Today I am looking at the investment prospects of three Thursday headline makers.
Atlantic Coal
Energy play Atlantic Coal (LSE: ATC) has seen its share price explode in Thursday business, and the firm was dealing 10.7% higher on the day at one point. The stock was boosted by news that revenues galloped 26% higher during January-September, rising to $17.6m, putting the company in great shape to blow away last year’s total turnover of $18.4m.
The news comes just a week after Atlantic Coal announced that production of clean coal and “run of mine” coal advanced 28% and 50% in the third quarter, while total sales leapt 65% in the period.
With the Pennsylvanian miner boasting vast inventories, and hiking prices ahead of the key winter season, the company appears in great shape at the moment. But with the US moving steadily away from coal in favour of other power sources, I believe the long-term outlook for Atlantic Coal remains shaky.
Hays
Recruitment specialists Hays (LSE: HAS) failed to ignite the market following its own update on Thursday, however, and the company was last changing hands 7.2% lower from the midweek close. The business advised that like-for-like net fees advanced 8% during July-September, slowing from 9% in the prior three months. In particular, investors were spooked by a chunky drop in UK and Irish fees growth.
On top of this, the effect of a weak euro and Australian dollar meant that reported net fees rose just 3% in the period, and the company advised of further currency troubles ahead. But troubles in Hays’ domestic market is the main area of concern for analysts, and with the City set to downgrade its earnings estimates, a P/E multiple of 17.7 times for the year to June 2016 suddenly looks a tad heady in my opinion.
Dunelm Group
Shares in out-of-town homewares retailer Dunelm Group (LSE: DNLM) received a mild shot in the arm in Thursday trade following its latest financial update, and the business was last 2.3% higher from Wednesday’s close. The company commented that like-for-like store sales galloped 4.4% in the 13 weeks to October 3, to £171.8m, while home delivery orders surged 25.9% to £11.5m. In total, group underlying sales rose 5.5% in the period.
Dunelm’s results reflect the huge investment made in improving its expanding the number of outlets it operates and refurbishing its stores, not to mention the launch of its new website during the summer. And, promisingly, the retailer expects much more to come from its online service, advising that “as the new site becomes fully bedded down, we expect to see substantial further growth through this channel.”
The City expects Dunelm to enjoy a 5% earnings advance in the year to June 2016, creating a respectable P/E multiple of 18.1 times. And I expect the bottom line to continue expanding as consumer spending power in the UK ticks steadily improves.
