Why Legal & General Group Plc, InterContinental Hotels Group PLC And Rotork p.l.c Should Beat The FTSE 100 Today

The FTSE 100 (FTSEINDICES: ^FTSE) is carrying on in uncertain fashion today, dropping just after opening, and then recovering to just six points up on the day to 6,626. Industrial output statistics were better then expected, but markets are still awaiting the next Bank of England inflation figures, due on Wednesday. We had some upbeat earnings reports as well, which helped support the FTSE’s top index.

With a modest FTSE today, which companies look set to beat it? Here are three responding well to news:

Legal & General

First-half results sent Legal & General shares up 6.4p (3.2%) to 204p this morning, taking them up nearly 55% over the past 12 months. And with pre-tax profit up 13% to £592m, earnings per share (EPS) up 13% to 7.82p and net cash generation up 23% to £500m, the price rise was no surprise. Chief executive Nigel Wilson told us that “International assets under management are up 21% to £52bn.  Bulk annuities and related retirement solutions for corporates are up ten-fold“.

Legal & General has a good record of paying dividends, and for the full year to December there’s a 4.4% yield currently forecast, which would represent an 11% rise on 2012. If anything, that is looking conservative now, with the interim dividend having been boosted by 22% to 2.4p per share.

InterContinental Hotels

InterContinental Hotels also released first-half figures this morning, and announced it is to return $350m to shareholders via a 133 cents-per-share special dividend to be paid in October — and the regular interim dividend was lifted 10% to 23 cents, too. Revenue for the period rose 7% to $936m with operating profit up 20% to £338m. Adjusted EPS is up 25% to 78.2 cents. The only obvious downer is that net debt grew by 53% to $861m — the rise being pretty much equivalent to the special dividend.

The share price is now up a little more than 20% over the past year, but that puts the shares on a forward P/E of nearly 19 based on full-year forecasts, and it only drops to around 17.5 for 2014. The dividend looks like yielding around 2.5%.


News of a couple of acquisitions sent the Rotork share price up 192p (7.1%) to 2,896p today, for an overall rise of 25% in the last 12 months. The firm, which makes actuator and flow control products, has acquired the entire share capital of G.T. Attuatori Italia, Germany’s Attuatori Europe and Max Process, and Renfro Associates of Oklahoma.

Chief executive Peter France said that “The acquisition of GTA brings to the Rotork family of companies one of the longest established, best regarded, pneumatic rack and pinion manufacturers in our markets“. I don’t know what that is, but it must be good.

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