The company provides pricing, research, data and other business-to-business services focusing on the global financial community in the areas of asset management, banking & finance, commodities events, and pricing, data and market intelligence. Its brands include Euromoney, Institutional Investor, BCA Research and Metal Bulletin.

An encouraging update

I find today’s AGM trading statement to be encouraging. During the last three months of 2018, trading was “in line with board expectations.” Underlying revenue came in 1% higher compared to the equivalent period the year before. Within that figure, underlying subscription revenue rose 1%, and 9% growth in the Pricing, Data and Market Intelligence segment “more than offset”a 4% slide from activities in the Asset Management segment. Meanwhile, the Events segment grew 3%.

City analysts expect revenue to increase by 2.9% for the full year to September 2019 and for earnings to decline by 8%. However, the company disposed of its Global Markets Intelligence Division in April 2018, which makes earnings comparisons less useful than they might have otherwise been. The forecast is for a 6% rebound in earnings during 2020.

I like the apparent strength of the balance sheet, and net cash stood at almost £94m on 31 December, up almost 20% from 30 September. The directors explained in the report that the increase occurred because of proceeds of £20m received from the sale of a business and because of “continued strong operating cash flow.” Cash gains were offset by a one-off withholding tax payment and because of payments made on the completion of two acquisitions.

Strategy progressing well

Overall, the directors said that the strategy is “progressing well,” and there is “increasing recognition” of the firm’s pricing products. On top of that, restructuring in the asset management segment is complete. We can find out more with the interim results report, which is due on 16 May.

At today’s share price close to 1,264p, the forward-looking earnings multiple sits just below 16 for the trading year to September 2020 and the anticipated dividend yield is just over 2.6%. Those expected earnings should cover the dividend around 2.4 times. I think the valuation looks fair, but the main attraction for me is that the dividend has increased by 42% over the past five years and that kind of growth looks set to continue.

I think the ongoing growth potential makes Euromoney International Investor one for me to keep an eye on and I’d be keen to revisit the shares on dips and down-days with a view to picking up a few as part of my balanced and diversified portfolio.

The post Should I invest in this FTSE 250 dividend-growing company? appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, it’s not the only income stock with dividend growth potential. Announcing news on Monday was one company which could become a top dividend stock over the medium term.

Asset disposal

The company in question is media company Euromoney Institutional Investor (LSE: ERM). It focuses on media and information services provision within the financial services industry. It announced on Monday the sale of Adhesion Group and its 74% stake in World Bulk Wine Exhibition to Comexposium.

The former business is a Paris-based exhibitions company which has been owned by Euromoney for over two decades. The latter takes place in Amsterdam each year and is the top event for buyers of bulk wine. The decision to sell the businesses is in line with the company’s strategy as it seeks to recycle capital towards big investment themes such as asset management, price discovery and telecoms. Such areas could provide it with stronger growth potential in the long run.

Dividend growth

Looking ahead, Euromoney is forecast to grow its dividends per share by over 16% a year during the next two years. Even with such a rapid rate of growth, its dividend coverage ratio is expected to remain relatively high at 2.5 times. This suggests that it should be able to deliver further growth in dividends over the medium term which could allow it to grow its forward dividend yield of 2.8%.

Of course, that’s still a long way behind the 5.9% dividend yield which Imperial Brands is expected to deliver in 2018. The company could have further growth in shareholder payouts ahead in the long run due to its payout ratio being just 67%, which is relatively low for a tobacco company. It is also making substantial investment in next generation products such as its e-cigarette, blu. With smokers seeking less harmful products and regulations moving against tobacco products, next generation products could be a strong growth area for the company in future years.

Value appeal

With Imperial Brands trading on a price-to-earnings (P/E) ratio of 11.6, it appears to be relatively cheap at the present time. Similarly, Euromoney’s P/E of 15.2 does not appear to be overly generous given the company’s growth potential. As such, both stocks could prove to be sound buys for the long term at a time when the FTSE 100 is trading towards record highs and inflation is moving higher. They could offer a mix of value, dividend growth and earnings growth appeal which allows them to generate high total returns in the long run. 

The post A ‘secret’ dividend growth stock I’d buy alongside Imperial Brands plc appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Imperial Brands. The Motley Fool UK has recommended Imperial Brands. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

It said conditions remain “challenging” for some businesses in the group but advised: “The outlook for the Group as a whole is in line with market expectations, with adjusted earnings per share towards the higher end of the range and adjusted profit before tax towards the lower end of the range.”

Major changes

DMGT has recently undergone management changes with a new chief executive and finance director. One of the first major things the company did under the new CEO was reduce its 67% stake in fellow mid-cap listed media group Euromoney Institutional Investor (LSE: ERM) to 49%.

Euromoney will cease to be a subsidiary and will be accounted for as an associate. However, the change is more than a paper exercise and the tangible benefits of it for both companies are part of the reason I reckon they could be brilliant turnaround stocks from the levels they’re currently trading at.

De-ratings

Before coming to their turnaround prospects, the tables below show where the two companies are at today, compared with their last share-price highs of February 2014.

As you can see, the market has de-rated both companies. DMGT’s earnings per share (EPS) has declined 7% but its share price has dropped a massive 41%. As a result, the multiple of 19.3 times earnings investors were paying back in 2014 has dropped to just 12.2 times for investors buying today. Meanwhile, the combination of the falling share price and the increasing dividend (still well covered by earnings) means the yield has risen from 1.9% to 3.6%. It’s a similar story, only less pronounced, for Euromoney.

Turnaround prospects

I believe both companies have prospects of delivering good earnings growth in the coming years. If so, share price rises will almost certainly be given an extra boost by the market affording the companies higher earnings multiples. Even if the multiples don’t reach the previous 19-odd levels, a re-rating could still add significantly to the gains.

The reduction of DMGT’s stake in Euromoney means the latter’s balance sheet is now independent of DMGT’s. This has increased Euromoney’s financial flexibility to be acquisitive and add to its already well-respected brands and high-quality stream of recurring subscription revenues.

At the same time, DMGT has been able to reduce net debt from the proceeds of the share sale, likewise increasing its financial flexibility. This will help it pursue its strategy of allocating capital investment in market-leading positions, both organically and through acquisitions.

Both companies have good management in my view and look well capable of executing on what also appear to me to be sound strategies. On the basis of reinvigorated earnings growth and rising earnings multiples if this plays out, I rate both stocks as very buyable.

The post 2 brilliant turnaround stocks that could make you rich appeared first on The Twelfth Magpie.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Considering UBM’s (LSE: UBM) performance over the past decade, the company may not be the first choice for growth investors.

Over the last 10 years, shares in the company have lost 26% of their value as the group has struggled with a number of headwinds. However, it now looks as if management has pulled the business back on track. Over the past five years the shares have gained 19.2% excluding dividends, and over the previous 12 months, shares in UBM have added 9%. And for the first time in five years, last year revenue expanded by a noticeable amount.

Back to growth?

Between 2011 and 2015 UBM’s revenue bounced between £794m and £550m, with an average of around £750m. For 2016, revenue of £863m was reported, and analysts have pencilled-in revenue of £1bn for 2017. What’s more, for 2017 the company is expected to report a pre-tax profit of £250m, more than the past two years combined. Earnings per share are set to come in at 50.4p, up 26% year-on-year and based on these figures the shares trade at a forward P/E of 14.

As well as UBM’s earnings growth, the shares also support a relatively attractive dividend yield of 3.2%, and the payout is covered twice by earnings per share.

So, after a decade of floundering it now looks as if it could be time to bet on UBM’s recovery as the group builds on the foundations put in place over the past few years. As well as the company’s attractive growth profile, it also boasts a healthy cash balance of nearly £300m, as reported at year-end 2016.

Freedom to grow

Like UBM, data services Euromoney (LSE: ERM) has struggled to find growth over the past five years. City analysts have pencilled-in earnings per share of 71.4p for the year ending 30 September 2017, up only 5.3% from fiscal 2012’s reported number of 67.8p.

Still, while the company has struggled to find growth in the past, analysts are predicting bright things for the firm. For example, they expect earnings per share growth of 7% for this fiscal year followed by growth of 8% for 2018, the company’s only two-year growth run since 2013.

According to management, the recent reduction of DMGT’s stake in the business, from 68% to 49% has helped speed up diversification efforts, which explains why analysts now expect Euromoney’s growth to pick up after several years of stagnation.

Looking after investors

Shares in Euromoney might look expensive today as they trade at a forward P/E of 14.4, but this multiple seems appropriate for the business. The company is highly cash generative and during its last fiscal interim period spent £200m buying back shares from DMGT. This deal has sent debt skyrocketing to £83.6m from a net cash position of £55.9m, but with around £50m of free cash being generated every year, it shouldn’t be long before this debt is eliminated.

As well as the buybacks, which show that management is set on creating value for investors, the shares support a dividend yield of 2.4% at the time of writing. The payout is covered 2.8 times by earnings per share.

The post 2 exciting growth stocks with untapped potential appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended UBM. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Business information

Shares in Euromoney Institutional Investor (LSE: ERM) fell a couple of percent this morning, 1,028p, on the release of preliminary full-year results, although they actually looked quite reasonable and were pretty much in line with expectations.

Adjusted pre-tax profit fell by a modest 5%, to £102.5m with adjusted EPS down a similar proportion to 66.5p, and the firm maintained its full-year dividend at the expected 23.4p per share to yield 2.3% on the current share price.

The business and financial publisher and event organizer has suffered along with the rest of the print media business, as the idea of sending out information written on dead trees is really becoming old hat these days.

But according to chief executive Andrew Rashbass, the company’s recovery strategy, instigated in March is working, and he pointed to “the acceleration in subscription growth, which constituted a record 58% of our business in 2016, and in the flow of successful product launches” as examples of its success.

The firm is also changing direction through acquisition, having snapped up metals news and prices platform FastMarkets during the year, and Reinsurance Security, which rates reinsurance companies.

Euromoney shares are on a forward P/E, based on next year’s forecasts, of around 16 now, which is a bit above the FTSE average, and its dividend looks set to yield a below-average 2.3%. That, coupled with the decline of the print publishing business, might make the shares seem like a poor investment.

But it looks to me as if Euromoney is managing the shift to digital publishing and information provision competently, and the firm could well be at the bottom of a relatively modest downturn cycle with EPS growth on the cards again for 2017.

If that’s the case, we could be looking at a decent long-term investment here.

Traditional publishing

Turning to a more traditional publisher, shares in Daily Mail and General Trust (LSE: DMGT) have been under pressure since early 2014, but they’ve been staging a bit of a rally in the latter half of this year. The price took a dip immediately after the Brexit vote, but since a low on 6 July we’ve seen a 37% rise to today’s 790p.

A pre-close update in September helped, confirming that the group’s outlook remained in line with market expectations with underlying revenue growth of 4%.

The group continues to own 70% of Euromoney Institutional Investor, so the fortunes of the two companies are closely tied, with Euromoney’s revenues effectively contributing around 15% to Daily Mail’s returns on a revenue basis.

Full-year results should be with us on 1 December, and analysts are expecting them to show a fall in EPS of around 10%. But that would put the shares on a perfectly respectable P/E of 15 which would drop to under 14 if the predicted return to earnings growth for 2017 comes good.

Dividend yields are looking pretty average at around 3%, but the cash handout is growing and it should be more than twice covered by earnings.

It’s a sector not without risk, that’s for sure, but I see the recent share price recovery as being backed by sustainable earnings, and this is a share worth a closer look.

The post Is Euromoney Institutional Investor plc a good investment in these troubled times? appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

However, despite its problems, Standard Chartered still offers tremendous investment potential. Certainly, it may take time for its compliance function to be successfully overhauled (which is apparently a key aim of its new management team) but for long term investors it is a superb buying opportunity.

That’s at least partly because Standard Chartered trades on a super-low valuation. For example, it has a price to book value (P/B) ratio of only 0.6 which, for a highly profitable bank with excellent long term growth potential, is exceptionally difficult to justify. In fact, while Standard Chartered’s bottom line is due to fall by 36% this year, a rebound of 24% is forecast for next year. This could begin to positively catalyse investor sentiment in the coming months and stabilise the bank’s share price after its fall of two-thirds in the last five years.

In addition, Standard Chartered also has a great yield, with it due to be as high as 4.6% next year. This is considerably higher than the yield offered by BT (LSE: BT-A), with it being expected to yield 3.8% next year. In fact, a higher yield is not the only reason why Standard Chartered appears to be a better buy than BT. The latter trades on a rather unappealing valuation, too, with it having a price to earnings (P/E) ratio of 13.3 despite its profit being forecast to fall by 3% this year.

Certainly, BT has a bright long term future and its investment in a mobile network, superfast broadband and pay-tv (plus sports rights) is likely to position the business as the dominant quad play offering in the UK. However, the risk is that BT boosts its top line but fails to deliver the same rate of growth in its bottom line, with highly competitive deals and high levels of investment having the potential to put margins under pressure.

Similarly, Euromoney Institutional Investor (LSE: ERM) is struggling to grow its bottom line and, as today’s update from the financial services information company shows, its full-year profit is now due to fall versus last year. Pretax profit is expected to fall from £116m last year to £107m in the current year and, looking ahead, growth of just 3% is being forecast for next year.

This puts Euromoney Institutional Investor on a price to earnings growth (PEG) ratio of 5.3, which indicates that its shares may be fully valued at the present time. Certainly, it is a sound business with significant long term appeal. But, while a downturn in the energy sector is being partially offset by impressive performance from its asset management and investment banking divisions, its shares may fail to post index-beating returns in the near term.

As such, Euromoney Institutional Investor seems to be worth holding on to for existing investors, while Standard Chartered appears to be a strong buy at the present time. For investors in BT, though, the risks seem to outweigh the rewards right now and there may be better opportunities to make gains elsewhere.

The post Why I’d Buy Standard Chartered PLC, Hold Euromoney Institutional Investor PLC And Sell BT Group plc appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Standard Chartered. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.