Today I am running the rule over three of the FTSE’s best — and worst — performers during Tuesday trading.
Moss Bros Group
Executive ‘suiters-and-booters’ Moss Bros (LSE: MOSB) is riding the crest of a wave, and was recently leading the London listings with a 4.6% advance in Tuesday trade. The clothes retailer has embarked on an ambitious brand refreshment strategy which is clearly paying off handsomely, a strategy boosted by surging online trade — total like-for-like sales rose 7.8% during August-December.
City analysts expect the business to record a hefty 11% earnings decline in the year concluding January 2015 due to autumn discounting and heavy investment. But the firm’s growth story is expected to get back on course thereafter, and rises of 24% and 17% are pencilled in for fiscal 2016 and 2017 correspondingly.
At first glance Moss Bros may not be considered outstanding value for money, with a P/E multiple of 26.6 times earnings for this year remaining elevated at 21.4 times for 2016 and 18.4 times for 2017. Still, for income chasers the company may be considered too good to pass up on — the business is expected to keep on hiking the full-year dividend for the foreseeable future, resulting in an astonishing yield of 5.9% for this year, 6.2% for 2016, and 6.6% for 2017!
Ashtead Group
Construction and industrial equipment provider Ashtead (LSE: AHT) is one of the leading fallers in Tuesday business, recently dealing down 6.5%. Still, I believe that this represents a decent buying opportunity for those seeking to ride the construction boom across North America and Europe, with improving end markets and market share grabs for its Sunbelt and A-Plant divisions in the US and UK respectively driving sales higher.
On top of this, Ashtead remains an active player on the acquisition trail, a quality which is expected to turbocharge long-term earnings growth. Indeed, the number crunchers expect the firm to punch growth of 30% for the year ending April 2015. And growth of 23% and 14% is forecast for the following two years.
Consequently a slightly-heady P/E multiple of 19.4 times for this year collapses to 16 times for 2016 and then 14 times for 2017 — any reading around or below 15 is widely considered very attractive value.
Enquest
Oil explorer Enquest (LSE: ENQ) is also trading in the red and was recently down 5.8% on the day, reflecting wider fears over the state of the oil market. Brent slipped to fresh five-and-a-half-year troughs around $51 per barrel earlier today, and many expect the price to keep slipping as OPEC vows to keep pumping and global economic growth stalls.
The result of these worries, not to mention Enquest’s reliance on vast investment to get its asset portfolio up and running, is expected to push earnings 64% lower during 2014. But with the firm’s gigantic Alma/Galia field in the North Sea expected to produce first oil mid next year, earnings are predicted to take off and a 163% earnings bounce is currently expected in 2015.
Consequently a P/E multiple of 14.6 times for this year collapses to just 5.1 times for 2015. On paper this is a steal, but should the oil price continue tanking as expected — and Enquest’s exploration and development work elsewhere disappoint, a common problem for fossil fuel drillers — these projections could be set for significant downgrades.
