Today I am running the rule over three London-listed headline makers.
Toast brilliant returns
Shares in Enterprise Inns (LSE: ETI) have exploded 8% in Tuesday trade following the release of bubbly trading numbers.
The pub operator advised that like-for-like sales advanced 1.5% in the leased and tenanted estate division during the six months to March 19th. As a consequence, Enterprise Inns said that it remains on track to meet its expectations for the full year.
And following today’s solid results, Enterprise Inns announced plans to embark on a £25m share buyback programme.
The City expects Enterprise Inns to flip from a 1% earnings dip in the year to September 2016 with a 2% advance in the following period. These figures create mega-low P/E ratios of 4.3 times and 4.2 times correspondingly, very decent value in my opinion given the solid momentum of the firm’s growth strategy.
A capital selection
Investor appetite for SVG Capital (LSE: SVI) also bumped higher in today’s session, the business last dealing 3% higher from Monday’s close.
SVG Capital advised that net asset values surged by double-digit percentages for the sixth year on the spin in the year to January 2016. Net asset values improved 11% from the previous year, the company advised, compared with a 5% slide in the FTSE 350.
Looking ahead, however, chief executive Lynn Fordham advised that “the year ahead is likely to present a number of macroeconomic, geopolitical and financial market challenges and we expect volatility to continue.”
The number crunchers expect these problems to push earnings 41% lower in the current period, resulting in a P/E rating of 16.1 times. But a predicted 74% earnings advance in 2018 drives the multiple to just 9.3 times.
Given that SVG Capital has already proved it has what it takes to succeed despite heavy macroeconomic turbulence, I reckon the business could once again surprise to the upside this year and beyond. The investment specialists could prove a canny purchase for stock pickers with the right appetite for risk, in my opinion.
Mammoth risks at current prices
Precious metals play Fresnillo (LSE: FRES) has also leapt in Tuesday business on the back of rising gold and silver values, the business last dealing 3% higher on the day.
Fresnillo has seen earnings dip for four years on the bounce as metal prices have eroded. But earnings are expected to surge 237% and 120% in 2016 and 2017 respectively, according to the City, the result of recent commodity price improvements and vast cost-cutting at the firm.
However, these estimates still leave Fresnillo dealing on massive P/E multiples of 58.9 times and 29.3 times respectively.
I believe that these figures fail to reflect the huge risks facing the business in the near-term and beyond. Silver demand continues to steadily decline, while the prospect of a resurgent US dollar also casts doubt on the strength of precious metal price advances. I believe the risks at Fresnillo continue to outweigh the potential rewards.
