Clarity Commerce Solutions

Shares in hospitality, leisure and retail-sector IT business Clarity Commerce tumbled 20% as chief executive Graham York revealed that full year profits will fail to match analyst expectations. Nevertheless there remain many positive signs for investors. Explaining the unexpected profit warning, York commented that the $3m purchase of cinema ticketing software supplier Pacer/Cats (one of two acquisitions made last autumn) 'is having to proceed more quickly than planned, as a result of major customers requiring upgrade systems'. Investment in this business has therefore been greater than anticipated. However, York's assurances, that turnover will 'be in line with market expectations' and that group profits will still be 'significantly above' the £315,000 achieved last year, bode well for the future. Following the warning, house broker Williams de Broe is still forecasting a £650,000 profit before tax and goodwill for the year to March, down from a previous estimate of £850,000. Earnings of 3.6p a share on sales of £12.6m are also now expected. With this latter figure representing a near 80% improvement on 2003 figures and the increased investment at Pacer/Cats set to improve prospects in the medium term, a current £8.3m market valuation is not expensive. Those ready to offer Clarity the benefit of the doubt should look to up their stakes.

Sector: Software & Computer Services

Companies: Clarity Commerce Solutions (suspended on 3 January 2012)

Market cap: £8.3m

PE Forecast: 14.9

Share price: 53.5p

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