Why the Service Stream (ASX:SSM) share price is surging 5% today

Today’s gains will come as welcome news for shareholders, who have lost half their investment over the past year.
The post Why the Service Stream (ASX:SSM) share price is surging 5% today appeared first on The Motley Fool Australia. –

Service Stream Ltd (ASX: SSM) shares are charging higher in morning trade. At the time of writing, the Service Stream share price is trading 4.97% higher at 95 cents.

This will come as welcome news to shareholders, who’ve watched their shares tumble by around 50% over the past 12 months.

Let’s take a look at the ASX telecommunications and utilities company’s latest business update.

What was announced?

The Service Stream share price is gaining after the company confirmed its guidance, stating that its second-half earnings before interest, taxes, depreciation and amortisation (EBITDA) will be “in-line with” its first-half results. The company will provide more detailed results and outlook when it releases its full 2021 financial year results on 26 August.

Having received an increased number of enquiries from shareholders about the company’s growth outlook, and the recent performance of the Service Stream share price, the board opted to update the market prior to entering a blackout period, commencing today.

The board also stated it is “aware of an article that appeared in The Australian Financial Review on 10 June 2021 speculating about Service Stream’s potential involvement in a sale process in relation to the services division of Lendlease Corporation Limited”. The company reiterated that it considers external growth opportunities, but was not in a position to comment about speculation on specific businesses which might be under assessment.

Management wrote that it is “acutely aware of the fall” in the Service Stream share price, stating the company remains focused on its fundamental business model. That includes diversifying its revenues from the current bias towards telecommunications across broader essential infrastructure.

In an update on its utility business segment, the company stated it expects approximately 10% revenue growth from Comdain. That’s below the 15% growth it forecast at the half-year, largely due to floods and rain along the east coast delaying some project works. It said Comdain has a “strong backlog of secured work” heading into the new financial year.

Revenue from Service Stream’s telecommunications segment is down, following the completion of the national broadband network construction operations in the 2020 financial year.

Service Stream share price snapshot

Despite gaining strongly in morning trade, Service Stream shares remain down almost 50% over the past 12 months. By comparison, the All Ordinaries Index (ASX: XAO) has gained 31% in that same time.

Year to date, the Service Stream share price has remained under pressure, down 47% so far in 2021.

The post Why the Service Stream (ASX:SSM) share price is surging 5% today appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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