Why Pearson plc, Balfour Beatty plc And Kier Group plc Should Lag The FTSE 100 Today

Pearson plc (LON: PSON), Balfour Beatty plc (LON: BBY) and Kier Group plc (LON: KIE) all slip.

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The FTSE 100 (FTSEINDICES: ^FTSE) has been up and down all day, first gaining about 30 points before falling to a 25-point loss — and at the time of writing, it is back up 25 points on the day to 6,269. There’s little driving the UK’s top-drawer index at the moment, in the lull between the US Federal Reserve’s last pronouncement and meetings due at the Bank of England and the European Central Bank this week.

There’s not a lot of excitement anywhere, in fact. But here, at least, are three companies from the various indices that the FTSE looks set to beat today:


Shares in Pearson (LSE: PSON) (NYSE: PSO.US) dropped 19p (1.6%) today after the publishing giant and Bertelsmann jointly announced the completion of the merger of Penguin and Random House, to create the unimaginatively named Penguin Random House. The combined new entity, which is being billed as “the world’s leading consumer publishing company”, apparently now employs more than 10,000 people and publishes more than 15,000 titles a year.

Pearson owns 47% of Penguin Random House, with Bertelsmann owning 53%. Pearson shares have done little over the past 12 months, dropping around 8%. Even after that lacklustre 12 months, we’re still looking at a P/E of 15 for full-year forecasts, but there is at least a 4% dividend being suggested.

Balfour Beatty

Balfour Beatty (LSE: BBY) shares have had a weak year too, dropping more than 20% over the past 12 months. And today they dipped 8.1p (3.4%) to 230p after the construction firm announced the disposal of its 50% stake in the Salford Hospital PFI. The sale, to a subsidiary of HICL Infrastructure for £22m, will net the firm a gain of £11.5m, beating previous estimates of an £8.3m value.

Balfour Beatty, which disclosed net debt of £220m in its first-quarter update released in May and told us it expects further capital outflow in the second quarter, has so far realised gains of £44.9m from PFI disposals.

Kier Group

Fellow construction firm Kier Group (LSE: KIE) has seen its share price fall nearly 10% in the past year, and also saw a drop today — albeit a modest 5p (0.5%) to 1,140p. Again, the driver was the announcement of a disposal, this time of property at Bell Green Retail Park in Sydenham.

But it was a bit of an in-house transaction, with the buyer being a 50% partnership between Kier itself and the Kier Group Pension Scheme. Still, the deal did provide £46m in cash to add to Kier’s liquid assets, and generated a profit of approximately £2m.

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

It’s the subject of our BRAND-NEW report, “The Motley Fool’s Top Income Share For 2013“, which you can get completely free of charge — but it will only be available for a limited period, so click here to get your copy today.

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

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.

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