Since last July’s dip, shares in Admiral (LSE: ADM) have powered up by 28% to 1,767p, for an overall 12-month gain of 20%. Add to that a predicted dividend yield of 5.6% for the year ended December 2015, and if you bought a year ago you’d have done very nicely.
However, annual double-digit EPS growth came to an end with a 2% dip in 2014. There’s a forecast for a modest resumption of growth starting in 2016 after a flat 2015, so results due on 3 March could be crucial. Admiral famously pays out a large portion of its annual cash as a special dividend, and if that’s missed any time then a key support for the share price will have been removed. But with the first half dividend upped by 3% to 51p per share, the full 2015 payout is looking safe enough.
At the interim stage, EPS was up 4%, with chief executive Henry Engelhardt saying “Profits are up, customer numbers are up, earnings per share is up, the dividend is up … you might say it was a pretty ‘up’ first half!“
The only downside is a relatively high P/E of 17, which has the analysts split over whether to buy or sell — but those dividends are surely worth a bit extra.
Aviation struggling
The past year has been less kind to BBA Aviation (LSE: BBA) shareholders, who are sitting on a 22% share price loss — although there has been a 29% recovery since a low on 20 January to today’s 195p. There’s still an attractive 4.1% dividend yield mooted for the year just ended, but the trouble is there’s a 15% fall in EPS expected too, with no uptick predicted until 2017.
A trading update released by the aviation support provider in December told us that overall revenue was down 3%, with its Engine Repair & Overhaul having a bit of a tough time and not performing in line with previous expectations.
If we hear anything a bit more upbeat for 2016 prospects, we could see the share price recovery continuing, especially if a return to EPS growth looks like it could happen this year instead of next. But with BBA on a P/E of 14.5, I see better bargains out there.
Oily collapse
My third pick reporting tomorrow is Genel Energy (LSE: GENL), whose share price has collapsed over the past 12 months by 87% to today’s 75.6p. Things got worse on 29 February when a reduction of 75% in 2P reserves at the Kurdistan-based oil producer’s Taq Taq field was announced — and the shares lost 41% on the day! Taq Taq is responsible for around 60% of Genel’s production.
The possible upside is that Genel’s production costs are very low, and the current share price values its assets very cheaply indeed. It’s a political minefield in Kurdistan, but even a modest recovery in the oil price could gear up the value of Genel’s reserves quite nicely — although profit isn’t expected before 2017. If you like this level of risk, there could be a nice upside here.
