The FTSE 100 (FTSEINDICES: ^FTSE) has been lifted a little by positive earnings reports today, but just 19 points up at 6,580 the move is pretty much indistinguishable from random noise, and we have had a few big fallers in the UK’s top index to counter any further rises. With fears for Chinese growth subsiding, macroeconomic eyes will now be pointed towards the next round of updates from central banks.
Which shares are holding the FTSE in check today? Here are three from the various indices that are slipping:
BP
Shares in BP slumped 20p (4.3%) to 447.5p this morning after the firm upped its estimate for the total cost of settling the Deepwater Horizon disaster to $42.4bn (27.7bn). The news came with second-quarter results, which were otherwise mildly disappointing. Pre-tax profit for the period came in at $2.7bn, compared to $4.2bn in Q1 and $3.6bn for the same period last year. The drop was blamed on lower oil prices, a higher effective tax rate, and dipping income from Russia. There will be a quarterly dividend of 9 cents per share.
This is not great news for the Fool’s Beginners’ Portfolio, which has held BP shares since August 2012 — the price is slightly up over the subsequent 12 months, but not enough to cover dealing costs yet. Judging by the latest analysts’ consensus, BP shares are on a forward P/E of under 9, which is pretty cheap. But the disaster uncertainty continues to weigh heavily, and forecasts may well be re-rated downwards after today’s update.
Barclays
Barclays announced today that, in order to get its leverage ratio to meet the Prudential Regulation Authority’s target of 3% (it’s currently around 2.2%), the bank is to launch a new rights issue to raise approximately £5.8bn. There will be one new ordinary share for every four currently in existence, offered at a a price of 185p each, which represents a 40% discount to the closing price of 309p on 29 July. The result, unsurprisingly, was a share price fall — of 21.7p (7%) to 287p. All in all, shareholders who held the shares at 309p at pretty much breaking even on the deal, but it will cause some shock as Barclays had previously been confident it could meet the regulator’s requirements without issuing new shares.
The announcement came on the same day as the bank’s first-half results, which showed a 17% fall in adjusted pre-tax profit to £3,591m and a 4% fall in net asset value to 397p per share. Barclays shares are on a forward P/E, based on December 2013 forecasts, of under 9.
Domino’s Pizza
Our third faller today is Domino’s Pizza (LSE: DOM), whose share price took a 53p (8.8%) hit to 547p after the company revealed that first-half pre-tax profit plunged 46% to £11.6m after exceptional items related partly to charges in its German operations. But it’s early days in Germany, with chief executive Lance Batchelor telling us that “…it is time to drive our German expansion using our tried and tested franchise model […] and with five world-class franchisees now operating in the German market and more arriving shortly, we are excited about the future in this territory.”
With the share price only about 5% up over the past 12 months, and the interim dividend raised by 7.6% to 7.1p per share, is it a good time to buy? You’ll have to decide that for yourself, but the shares are on a forward P/E of nearly 26 and the dividend is likely to yield less than 3%.
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?
It’s the subject of our BRAND-NEW report, “The Motley Fool’s Top Income Share For 2013“, which you can get completely free of charge — but it will only be available for a limited period, so click here to get your copy today.
> Alan does not own any shares mentioned in this article.
