Can These Shares Continue To Outperform The Market? Sky plc, easyJet plc, Inmarsat plc & Berkeley Group Holdings plc

A look at the outlook for shares in Sky plc (LON:SKY), easyJet plc (LON:EZJ), Inmarsat plc (LON:ISAT) and Berkeley Group plc (LON:BKG)

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Sky

Sky (LSE: SKY) has benefited from the improving market conditions in the paid TV market in Europe, particularly in the UK, Germany and Austria. Despite intense competition from low-cost rivals, the company has delivered strong growth in customer numbers as it continues to invests in original programming and exclusive live television rights.

Analysts are optimistic with the firm’s outlook on earnings growth, and expect Sky should deliver underlying EPS growth of 13% next year. Shares in Sky are fairly valued, with a forward P/E of 15.9 and a dividend yield of 3.2%. With a positive outlook on earnings and relative attractive valuations, shares in Sky should continue to outperform in the medium term.

easyJet

Growing passenger numbers and lower fuel costs should mean easyJet (LSE: EZJ) would find it easy to deliver continued revenue and earnings growth. In the company’s September trading update, the company said the number of passengers travelling on the carrier in August rose 6.8%, whilst its load factor rose 0.2 percentage points to a record 94.4%.

Despite a series of unanticipated headwinds, including the strike by French air traffic controllers in April, the fires at Rome Fiumicino airport and the £8 million settlement with Eurocontrol, management expects its 2015 profits will be significantly higher than previously anticipated. It now expects 2015 pre-tax profits will be between £675 million and £700 million, up from its previously guided figure of between £620 million and £660 million.

Earnings for the carrier is set to continue to grow in 2016, as the impact of lower fuel costs slowly feed into the airline’s bottom line. Analysts current expect underlying EPS will grow 9% in 2016 to 146.1 pence, following the 17% earnings growth anticipated for the current year. easyJet shares currently trade at just 12.9 and 11.9 times its expected earnings in 2015 and 2016, respectively.

Inmarsat

Shares in Inmarsat (LSE: ISAT) have risen by 43% over the past 52 weeks, following the successful launch of two of its Global Xpress satellites this year. This would create the first high speed mobile broadband network with global coverage, and the company expects it will generate at least $500 million per year in the first five years of operation.

Although there is much optimism with the new traffic that Inmarsat would be able to carry, demand in the medium term is likely to be weaker than initially expected. Lower commodity prices and weak international trade should mean fewer people are likely to be employed in remote locations, and this should lead to lower revenue figures. On top of this, demand from the government sector has been steadily declining, and competition is intensifying with its legacy offering.

With Inmarsat trading at a forward P/E of 35.9, its shares are unlikely to climb much higher.

Berkeley Group

Berkeley Group (LSE: BKG) is set to join the FTSE 100, following the latest reshuffle of the index’s constituents. The promotion of Berkeley to the FTSE 100 could mean further upside in its share price, as index tracking funds are obliged to buy into the company’s shares in the days following its promotion.

Despite the recent turmoil in global stock markets and the anticipation of higher interest rates in the UK, longer term fundamentals are also on the side of Berkeley. The London property market is likely to remain buoyant, as the limited supply of new homes and robust local demand are long term structural factors that will likely offset the impact of near term headwinds.

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.

Jack Tang has no position in any shares mentioned. The Motley Fool UK has recommended Berkeley Group Holdings and Sky. 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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