Why Ekf Diagnostics Holding PLC, Computacenter plc And Serco Group plc Are Rising Today

Here’s why Ekf Diagnostics Holding PLC (LON: EKF), Computacenter plc (LON: CCC) and Serco Group plc (LON: SRP) are charging higher today.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Troubled outsourcer Serco Group (LSE: SRP) is rising today after analysts at investment bank Credit Suisse lifted their recommendation on the company’s shares to neutral from underperform. The bank’s analysts also raised their price target on the company’s shares from 142p to 208p. 

While this is a welcome relief for Serco’s shareholders, the company is still in dire trouble. Indeed, the company is still planning to conduct a refinancing and rights issue at some point in the next month or so as it looks to bolster its weak balance sheet. 

However, the group has started to recover from some of the accusations made against it last year. For example, the City of London Police recently found that the company wasn’t guilty of misleading the taxpayer over prisoner transfer contracts. The company has also won a contract to continue providing Australian immigration services. 

So, Serco is starting to recover but the company still has a long way to go.

Capital return  

Computacenter (LSE: CCC) has jumped by as much as 13% today after the company completed a return of capital to shareholders. Shareholders on the register as of 19 February will receive 71.9p existing ordinary share, equivalent to approximately £100m or around 11.2% of Computacenter’s current market capitalisation. The shares have jumped on a capital reorganisation. 

If you’ve missed Computacenter’s special payout, there’s no reason to worry. The company has a history of returning capital to shareholders. Computacenter’s dividend yield is set to hit 4.8% this year and the payout is growing at a double-digit rate every year. Additionally, even after returning £100m to investors, according to my figures, Computacenter has large net cash balance. So, I wouldn’t rule out further special payouts. 

Maiden profit 

Lastly, Ekf Diagnostics (LSE: EKF) has jumped by 10% today as investors position themselves ahead of the company’s full-year 2014 results. EKF will announce its preliminary results for the year ended 31 December 2014 on 16 March 2015 and the market is expecting the group to unveil its maiden profit. 

According to Ekf’s latest trading update, management expects 2014’s figures to be at the higher end of previous management guidance. Unaudited revenues of around £40.1m, a 26% improvement on the previous year, are expected. City analysts are expecting a pre-tax profit of £1.8m for the period and earnings per share of 0.34p. 

Based on these figures, the company is currently trading at a forward P/E of 54. However, based on the fact that Ekf’s earnings per share are set to jump by more than 140% net year, this premium valuaion is justifiable.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »