Are these FTSE 100 stocks stunning buys after today’s updates?

Royston Wild runs the rule over two FTSE 100 (INDEXFTSE: UKX) stocks updating the market on Tuesday.

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GKN

Image: GKN: Fair use

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Asset manager St James’s Place (LSE: STJ) has seen its share price leap 3% on Tuesday following the release of perky trading numbers.

The company advised that funds under management exploded 31% year-on-year as of the end of September, to £71.4bn. St James’s Place noted that client retention rates remained strong during the period, and that gross fund inflows jumped to £2.8bn from £2.3bn a year earlier.

Chief executive David Bellamy lauded “the globally diverse range of funds and portfolios we offer continues to serve our clients well.” He added: “These results and continued resilience of our business give us further confidence that… we can continue to grow our business in line with our objectives in the final quarter of 2016 and beyond.”

The City expects St James’s Place to record a 9% earnings decline in 2016, although today’s strong results could well force these forecasts to be revisited.

Still, the wealth manager is likely to continue trading at a premium to its big-cap peers — St James’s Place currently deals on a forward P/E ratio of 26.9 times, sailing outside the FTSE 100 average of 15 times. Many would argue that the financial firm’s longer-term outlook is worthy of such a premium however, with earnings expected to spiral 28% higher in 2017.

But while St James’s Place is continuing to perform well at present, I reckon such earnings multiples leave the stock in danger of a sharp retracement should investor sentiment begin to cool, a very real possibility given the huge economic and political problems facing the global economy.

Car star

Engineering colossus GKN (LSE: GKN) also updated the market in Tuesday trade, although its share price hasn’t fared so well, the firm last dealing 3% lower on the day. This is despite the company’s announcing that its principal markets “performed in line with the expectations set out in our July results announcement.”

Organic sales at the Driveline division continued to outperform the market, a 6% revenues uptick during January-September dwarfing a 4% rise in global auto build rates. GKN had new product launches to thank for this decent result, as well as strong premium vehicle demand in Europe.

GKN’s Aerospace arm also continued to grow despite current challenges in the civil aircraft market, and organic sales here rose 2% in the nine months. But weak agricultural machinery demand caused organic sales at Land Systems to slip 8% in the period to September.

Sure, GKN’s main markets are expected to remain under pressure for a little longer. But I believe the part builder’s top-tier relationship with major OEMs across the globe sets it up as a hot growth pick in the long term.

This view is shared by much of the City, and a 1% earnings rise this year is anticipated to rev to 11% in 2017. I reckon a forward P/E rating of 11.2 times and 10 times for these years represents splendid value.

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.

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

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