Why Cobham plc, BTG plc and SThree Plc Should Lag The FTSE 100 Today

The FTSE 100 (FTSEINDICES: ^FTSE) started the week in a relatively optimistic mood, gaining 26 points to 6,570 by just after midday as the see-saw that is Chinese sentiment swung back into cheer, with GDP data from the People’s Republic looking better. As usual when such things happen, mining shares gained a small amount.

But which shares are not doing so well? Here are three from the indices that are slipping:


Cobham (LSE: COB) shares dipped 0.8p to 286p this morning, after the aerospace and defence firm announced the acquisition of the remaining 50% it did not already own of FBH, the helicopter venture it formed with Bristow Helicopters. The deal will cost £74m, and Cobham will take on Bristow’s share of FBH’s net debt.

Chief executive Bob Murphy said that FBH “brings a long track record of operating in attractive, specialist outsourcing markets with demonstrable success in winning contracts across the globe“.


Pharmaceuticals firm BTG (LSE: BTG) saw its shares drop 4.8p (1.2%) to 383p, despite the firm confirming that it has completed the acquisition of the Targeted Therapies division of Nordion Inc, which was announced on 23 May — the deal was completed on 13 July.

BTG’s share price is close to flat over the past 12 months, having fallen slightly, but the shares are on a forward P/E based on the year to March 2014 of over 30, with a fall in earnings per share (EPS) expected. And that only drops to 22 for 2015’s estimated 44% EPS rise.


Interim results sent shares in SThree (LSE: STHR) down 17.5p (4.8%) to 345p, after the contract staff agency revealed a pre-tax fall of 28% to £6.7m for the six months to 26 May — though revenue was actually up 4.8%. Basic earnings per share also fell, by 29% to 3.7p, but the firm stuck to its interim dividend and is paying an unchanged 4.7p per share for the half.

Things are tough in SThree’s markets right now, with chief executive Gary Elden saying “Against a backdrop of weaker macroeconomic conditions, we had a satisfactory first half“. He went on to say that “global economic conditions remain fragile and predicting the kind of market conditions the Group will face in the second half with any accuracy is extremely difficult“.

Finally, reliable dividends can more than compensate for the day-to-day ups and downs of share prices. So how about a company that’s offering a 5% yield and which could be set for some nice share price appreciation too?

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> Alan does not own any shares mentioned in this article.