Why Marks & Spencer Group Plc, A.G. Barr plc and Dixons Retail PLC Should Lag The FTSE 100 Today

Marks & Spencer Group Plc (LON: MKS), A.G. Barr plc (LON: BAG) and Dixons Retail PLC (LON: DXNS) all slip.

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The FTSE 100 (FTSEINDICES: ^FTSE) is climbing further today, with rises across the mining sector making a nice change from the almost incessant gloom afflicting the industry. Today’s optimism appears to be based on an improving outlook for the UK economy, but fickle as sentiment is these days, if someone in China should cough tomorrow the FTSE will probably head South again.

But which companies are failing to keep up with London’s top index? Here are three looking like they can’t make it:

Marks & Spencer

Marks & Spencer shares lost 8.3p (1.8%) to 451p after the high-street giant reported a lacklustre first quarter. Although like-for-like UK food sales were up 1.8%, clothing and home goods are still struggling, with General Merchandise sales down 1.6% on a like-for-like basis. Online sales did gain 30%, but that only accounts for around 10% of total sales.

The firm’s outlook is not especially encouraging either, as we were told “we remain cautious about the outlook and continue to manage the business tightly”. All eyes will now be on M&S’s first-half results, which should be with us on 5 November.

AG Barr

AG Barr (LSE: BAG), the other half of last year’s planned merger with Britvic, saw its share price fall today, losing 17p (3.2%), after the Competition Commission ruled in favour of the now-lapsed link-up. But it seems more likely that it wasn’t the Commission result that disappointed Barr shareholders as much as comments from Britvic’s chairman Gerald Corbett, who appeared to pour cold water on any prospects for a new deal.

On the face of it, Barr’s shares do look a bit pricey on a forward P/E of more than 20 based on January 2014 forecasts — Britvic shares are on a more modest 16, with a better dividend yield of 3.5% expected.

Dixons

Shares in Dixons Retail (LSE: DXNS) fell back a bit today, losing 2.6% to 42.3p, but that’s probably just a bit of profit-taking after full-year results released last month showed a return to growth. In fact, in one of the best post-crisis recoveries we’ve seen, Dixons shares have soared more than 130% over the past year.

With earnings per share forecast to grow by 33% and 25% for 2014 and 2015 respectively, the shares are on a forward P/E of over 21, dropping to 15. But if that growth can continue a bit further, today’s price could still turn out to be a bargain.

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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