The worst performer on the ASX 200 on Wednesday has been the McMillan Shakespeare Limited (ASX: MMS) share price.
In early afternoon trade the salary packaging, novated leasing, and fleet management company's shares are down 18.5% to $11.86.
Why has the McMillan Shakespeare share price been smashed?
Investors have been heading to the exits in their droves following the release of its half year results.
For the six months ended December 31, McMillan Shakespeare posted a 1.2% increase in revenue to $273.1 million and a 3.8% decline in EBITDA to $65.3 million.
First half underlying net profit after tax and acquisition amortisation (UNPATA) fell 3.9% to $42.6 million and 4.1% on a per share basis to 51.5 cents. Despite this profit decline, the McMillan Shakespeare board declared a fully franked interim dividend of 34 cents per share, up 3% on the prior corresponding period.
This result appears to have fallen well short of the market's expectations.
What were the drivers of the result?
During the half the company's Group Remuneration Services segment performed well and delivered solid growth in novated units and salary packages. This led to a 5.2% lift in segment EBITDA but only a 1% lift in segment UNPATA.
Unfortunately, the company's other two segments weighed heavily on its results. The Asset Management segment posted a 12.8% decline in segment UNPATA and the Retail Financial Services segment saw UNPATA fall 16%.
Should you buy the dip?
Based on today's result and its significant share price decline, McMillan Shakespeare's shares are now changing hands at under 11x trailing earnings and provide a fully franked 6.2% dividend.
Whilst it isn't necessarily a share that I would buy, it does look reasonably attractive at this level even after taking into account the tough trading conditions. Especially if its potential merger with Eclipx Group Ltd (ASX: ECX) goes ahead.
Incidentally, the Eclipx share price is down 11% today following the release of this update. Industry peers SG Fleet Group Ltd (ASX: SGF) and Smartgroup Corporation Ltd (ASX: SIQ) have also fallen heavily this week.
