Should You Buy Hill & Smith Holdings PLC, Kingfisher plc And Cineworld Group plc?

Royston Wild runs the rule over headline makers Hill & Smith Holdings PLC (LON: HILS), Kingfisher plc (LON: KGF) and Cineworld Group plc (LON: CINE).

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Today I am looking at the investment prospects of three of the FTSE’s newsmakers.

The road to brilliant returns

Highways maintenance specialists Hill & Smith (LSE: HILS) greeted the market with a cheery update in Tuesday trading, sending shares in the business 3.6% higher. The Solihull firm advised that “trading during [July-October] has continued to be robust,” noting that its broad geographical and market spread continues to give it strength.

Accordingly Hill & Smith affirmed its full-year guidance for 2015, and I expect the company — which provides gantries, barriers and an assortment of other road-related hardware — to continue to enjoy strong sales growth as the UK government doubles-down on roadbuilding. In addition to this, the purchase of signbuilder Tegrel this month drastically improves Hill & Smith’s supply chain and thus ability to service the needs of Highways England.

Against this backcloth the City expects Hill & Smith to follow an anticipated 8% earnings bounce this year with a 7% improvement next year, pushing an already-attractive P/E rating of 13.2 times to just 12.4 times. On top of this, projected dividends of 19.9p per share for 2015 and 21.7p for 2016 produce chunky yields of 3.1% and 3.4% correspondingly.

Plenty of hard work ahead

Things over at DIY play Kingfisher (LSE: KGF) are not so rosy, however, and yet another troubling update left the retailer dealing 0.3% lower from Monday’s close. Despite positive British retail conditions pushing domestic like-for-like sales 4.6% higher in August-October, conditions on the continent remained a problem and French underlying sales edged just 0.1% higher.

As a result Kingfisher — which operates the B&Q and Screwfix chains in the UK — reported a profit of £223m, missing broker forecasts by some distance. And although the retailer advised that restructuring is rattling along nicely, I believe soft trading conditions in France continue to cast a pall over the company. To add to Kingfisher’s overseas woes, adverse currency movements during the period dented non-sterling profits by a chunky £17m.

The number crunchers expect Kingfisher to report a 3% earnings advance in the year to January 2016, and an 11% rise is forecast for 2017. These figures leave the retailer dealing on reasonable P/E ratings of 16.3 times and 14.7 times for these periods, while estimated dividends of 10.2p and 11.1p for 2016 and 2017 respectively produce handy yields of 2.9% and 3.2%.

Still, I do not find these levels particularly attractive given the huge obstacles Kingfisher faces on the continent.

Neither shaken nor stirred

Movie and munchies play Cineworld (LSE: CINE) was recently dealing 0.2% in deficit in Tuesday despite releasing yet another bubbly trading statement. The picture house saw box office revenues leap 10.8% between January and mid-November and, helped by the enormous popularity of Bond flick SPECTRE, the business advised that the fourth quarter has got off to a strong start.

Furthermore, with The Hunger Games: Mockingjay Part 2 and Star Wars: The Force Awakens slated for release in the coming weeks, Cineworld said it remains confident that it will meet its full-year profit forecasts.

With Cineworld also continuing its bold expansion plans — the business has opened a further three sites in the UK in the second half, and seven in Central and Eastern Europe and Israel — and a bulging list of blockbusters scheduled for next year and beyond, I fully expect revenues to carry on surging.

This view is shared by the ‘Square Mile’, and anticipated earnings growth of 15% and 10% for 2015 and 2016 correspondingly leave Cineworld dealing on P/E ratios of 19.2 times and 17.4 times for these years. I believe the company’s stunning growth outlook justifies this slight premium, while anticipated dividends of 15.5p and 17.1p for 2015 and 2016 correspondingly — yielding 2.9% and 3.2% — sweeten the investment case.

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 considered so you should consider taking independent financial advice.

Royston Wild owns shares of Cineworld Group. The Motley Fool UK has no position in any of the shares mentioned. 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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