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Why Fresnillo Plc, Meggitt plc And Greggs plc Should Lag The FTSE 100 Today

The FTSE 100‘s (FTSEINDICES: ^FTSE) is see-sawing today — it’s been up and down, and at the time of writing has gained 11 points to 6,609. Sentiment seems pretty uncertain, and though UK production figures are better than expected, there’s still a little trepidation ahead of the Bank of England’s next inflation report due tomorrow.

Mixed company results are having an impact on the FTSE, too. Here are three from the various indices whose latest updates are sending them down:

Fresnillo

Gold and silver miner Fresnillo slashed its first-half dividend by 68% to 4.9 cents per share today, sending its share price tumbling 51p (4.9%) to 986p, after revealing a 14% fall in revenue to $982m. With average realised silver price down 20% and gold down 10.6%, the firm suffered a 27% slump in gross profit to $519m with earnings per share (EPS) crashing 61% to 20 cents per share. The human cost of the shiny stuff was brought home as well, with two fatalities during the period.

Fresnillo shares are down around 35% over the past 12 months, with a near-40% fall in EPS forecast for the full year — but that still represents a forward P/E of 28.

Meggitt

Aerospace and defence engineer Meggitt saw its share price slip back 11p (2%) to 544p after releasing decent-looking first-half results, although the price is up 40% over the past year. With revenue up 4% to £810m, underlying pre-tax profit rose 7% to £182m with underlying EPS up 9% to 18.1p. Net debt fell 12% to £7901m, and the firm lifted its interim dividend by 10% to 3.95p per share. A similar rise for the full year would give us a 2.4% yield.

Chief executive Stephen Young said “The business delivered top line growth in line with our expectations in the first half, with particularly strong performances in the civil OE and energy markets.  Military held up well given the challenging budgetary environment, and we have seen a modest recovery in the civil aftermarket in the second quarter“.

Greggs

Things just aren’t going well for Greggs, after the high-street baker reported falling like-for-like sales and saw its share price drop 28.6p (6.5%) to 413p — that’s a fall of nearly 20% for the year. Pre-tax profit for the six months to 29 June slumped 29% to £11.4m, with diluted EPS also down 29%, to 8.5p. The interim dividend was held at 6p per share, though it is barely covered.

New chief executive Roger Whiteside has apparently spotted that Greggs mostly sells takeaway food, though he prefers to call it “fulfilling a food-on-the-go need“, and that appears to be the new catchphrase — Greggs will now refocus on “food on the go”.

Finally, you can compensate for the day-to-day ups and downs of share prices by looking for reliable dividends. So how would you like a company that’s offering a 5% yield and which could be set for some nice share price appreciation too?

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