Today I am taking a look at three of the FTSE’s Thursday news makers.
Take a bite
Shares in catering and support services provider Compass Group (LSE: CPG) have been extremely volatile since the start of 2016, although prices have stomped higher more recently and gained more than a tenth over the past fortnight.
The Chertsey business received further fuel in Thursday’s session after announcing that total organic revenues surged 5.9% between October and December. Compass Group saw sales rise across all regions, including a solid 7.9% advance in North America, thanks to strong customer retention and new contract wins.
And the company remained upbeat over its outlook for 2016 and beyond, claiming that “growth in North America is strong, Europe is improving, and we are managing the challenges in the Rest of World region.”
The City expects Compass Group to rack up a 4% earnings rise in the year to September 2016, resulting in a slightly-elevated P/E rating of 20.7 times. But I believe the firm’s terrific momentum in all of its major territories merits such a premium.
Soaring higher
Budget flyer Ryanair (LSE: RYA) also greeted the market with a bubbly update in Thursday trade, although moderating risk sentiment across financial markets pushed the stock 3.8% lower from the midweek close.
Ryanair advised that passenger numbers charged 25% higher during January, to 7.5 million, while the load factor improved by 500 basis points to 88%. The Dublin airline advised that a combination of low prices and the success of its ‘Always Getting Better‘ customer service programme helped to drive numbers.
And as demand for cheap flights from leisure and business customers continues to take off, and Ryanair expands its base network to harness such growth (the company opened new hubs in Berlin, Corfu, Gothenburg and Milan between October and December alone ), I fully expect earnings to continue moving higher.
On the retreat
Precious metals producer Randgold Resources (LSE: RRS) has also enjoyed a fresh bump higher on Thursday thanks to a chunky rise in the gold price.
Indeed, the miner has risen 23% since the turn of the year as the commodity’s value has gained ground. And the ‘safe-haven’ metal burst back through the $1,150 per ounce marker just today, taking it to levels not seen since the end of October as the US dollar continued to lose value.
With Randgold Resources also steadily hiking output and doubling-down on its cost-saving measures, the City expects the company to bounce from an anticipated 25% earnings fall in 2015 with a 21% rise in the current period, resulting in a high P/E rating of 27.2 times.
But I am unconvinced that the stock can maintain this strong momentum. Given that fresh greenback strength is likely in the coming months, and physical gold demand remains extremely patchy, I reckon gold prices could find themselves on the retreat again in the near future. Consequently I believe Randgold Resources is an unappealing pick at current prices.
