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OKN - Oakton Limited

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Knobby22

Mmmmmm 2nd breakfast
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Haven't bought anything for awhile but am feeling that the pricing is getting into the "zone"

The first one to trip for me was Oakton, a software consultancy company with a good growth history that pays good dividends. Debt is not too great and even if profits have, which the company said won't occur, it still looks good value.
 

I used to trade this at close to $3 prices. Not now.

It's a good growth company, but the uncertainty over IT expenditure next year makes this stock vulnerable, not sure whether they will pay same dividend last year.

But just close to $1 is a good entry. This is my personal comment. Thanks.
 
ndpjai said:
But just close to $1 is a good entry. This is my personal comment. Thanks.
Click to expand...

Please provide reasoning as to why you think $1 is a good entry price. Otherwise the post will be considered as ramping and be removed
 
OKN up around 20% today. News released today that the CEO upped his shares. ummm so what? Fair enough if other companies have buy-in, which would reflect external confidence but why would share price rise on such an announcement. Seems crazy to me.
 
Anyone follow Oakton?

I've added OKN to my watchlist after it was sold off following its 1H10 report earlier this week.

About to begin my research on the company and would appreciate any views ASFers might have about the company.
 
I held this from June 09 to Dec 09, nice uptrend at the time.

Also from Sept 06 to Jan 08.

Agree it's worth watching for another good uptrend.

You need to get a decent capital gain as the dividend is next to worthless.
 
I held it based on the fact that this was included in the portfolio of Alan Kohler himself as reported in newsletter some year back. But now I do not hold it.
The technicality of the scrip was very good but share market performance was not directly proportional to its intrinsic value so I quit.
 
I used to own it and sold it in late 09 on bad outlook, by CEO

I still hold SMX and DTL its main competitiors and both are performing much better IMO.
DYOR SEAdvice
 
Thanks all.

Condog - yeah, SMX is also on my watchlist. SMX seems to be doing a lot better than OKN at the moment.
 
Four entities in the Blackrock Investment Management group of companies have taken a substantial holding in OKN from 18/2/10, with buying starting from October 2009. Not sure what it means just yet but an intriguing development, I think.
 
These guys are stating to interest me. The bounced a little off yesterdays 52 week low, have little debt and a satisfactory ROE - nice dividend yield as well.

I would like to investigate why the ROE has been declining in recent years however.

AMP does seem to be selling for what it is worth.

DWS is also on my radar - again.
 
Be sure to report back with your findings, ill be reading

Im not sure if I recall exactly, but I think OKN lost a contract/customer or something similar recently (6 months or so ago)?
 
VSntchr said:
Be sure to report back with your findings, ill be reading

Im not sure if I recall exactly, but I think OKN lost a contract/customer or something similar recently (6 months or so ago)?
Click to expand...

They have had a legal dispute that has been settled recently in Oaktons favour.

The short answer on the decline in ROE is in the main due to a restructure of the OKN business. They seem to be aiming for the lowest cost competitor position through offshore staff in India.

OKN has also had performance issues in their Victorian operations.

I normally take the forecast earnings on Comsec with a large boulder of salt... but it will be interesting if the strategies and investments taken by OKN pay off.

There is a lot of competition in this sector, SMX, DTL and DWS to name a few it is difficult for me to determine in any of the above have a competitive advantage.
 
Yes, Robusta. Bought some today.

The Victorian problem meant they had to sack the manager and get serious. I really think we are near the nadir now. With some half reasonable Victorian management and the advantaage of the Indian operation, the eps and dividends should increase. Of course, by how much depends on a lot of internal and external factors.
 
robusta said:
There is a lot of competition in this sector, SMX, DTL and DWS to name a few it is difficult for me to determine in any of the above have a competitive advantage.
Click to expand...

Plenty of peers for OKN. SMX, DWS, DTL like you mentioned. Also UXC, TNE, ASZ and HSN are in similar veins.

SMX, DTL and TNE are proven performers over the last 10 years.
 
I find it difficult to seperate these companies, they all have fairly similar metrics and seem to offer almost identical service, although they will all have differences at the margin. I wonder how virtualisation will affect a company like DTL who is so dependant on software sales.
 
skc said:
Plenty of peers for OKN. SMX, DWS, DTL like you mentioned. Also UXC, TNE, ASZ and HSN are in similar veins.

SMX, DTL and TNE are proven performers over the last 10 years.
Click to expand...

Yes a lot of 'quality' in the above companies. I would like to buy something in this sector but am still trying to work out the most likely winner in the next 10 years. It would not surprise me to see some consolidation among these guys to buy market share.
 


Dodged one here. The big volume bar on 9 Feb suggested that some overhang was removed followed by a big up day with barely any resistance. That long candle finished close to the high and breaks the long term down trend.

I was going to buy on a retrace but noted that the report is due anytime and would rather pay a few more cents on the release of the report... which the market clearly didn't like.

Fundamentally revenue going backwards is never good, neither is staff number falling 10%. The usual. EPS was 7.3c and 75% payout as dividend at 5.5c. Even if H2 continue to fall by say 7%, full year EPS ~14c and dividend of ~10.5c. This means a PE ~7.6 and yield of 10%, fully franked no less.

The current share price is probably price they will struggle to maintain current market share. Those with specific IT consulting industry knowledge can attempt to prove the market wrong.
 
Share buy back announced today, up to 10% of issued capital, at these prices buy bach should add shareholder value IMO.
 
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