Why Capita PLC, CRH PLC And MITIE Group PLC Should Lag The FTSE 100 Today

The FTSE 100 (FTSEINDICES: ^FTSE) has started weakly today, dropping 16 points to 6,568 after weaker-than-expected GDP figures from Japan knocked some of the shine off last week’s news of rising factory output from China. European markets opened lower too, as we await the latest figures from the eurozone economies.

A number of FTSE companies have seen their prices fall today. Here are three that are failing to keep up.


Shares in outsourcing and recruitment firm Capita Group (LSE: CPI) dropped 9p (1%) to 1,008p this morning, despite the news that it has been appointed as a servicer to Ireland’s National Asset Management Agency. The contract will commence this month, and should be worth around €80m (£69m) over the next four years.

Though down a little today, Capita shares are up 40% over the past 12 months. But that has driven the forward P/E, based on forecasts for the year to December 2013, up to 18, and there’s only a modest dividend yield of 2.5% expected. Still, Capita has shown healthy earnings growth over the past five years, and more of the same could justify a high rating today.


Buildings materials group CRH (LSE: CRH) announced an acquisition in India this morning, but that led to a 23p (1.6%) share price fall to 1,448p. My Home Industries, a joint venture owned 50% by CRH, will acquire Sree Jayajothi Cements for an enterprise value of 14 billion rupees (€175m), with the deal being financed through a combination of debt and equity.

CRH shares are up almost 20% over a year, but we have seen very erratic earnings in recent years, and forecasts put the shares on a forward P/E of 21 with a dividend yield of 3.7%.


It’s a poor day for outsourcing companies today, with MITIE Group shares losing 6.7p (2.4%) to 269p, even though a trading update this morning told us the firm “has made a positive start to the year” and that it “continues to see good opportunities across its markets“. In fact, of the revenues budgeted for the current financial year, 89% had already been secured by 30 June.

With the shares flat over the past year, forecasts put the shares on a P/E of 11. But the key attraction of MITIE is its dividend — it’s been steadily rising for years, and is predicted to be up again this year for a yield of 4% — and it should be more than twice covered.

Finally, you can compensate for the day-to-day ups and downs of share prices by looking for reliable dividends. So how would you like 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.