With investors rushing to buy UK defence stocks, one FTSE 250 growth star stands out to me.

I just bought Qinetiq (LSE:QQ) for my SIPP as a long-term compounder.

Qinetiq paid £43m to shareholders in 2022/23. The dividend per share is double what it was a decade ago. But there’s more.

BAE the best?

BAE Systems is one of the biggest stock market gainers from the West’s move to aid Ukraine with military support. It’s Britain’s largest defence company, after all.

It remains the UK’s most-searched for stock in 2023, according to Google Trends.

But with so many investors throwing their cash into BAE shares, I see the £10+ per share price as too high. Now I’d have to pay 17 times annual earnings for BAE.

Instead, my eyes alighted on a company a fraction of the size. QinetiQ is a £1.8bn market-cap defence specialist with £1.6bn in revenue. It has a solid and growing dividend, and humming net profits.

A Common Wealth report cited by The Guardian found Qinetiq pays just 4.5% of its own research and development costs. The rest is shouldered by increasing UK government support for aerospace and defence companies.

That’s led to a chunky 23.2% return on investor capital, reporters wrote.

Breakups are tough

So what are the major risks? A takeover or buyout seems most likely to top that list. Those deals don’t always work out best for the private investor.

In 2019, the UK government waved through the £4bn sale of British aerospace firm Cobham to a private equity giant.

Two years later, AIM-listed TP Group was taken out by Science Group for a song. The US engineering giant Parker-Hannifin Corp snapped up the £1.6bn-a-year revenue Meggitt in 2022.

That cleared out some of the largest UK rivals to Qinetiq. But defence is a global industry with massive players.

Where the upside lies

Qinetiq is a multinational with divisions in the Middle East, Australia, and the US.

Chief executive Steve Wadey said on 12 September that the war in Ukraine led to growing interest in its key technologies. These include using laser energy to target airborne threats.

The Ministry of Defence (MoD) also noted something very interesting last year: “QinetiQ…have built a phase-combined laser with the ability in the future to scale fire-power levels”.

Intellectual property and patents are critical to defence companies’ ability to turn potential into profit.

Qinetiq says its dividends will rise from today’s 7.7p per share to 8.59p by 2025.

The company’s inconsistency in upping these payouts may have dampened enthusiasm in the past. But I see a change in strategy here.

It is one of only three firms invited by the MoD to Porton Down in November last year. There it took part in the UK’s first high powered long-range laser weapons trial.

Defence stocks will be critical to managing the uncertain world ahead. I spy a long-term growth and dividend opportunity here, and that’s why I bought Qinetiq.

The post I just bought this FTSE 250 defence star as war breaks out appeared first on The Twelfth Magpie.

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Tom Rodgers has positions in QinetiQ Group Plc. The Motley Fool UK has recommended BAE Systems and QinetiQ Group Plc. 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.

The smaller companies in the FTSE 250 have collectively outperformed their larger rivals in the big cap FTSE 100. Some individual stocks have done even better. Today I’m looking at two FTSE 250 stocks I believe could beat the market over the next few years.

Can this turnaround deliver?

Defence specialist QinetiQ Group (LSE: QQ) has fallen out of favour with the market over the last year. But I’m starting to think that this sell-off may have gone too far.

A trading update today confirmed expectations for the current year. Broker forecasts were upgraded in November following the group’s interim results, so it’s encouraging to get confirmation that management expects to hit these increased profit figures.

One potential concern is that earnings are expected to be broadly flat next year. The company is in the middle of a programme aimed at reducing its dependency on UK government work and developing a more international client base.

During the first half of the current year, revenue generated from outside the UK increased from 21% to 26%, suggesting progress. The group said today that while the UK remains “challenging”, it’s seeing good growth in Australia and the Middle East.

Risk versus reward

It’s not yet clear to me when QinetiQ’s business will return to growth. But the group benefits from net cash of nearly £200m and an attractively high operating margin of 18%. In my view, these strengths should provide the time and support needed for its turnaround.

For investors, I think the forecast P/E of 12 and prospective yield of 3.3% could be a profitable level to buy. I’ve added this stock to my own watch list.

A proven top performer

If you’re uncomfortable about the situation at QinetiQ, then you may prefer to consider proven growth stock Electrocomponents (LSE: ECM) for your portfolio.

This electronic component distributor operates in 80 countries and ships more than 50,000 parcels a day from a range of more than 500,000 products. Engineers in Europe will recognise the company’s RS Components brand, while in America it operates as Allied Electronics and Automation.

Business has been booming in recent years and underlying revenue rose by 13.3% during the first half of the current year. This momentum appears to have been maintained into the second half, as sales rose by a further 14% during the four months to 31 January.

Non-stop broker upgrades

Brokers’ consensus forecasts for this year’s earnings have risen in 10 out of the last 12 months. The group is now expected to report adjusted earnings of 27.1p per share this year, up from an estimate of 21.9p one year ago.

Core financial metrics are equally impressive. Return on capital employed is running at nearly 20%, and the dividend should be covered comfortably by free cash flow this year. Adjusted earnings are expected to rise by 29% this year, and by a further 13% next year.

Although the shares may look pricey on a 2018/19 forecast P/E of 20, I believe this firm’s strong growth and financial quality suggests the stock could continue to perform well.

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Roland Head 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.

Market appetite for the aerospace giant leapt in Friday business following the release of a reassuring pre-close update for the half year (its share price was last 7% higher on the day). In it QinetiQ announced: “Trading has been in line with expectations and the outlook for overall Group performance this financial year is unchanged.”

The FTSE 250 firm’s Europe, Middle East and Africa (or EMEA) Services division had enjoyed stronger order numbers during the second quarter, it advised, and as a consequence “revenue under contract is as expected at this stage in the financial year.” QinetiQ expects modest growth in the year to March 2018, it said.

Meanwhile, over at the company’s Global Products arm, trading has been progressing in line with expectations. QinetiQ expects this division to also grow in the current fiscal period “as a result of its contracted orders and pipeline of opportunities, as well as the anticipated full-year contribution from QinetiQ Target Systems.”

Global trade picking up

The company’s drive to create a truly international company is clearly paying off as it clocked up encouraging business wins during April-September. It sealed a “significant order” for the provision of aircraft launch and recovery equipment for the new class of US Navy aircraft carriers, it said. And it also secured an A$8m order to manage mine warfare maintenance facilities at HMAS Waterhen (in New South Wales) for the Australian Department of Defence.

This was in addition to fresh contract victories back at home. QinetiQ received an £8m order from the Ministry of Defence to provide naval combat systems expertise for Type 26 Global Combat Ship, which was bolted to the existing £110m 11-year Naval Combat System Integration Support Services contract. And it also received a £25m order from Boeing to deliver wind tunnel testing for commercial aircraft development until 2024.

QinetiQ’s self-help plan will of course take a little time to fully bed in, as a result, the City expects earnings to slip 7% in the current year before narrowing to a fractional decline in fiscal 2019.

But given the brilliant progress its growth strategy is making so far, and the ample revenues opportunities QinetiQ has looking ahead as defence budgets gradually improve, I reckon the Farnborough firm is an attractive pick right now, and particularly given its low valuations (the share sports a forward P/E multiple of just 14.8 times).

Construction colossus

Watkin Jones (LSE: WJG) is another turnaround stock worthy of serious attention at the moment.

Like QinetiQ, the construction giant is expected to endure a little earnings trouble in the near term, a 42% bottom-line decline is forecast for the year to September 2017. But Watkin Jones is expected to get firing again from the fiscal year beginning next week, and an 11% profits leap is currently predicted.

This leaves the AIM-quoted company trading on a mere P/E ratio of 14.3 times for fiscal 2018. And this also means plenty of upside, in my opinion, as demand for student accommodation in the UK looks set to keep sprinting higher.

The post Could these be 2 of the hottest turnaround stocks today? appeared first on The Twelfth Magpie.

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Royston Wild 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.

It said some customer contract award decisions in one of its divisions had been deferred or delayed. This seems to have spooked the market, despite management reiterating previous guidance on the group’s revenue outlook for its financial year ending March 2018.

After this morning’s price drop, the shares are on sale at more than 20% below their 52-week high of 319.7p.

Management confidence

In addition to the near-term unpredictability of order intake, QinetiQ faces some pressure on operating margins due to a lower baseline profit rate for single source contracts. This is reflected in analysts’ forecasts of a 5% fall in earnings this year.

However, the dividend is expected to rise by 5% (covered a healthy 2.7 times by earnings), giving a prospective yield of 2.5% and a clear signal of management’s confidence in the longer-term outlook for the group. This confidence is underpinned by continuing progress on delivering its strategy of improving customer focus and competitiveness.

Opportune time to buy

On the face of it, QinetiQ’s current-year prospective price-to-earnings (P/E) ratio of 14.5 looks pricey for a business with no near-term growth. But in addition to the longer-term potential, the strength of the company’s balance sheet persuades me that there’s greater value here than on first sight.

At its last year-end, QinetiQ had net cash of £222m (37.3p a share), representing 16% of its £1.4bn market capitalisation. This not only drops the P/E of 14.5 to a cash-adjusted 12.3, but also gives the company firepower to make earnings-enhancing acquisitions.

With the market focusing on immediate earnings prospects and the shares more than 20% off their 52-week high, I believe now is an opportune time to buy a slice of this FTSE 250 business.

A blue-chip buy

I also rate QinetiQ’s larger defence-sector peer BAE Systems (LSE: BA) as an attractive buy, with the stock at a 10% discount to its 52-week high. The £20bn FTSE 100 behemoth said in May that it had started the year with good momentum building on a strong operational performance in 2016. It also said there is an improving outlook for defence budgets in a number of its markets for 2017 and beyond.

Management reiterated guidance of a 5% to 10% increase on 2016’s 40.3p earnings per share, assuming an average $1.25 to the pound exchange rate in 2017. The City consensus forecast of 43.8p (+8.7%) puts the company on a P/E of 14 at a current share price of 613p, falling to 13 in 2018. Meanwhile, dividend forecasts give a yield of 3.6%, rising to 3.7%.

BAE doesn’t boast the net cash position of QinetiQ but its debt is relatively low for a FTSE 100 company. Net gearing (net debt divided by shareholder’s funds) is 45%, while well above 50% is not uncommon in the blue-chip index.

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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

Today I’m going to look at two companies I believe have the potential to beat the market.

Order backlog up by 69%

FTSE 250 defence group QinetiQ Group (LSE: QQ) delivered a welcome return to sales growth in its 2017 financial year, which ended on 31 March.

Revenue rose by 3.6% to £783.1m, while pre-tax profit climbed 16.2% to £123.3m. Underlying earnings rose by 11% to 18.1p per share, while the dividend was increased by 5.3% to 6p. These figures give QinetiQ a trailing P/E of 17 and a dividend yield of 1.9%.

The order backlog rose from £1.3bn to £2.2bn last year. The bulk of this increase was down to a £1bn amendment to the group’s Long Term Partnering Agreement with the UK Ministry of Defence. The company says this is its “largest and most significant contract since privatisation.”

Last year’s acquisitions of Meggitt Target Systems and Australia’s RubiKon Group are also expected to drive new business, with a particular focus on international growth.

Why I’d buy

QinetiQ isn’t cheap, but the outlook seems positive and the firm’s financials are very solid. The group ended last year with net cash of £221.9m, despite a cash outflow of £65.7m relating to the two acquisitions.

The company generated an underlying operating margin of 15.1% last year. This contributed to a return on capital employed (ROCE) of 19%. That’s higher than any of the firm’s rivals in the UK defence sector.

In my view, QinetiQ’s proven profitability and healthy balance sheet mean that it remains a strong hold and a possible long-term buy.

Discount property to buy?

London-focused property group Helical (LSE: HLCL) said on Thursday that the valuation of its like-for-like London property portfolio rose by 9.8% to £666m during the year to 31 March. Contracted rents were 16.9% higher, at £27.9m.

By contrast, the performance of the group’s regional portfolio, which is focused on Manchester, fell by 2.1% to £351m on a like-for-like basis. Contracted rents of £24.3m were below the firm’s estimated rental value for the portfolio of £26.6m.

In my view, the key metrics when investing in property are yield and net asset value. Helical’s EPRA net asset value per share — an industry standard measure — rose by 3.7% to 473p last year. When compared with the current share price of 337p, this means Helical is trading at a 28% discount to net asset value.

However, if falling rental values in the regional portfolio are any indicator, property values could also fall over the next year.

It’s also worth noting that Helical has a relatively high level of gearing, with a loan-to-value ratio of 51% at the end of March. The group’s debt maturity profile is also quite short, at just 3.6 years, so Helical will need to refinance some debt over the next two or three years.

I’m attracted to Helical’s discount to net asset value, but the 2.6% dividend yield isn’t especially exciting and gearing is quite high. I’d hold for now, with a view to buying more at a lower price.

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Roland Head has no position in any shares mentioned. The Motley Fool UK has recommended Meggitt. 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.

High valuation

Reporting on Friday was global hospitality company Millennium & Copthorne (LSE: MLC). Its first quarter of the year was relatively positive, with revenue per available room (RevPAR) growing by 4.6%. It was driven higher by an increase in occupancy of 2.9% and an average room rate which was 0.3% up on the same period of the prior year. The company also gained a boost from currency translation, with RevPAR up 17.7% on a reported basis.

In terms of its geographic performance, London and New York continued to perform well. A weak pound boosted tourism in the UK, while in New York the completion of the refurbishment of ONE UN New York pushed sales higher. However, in Singapore, RevPAR declined by 0.9% as the average room rate dropped by 6.3%.

Looking ahead, Millennium & Copthorne is expected to record a rise in its bottom line of 9% in the current year. It is due to follow this up with growth of 7% next year. While this is slightly above the index average, the company’s shares trade on a price-to-earnings growth (PEG) ratio of 2.4. This suggests that while its performance is improving, the market has already priced-in its medium-term forecasts.

Disappointing outlook

The performance of the defence sector has been rather disappointing in recent years. A combination of austerity and an uncertain economic outlook has meant that defence companies such as QinetiQ (LSE: QQ) have struggled to grow their top and bottom lines.

Now though, the future for the industry is becoming increasingly bright. The Trump administration seems intent on increasing spending on defence, while austerity is gradually being eased across the developed world. This means that the outlook for defence companies is improving. Therefore, investing in the industry could prove to be a sound long-term move.

Despite this, QinetiQ seems to be overpriced and struggling to deliver meaningful earnings growth. For example, in the current year it is expected to record a rise in earnings of just 3%. This is due to be followed by a fall in net profit of 2% next year, which means its bottom line is not due to make any significant gains over the next couple of years. As such, it is difficult to foresee a possible catalyst to push its share price higher.

While the company has a rather downbeat outlook, its shares trade on a high valuation. They currently have a price-to-earnings (P/E) ratio of 18, which suggests they offer little upside over the medium term.

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Peter Stephens 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.

New yacht

But before you go ahead and start selling all your shares in companies with recent director selling activity, be aware that things are not as clear-cut as they seem. It’s very possible that a director has sold a big chunk of his or her holding simply because they are splashing out on a new yacht, or Ferrari, country mansion or divorce settlement. So as always, its best to use such triggers as the starting point for further research.

With this in mind, engineering support services company Babcock International (LSE: BAB) recently caught my attention. Company chairman Mike Turner picked up 10,000 shares in the FTSE 100 group at the end of last month, amounting to £88,750. On the very same day CEO Archie Bethel splashed out no fewer than five occasions to buy a total £114,000 worth of stock. Clearly Babcock’s bosses have an optimistic view of the company’s prospects.

50% upside

Personally I think that management is taking advantage of the recent share price weakness. Babcock’s shares have given up around 38% of their value since their 2014 peak of 1,417p, despite the firm delivering impressive revenue and earnings growth over the same three-year period.

With the group’s profits and share price heading in different directions in recent years, I think Babcock is overdue a re-rating by the market. The City is forecasting continued steady earnings growth over the medium term with the P/E rating falling to just 9.6 by the end of fiscal 2019. A five-year historical average of 14.5 suggests to me that 50% upside is easily achievable over the next couple of years.

Trump rally

Meanwhile, a firm whose share price has been heading the other way is QinetiQ (LSE: QQ). The Farnborough-based defence technology firm has enjoyed a strong share price rally in recent years climbing to lows of 97p in 2010 to recent all-time highs of 285p. I expect shareholders won’t be too unhappy about a near-threefold increase in the value of their holdings.

Full-year results for the year ended 31 March are due to be published next month, but despite increased optimism around the defence sector as a whole, analysts are anticipating little-or-no earnings growth for QinetiQ over the next couple of years. My belief is that QinetiQ has benefitted from the defence sector rally following Donald Trump’s election victory, leaving the shares overvalued at 17 times forward earnings.

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Bilaal Mohamed 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.

Not getting excited

Under the agreement the Farnborough-based engineering firm will modernise and operate the air ranges at MoD Aberporth and MoD Hebrides, and test aircrew training through the Empire Test Pilots’ School at MoD Boscombe Down. The company believes that efficiencies delivered through this programme will enable future MoD and QinetiQ investment in developing further world-class Test & Evaluation services.

So great news for QinetiQ fans, but is that enough to get new investors on board the FTSE 250 firm? Well, despite the magnitude of the contract win, the company’s shares ended the day pretty much where they started, and so far the market hasn’t shared management’s enthusiasm or excitement with regards to the contract win. It was much the same last month when the company issued positive interim results for the first half of its financial year.

Positive results

For the six months to the end of September QinetiQ reported an increase in orders to £376.8m compared to £228.4m for the same period last year. This was helped in no small part by the award of a £109m 11-year renewal from the MoD for the Naval Combat System Integration Support Services (NCSISS). But again the news seemed to go unnoticed, with the market refusing to get excited about the half-year results.

Sure, the contract wins will boost the group’s top line, but analysts are expecting underlying profits to come in 4% lower for the full year to the end of March, with no growth in sight until at least FY2019. For that reason I’m rating the shares as a hold at best, and I would suggest new investors wait for a return to growth before diving in.

Ongoing problems

Another hi-tech engineering firm I’m refusing to get excited about at the moment is Senior (LSE: SNR). The Hertfordshire-based group has been under severe pressure this year shedding a quarter of its value as on-going problems in its Flexonics division were compounded by a slower-than-expected ramp-up of new programmes for its Aerospace business in the third quarter.

The Flexonics division, which makes heat exchange solutions for the energy generation and diesel engine markets, has struggled throughout 2016, suffering from softer truck and off-highway vehicle markets, plus the downturn in oil and gas sector activity.

October’s profit warning brought the share price to near five-year lows but I still don’t see the shares as a good contrarian play with earnings forecast to shrink 25% for the full year ending 31 December. I would want to wait until the troubled Flexonics division returned to good health before giving the shares another look.

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Lots of cash

Shares in defence and security specialist QinetiQ (LSE: QQ) suffered during the banking-led recession, but over the past five years they’ve put on an impressive 109% to reach 244p. Earnings have been a bit erratic over that time and dividends have been yielding only around 2.5%, though share price valuations have remained unstretched.

And in a first-half report today, the firm announced a statutory after-tax profit rise of 18% to £49.5m, with reported earnings per share up 20%. Underlying figures were a little lower than that, with a profit rise of 5.3% and EPS up 7% to 7.8p, but that’s still impressive progress and suggests the full year could turn out better than the City’s analysts currently expect.

I’m impressed by QinetiQ’s cash-generation abilities, with underlying net operational cash flow up 8.5% to £50.9m and the firm’s underlying cash conversion ratio up to 98% from 94% a year previously. I like the visibility of a strong order book too, with 94% of the firm’s expected 2017 revenue under contract and a number of key order renewals in the bag.

In recent years, QinetiQ has been focusing on longer-term customer retention and competitiveness, and chief executive Steve Wadey reckons the plans are “on track with transforming the company.“

QinetiQ shares are on a forward P/E of 15.7 based on current full-year forecasts, but I wouldn’t be surprised to see those upgraded a little in the light of these interim figures. Still, on the face of it and with dividends only expected to yield around 2.5%, that might not look like a bargain rating.

But strong cash flow and net cash of £271.2m swing it for me, and I rate QinetiQ shares as good value.

Strong outlook

WS Atkins (LSE: ATK) shares have been spiking of late, and the engineering and defence firm has also reported increased first-half profits today.

Perhaps best known as a contractor for the London Underground, Atkins revealed a 14% rise in underlying pre-tax profit to £63.6m, with underlying EPS up 12.6% to 48.2p (although statutory figures including one-offs reduced that to losses on both measures).

A net cash position of £141m a year previously did turn into a net debt of £90.3m, but that was down to the acquisition of EnergySolutions’ project, products and technology business — so nothing to worry about.

Chief executive Uwe Krueger told us that “the near term outlook in our UK and North American businesses is particularly positive.” And the firm’s global spread with operations across Europe and the Middle East too is one of the things I like — it should help insulate the company from local shocks like Brexit.

Mr Krueger went on to tell us that Atkins’ full-year outlook is unchanged, which suggests we’ll see further earnings growth on top of strong growth in each of the past five years. That would put the shares on undemanding P/E multiples of 13 to 14 with dividend yields of around 2.5%, which I again see as good value — even with the shares up 188% in five years to 1,648p.

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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.

Defence dynamo

Shares in defence giant QinetiQ (LSE: QQ) crept to two-and-half-month peaks this week in the lead-up to Thursday’s full-year results. And investor faith appears to have been rewarded even though the engineer saw revenues slip 1% during the 12 months to March 2016, to £755.7m, while pre-tax profit slumped 14% to £90.2m.

But QinetiQ’s sales outlook appears to be steadily improving, the company enjoying an 8% boost in its order book — to £659.8m — thanks to a £153m, five-year renewal contract with the Ministry of Defence for aircraft engineering support.

Furthermore, QinetiQ advised that 74% of revenues for fiscal 2017 were covered as of the start of April.

With defence budgets back on the mend, the City expects QinetiQ to enjoy an earnings advance of 1% in both 2017 and 2018, resulting in very-decent P/E ratios of 14.9 times and 14.6 times, respectively. And dividend yields of 2.6% for 2017 and 2.9 % for 2018 provide a handy-if-unspectacular sweetener.

Paying off

Payments specialist Paypoint (LSE: PAY) also enjoyed a bump in Thursday business, a 2% advance sending the stock to levels not seen since early January.

Paypoint advised that pre-tax profits careered 84% lower in the year to March 2016, to £8.2m, the business hammered by a £30.8m impairment on its outgoing mobile payments division.

Revenues at Paypoint slipped 3% during the period, to £212.6m, although the company remains bullish over its long-term outlook as it develops its retail services. Indeed, Paypoint saw the number of retail transactions shoot 17.8% higher last year, to 140m.

The number crunchers certainly believe Paypoint is on the way up, and have pencilled-in earnings rises of 20% and 7% for 2017 and 2018. These figures produce excellent P/E ratings of 13.4 times and 12.7 times.

And dividend hunters will no doubt be attracted by huge dividend yields of 5.4% for this year and 5.8% for 2018.

Too sweet

Sugar play Tate & Lyle (LSE: TATE) has proved one of the stars of the show on Thursday, the stock gaining 2% and reaching levels not seen since last April in the process.

Tate & Lyle announced that sales edged fractionally higher during the year to March, to £2.36bn, although investors cheered news that adjusted pre-tax profits nudged 5% higher to £193m.

The food play posted a mixed set of sales results. Revenues at its Specialty Food Ingredients arm nudging 4% higher from 2015, to £897m. But Tate & Lyle’s Bulk Ingredients arm continues to struggle, and sales here dipped 1% to £1.46bn.

The City expects restructuring at the sugar giant to keep driving earnings higher, and rises of 7% and 6% are expected in 2017 and 2018, resulting in P/E ratings of 16.6 times and 15.5 times.

However, dividend yields of 4.7% for this year and 4.8% for 2018 help to offset these middling multiples.

Still, I believe Tate & Lyle still has plenty of work ahead of it to turn around its Bulk Ingredients business, while adverse currency movements add a further headache for the business. I reckon the stock’s turnaround story still leaves plenty of questions to be answered.

The post Should you buy Tate & Lyle plc, QinetiQ Group plc and Paypoint plc following today’s updates? appeared first on The Twelfth Magpie.

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