Today I’m looking at three Footsie stocks making headlines on Thursday.
Shares in defence giant QinetiQ (LSE: QQ) crept to two-and-half-month peaks this week in the lead-up to Thursday’s full-year results. And investor faith appears to have been rewarded even though the engineer saw revenues slip 1% during the 12 months to March 2016, to £755.7m, while pre-tax profit slumped 14% to £90.2m.
But QinetiQ’s sales outlook appears to be steadily improving, the company enjoying an 8% boost in its order book — to £659.8m — thanks to a £153m, five-year renewal contract with the Ministry of Defence for aircraft engineering support.
Furthermore, QinetiQ advised that 74% of revenues for fiscal 2017 were covered as of the start of April.
With defence budgets back on the mend, the City expects QinetiQ to enjoy an earnings advance of 1% in both 2017 and 2018, resulting in very-decent P/E ratios of 14.9 times and 14.6 times, respectively. And dividend yields of 2.6% for 2017 and 2.9 % for 2018 provide a handy-if-unspectacular sweetener.
Payments specialist Paypoint (LSE: PAY) also enjoyed a bump in Thursday business, a 2% advance sending the stock to levels not seen since early January.
Paypoint advised that pre-tax profits careered 84% lower in the year to March 2016, to £8.2m, the business hammered by a £30.8m impairment on its outgoing mobile payments division.
Revenues at Paypoint slipped 3% during the period, to £212.6m, although the company remains bullish over its long-term outlook as it develops its retail services. Indeed, Paypoint saw the number of retail transactions shoot 17.8% higher last year, to 140m.
The number crunchers certainly believe Paypoint is on the way up, and have pencilled-in earnings rises of 20% and 7% for 2017 and 2018. These figures produce excellent P/E ratings of 13.4 times and 12.7 times.
And dividend hunters will no doubt be attracted by huge dividend yields of 5.4% for this year and 5.8% for 2018.
Sugar play Tate & Lyle (LSE: TATE) has proved one of the stars of the show on Thursday, the stock gaining 2% and reaching levels not seen since last April in the process.
Tate & Lyle announced that sales edged fractionally higher during the year to March, to £2.36bn, although investors cheered news that adjusted pre-tax profits nudged 5% higher to £193m.
The food play posted a mixed set of sales results. Revenues at its Specialty Food Ingredients arm nudging 4% higher from 2015, to £897m. But Tate & Lyle’s Bulk Ingredients arm continues to struggle, and sales here dipped 1% to £1.46bn.
The City expects restructuring at the sugar giant to keep driving earnings higher, and rises of 7% and 6% are expected in 2017 and 2018, resulting in P/E ratings of 16.6 times and 15.5 times.
However, dividend yields of 4.7% for this year and 4.8% for 2018 help to offset these middling multiples.
Still, I believe Tate & Lyle still has plenty of work ahead of it to turn around its Bulk Ingredients business, while adverse currency movements add a further headache for the business. I reckon the stock’s turnaround story still leaves plenty of questions to be answered.