possibility of dividend cuts occurring if management needs extra cash to pay down debt. The company's debt burden is looking a bit stretched, with net debt rising to 2.6x Group forecast Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA). Banking covenants limiting this ratio to 3.5x.
Still, with a price to forecast earnings (P/E) ratio of 9 and rumours of a private equity takeover , smart investors should be running the ruler over Vocus Group.
