Wednesday’s Round-up: ARM Holdings plc (-4.4%) Broadly In Line, Special Dividend At Dunelm Group plc (+13%) And Challenging Markets For Victrex plc (+2.5%)

Dave Sullivan digs into Wednesday’s updates from ARM Holdings plc (LON: ARM), Dunelm Group plc (LON: DNLM) and Victrex plc (LON: VCT).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

After a gut-wrenching few days of what seemed like the FTSE 100 preparing itself to test new lows, investors were treated to an up day yesterday with the blue-chip index climbing by 0.9%. That’s not to be sniffed at in the current market climate.

However, if you start to look beyond the headline numbers of the indexes, particularly now that reporting season is in full swing, you’ll see there are many moving parts driving the indexes throughout the course of the day.

Below I focus on three of the more interesting market movers: Chip designer ARM Holdings (LSE: ARM), Homewares retailer Dunelm (LSE: DNLM), and high-performance polymer solutions producer Victrex (LSE: VCT).

As can be seen from the chart below, all of the companies have witnessed share price movements in excess of the main index – the key is to understand what caused the movements and how to react. Let’s take a closer look…

ARM: Off by 4.4%, trading ‘broadly in line’

There are plenty of companies that would give their right arm for earnings and dividend growth of 25%, and £951m in cash on the balance sheet. So why did the shares fall?

Perhaps it was the rather racy 27 times forecast earnings that caused the decline, or the belief that the future of the company is tied to that of Apple, which has seen its own shares sell-off of late.

However, I believe it was the outlook that spooked investors with management flagging increased economic uncertainty. This may influence consumer and enterprise spending, potentially impacting semiconductor revenues and industry confidence. Based on current conditions in the semiconductor market, management expected revenue for 2016 to be broadly in line with (director speak for slightly below) market expectations.

Dunelm: Shares 13% up with further return of cash

Along with other retailers, Dunelm had suffered due to the now-very-familiar unseasonably warm weather, which management had flagged in January. This had sent the shares in a downward trajectory with them reaching one-year lows, not helped by market sentiment during 2016.

However, the shares rallied Wednesday as investors warmed to the interim results, which pointed positively to the second half, coupled with a 9% increase in the interim distribution and a separate special distribution of 31.5p per share.

Commenting on the results, new CEO John Browett seemed positive too saying: “After a solid performance in the first half, we had a strong sale after Christmas and we expect further good progress in the remainder of the year.” 

Victrex: Up 2.5%, investors breathe sigh of relief

Last up is one of the most impressive UK growth stories you’ve never heard of. Victrex specialises in the production of a highly versatile form of plastic known as polyetheretherketone, or PEEK for short.

As can be seen from the chart, the shares have sold-off recently due to exposure to the oil and gas sector, plus global growth worries.

Yet it appears that things weren’t quite as bad as investors expected and the shares were marked-up by 2.5% Wednesday as management pointed to an expected stronger second half.

And with the shares in this quality company currently trading on around 13 times forecast earnings and yielding over 4% according to data from Stockopedia, now may be a good time to take a closer look.

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.

Dave Sullivan has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings and Victrex. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

2 FTSE income stocks investors should consider buying in April

Income stocks are a great way to build wealth. Our writer details two picks she believes investors should consider snapping…

Read more »