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Why NEXT Plc, GKN Plc And The Weir Group PLC Should Beat The FTSE 100 Today

The FTSE 100 (FTSEINDICES: ^FTSE) finished down on the day yesterday, but today it’s bouncing back a little and is up 16 points to 6,576 at the time of writing, after a few positive earnings updates have been coming in. In the macroeconomic world, there’s not much unexpected happening — fears about China have gone off the boil of late, the next tranche of Greece’s bailout has passed without drama, and we’re awaiting the next central bank updates.

But individual shares are moving. Here are three that look set to beat the FTSE today after releasing good news:

NEXT

I was saying recently how highly I rate NEXT (LSE: NXT) as a business, and today we see the share price rising further — it’s up 122p (2.5%) to 5,024p by mid-morning. The driver today is an upbeat first-half trading statement, telling us that total brand sales were up 2.3%, which is around the middle of the firm’s earlier guidance of 1% to 4%. That does include the firm’s end-of-season sale period, which carried 20% less stock than last year — prior to that, sales for the period were up 3.7%.

The company is, apparently, seeing volatility in sales over shorter time scales. But averaged out it seems that sales trends are quite stable, and NEXT has seen fit to narrow its sales growth guidance for the full year to somewhere between 1.5% and 3.5%. Pre-tax profit is expected to be around £635-675m, for a growth of 2.2% to 8.6%, with underlying earnings per share (EPS) up between 8% and 15%. The firm also expects its share buybacks for the year to total £250-350m.

GKN

GKN (LSE: GKN) shares also climbed this morning, up 19.3p (5.9%) to 346p, after the engineering  group announced an adjusted pre-tax profit rise of 5% for its first-half, to £278m. That came from a 12% rise in sales to £3.87bn, though underlying EPS did fall by 3% to 13.8p due to a higher tax rate. Reported figures, however, were lower, with pre-tax profit dropping 52% to £134m, “primarily due to foreign exchange rate changes impacting the mark to market value of foreign exchange contracts“.

With free cash flow of £77m, GKN saw fit to lift its interim dividend by 8% to 2.6p per share. If the same rise happens for the final payment, we should be seeing around 7.8p per share for a yield of 2.3%, though analysts are forecasting a little more than that.

Weir

We had a first-half report from Weir Group (LSE: WEIR) as well, and it sent the engineer’s shares up 75p (3.6%) to 2,152p in early trading. Although revenue for the period did fall by 10% to £1,198m and pre-tax profit declined 14% to £193m, that was no surprise, with chief executive Keith Cochrane saying “Weir has delivered a first half performance in line with our expectations, despite challenging market conditions“.

Looking forward, Weir shares are on a relatively modest P/E of 13.5 based on December 2013 forecasts, even though the price has gained around 25% over the past 12 months.

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> Alan does not own any shares mentioned in this article.