Monday, December 27, 2010

REL.L - a sell

I bought REL (Reed Elsevier) on 25-Oct-2010 at 559p. It's currently trading at 538p, and I think it's a sell. Although I'm only down 4%, and I haven't owned the shares for long, I still think they are a sell. There has been some directors buying on 1 and 14 Dec, I am still not convinced. It has a ROC of -98%, and an earnings yield of only 7%. Its problem is its high debt. Gearing stands at 241%, and its z-score is low. Its median earnings quality over the last decade is 0.0. It's a company that can't seem to report vanilla earnings.

This one is tricky. It is highly indebted, making its earnings yiled unattractive, but the directors are buying.

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