Warpaint shares fall on fears of slowing growth

Shares in AIM-listed cosmetics group Warpaint fell 12% on Monday after the firm gave a pre-AGM trading update that suggested growth at the company has slowed in the last year. 

Warpaint, which currently trades on a p/e that is baking in a lot of growth at 34.3x 2016 earnings, said it was trading in line with expectations, with "encouraging" growth across all sales territories worldwide. 

However, it added that sales in Europe (which accounts for 27% without the UK, 73% if included) are flat year on year, with growth in the US expected to deliver "double-digit" sales growth, considerably lower than last year.

"... Europe where sales remain similar to the corresponding period in 2016. I am particularly pleased that our sales strategy for the US, which is the world's largest colour cosmetics market, has delivered double-digit sales growth compared to the same period last year."

Stockdale said the update was positive, with growth in all territories outside of Europe:

"We maintain our 300p DCFderived TP and are encouraged that Warpaint is on track to meet our-upgraded 2017 and 2018 EBITDA forecasts at the time of the final results last month."

Shares in Warpaint fell 15% as the market opened before bouncing back slightly, suggesting investors were hoping for more from the update.

Nonetheless, the company says it is trading in line with expectations, with brokers expecting revenues to hit £31.9m in 2017 and £38.3m in 2018, with EPS of 9.4p in 2017 and 11.9p in 2018.