Electrocomponents has entered overbought conditions

Electrocomponents, the world's leading distributor of electronic components, equipment and tools intended in particular for the medical, industrial and IT sectors, announced full-year results.

Group revenue increased by 3.7% to £1,953.8 million and like-for-like revenue growth was 2.2%. Operating profit grew 2.1% to £205.3 million while earning per share was up 3.9% to 34.7p.

The Board has suspended its dividend : “It is prudent to defer the decision on the final dividend for the year ended 31 March 2020 until it has greater visibility and the impact of COVID-19 on activity levels and cash generation in our key markets have become clearer."

From a chartist point of view, the stock price is accelerating up and is approaching from the upper end of a medium term consolidation channel. The daily Relative Strength Index (RSI, 14) shows bullish momentum on a weekly chart but is now overbought on a daily chart. In addition, the 20WMA is still descending, indicating that prices may face a pullback.

Short term consolidation would drive the stock price towards the support at 595p before a new up leg can occur. Next resistance threshold is set at 720p (channel resistance).

Source: GAIN Capital, TradingView

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