Today I am running the rule over three London-quoted headline makers.
Retailer on the rise
Retail giant Findel (LSE: FDL) cheered the market on Tuesday with news of a significant divestment, a development that drove shares in the company 7% higher from Monday’s close.
The Hyde-based business advised that it had shorn off its Kitbag division to US sports merchandise giant Fanatics for a cash consideration of £11.55m. Findel said that the move will “focus our resources more fully on driving growth within our core home shopping and education businesses.”
And despite today’s solid share price bump, I believe Findel still offers great value at current prices, particularly as sales at Express Gifts and Findel Education continue to improve.
The City expects the company to follow predicted earnings growth of 15% in the 12 months to March 2015 with a 7% advance in 2016. This leaves the stock dealing on a P/E multiple of just 7.2 times — any reading below 10 times is widely considered terrific value.
Manufacturer on the march
Although paring gains from earlier in the day, diversified manufacturer Low & Bonar (LSE: LWB) was also firmly in the ‘plus’ column in Tuesday business and was last seen 5.5% higher on the day.
Investor sentiment cantered higher, following news that pre-tax profit advanced 5.6% in the year to November 2015, to £26.6m, with Low & Bonar shrugging off the impact of unfavourable currency movements. Total revenues at actual rates fell 3.6% last year to £395.8m, although at constant currencies these rose 2.4% in the period.
Even though tricky market conditions remain a bugbear for some of Low & Bonar’s divisions, I believe the company’s expansion in China — on top of capacity increases at its construction fibres facilities — should underpin robust bottom-line growth in the years ahead.
The abacus bashers expect the business to chalk up a 10% earnings advance in 2016 alone, leaving Low & Bonar changing hands on a very-attractive P/E rating of 10.8 times.
Time to stop digging
Diversified mining giant Anglo American (LSE: AAL) enjoyed a solid updraft during the dying embers of January, as risk appetite returned to global stock markets. But this strength is already beginning to peter out, and I expect the company to add to the 7% fall currently recorded in Tuesday trading.
It’s no secret that each of Anglo American’s major markets remain hamstrung by colossal supply/demand imbalances, a scenario that should keep a cap on potential price recoveries. Indeed, signs of worsening economic cooling in China are likely to heap fresh pressure on raw material prices in the near future.
Anglo American is expected to have clocked up a fourth successive earnings slip in 2015, this time by a meaty 57%. And a colossal 36% dip is predicted for 2016.
Sure, a consequent P/E rating of 10.4 times may be attractive on paper. But I reckon Anglo American’s long-term revenues outlook — not to mention the prospect of earnings downgrades to current projections and likelihood of draconian dividend cuts — make the business a highly-unattractive stock selection.
