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Why GlaxoSmithKline plc, Whitbread plc and Oxford Instruments plc Should Lag The FTSE 100 Today

The FTSE 100 (FTSEINDICES: ^FTSE) is having another good day, up 53 points to 6,584 by just after midday, as recent fears are being overshadowed by further good economic news from China, a reducing likelihood of intervention in Syria, and upbeat reports from some top FTSE 100 companies.

But not everyone is doing so well today. Here are three from the indices that are moving in the opposite direction to the FTSE today:

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Shares in pharmaceuticals giant GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) didn’t move much on yesterday’s announcement of the sale of its Lucozade and Ribena brands, but in a belated drop today they were down 52p (3.2%) to 1,588p by around noon. The two brands, which generated £0.5bn in sales in 2012, are to be sold to Suntory Beverage & Food of Japan in a deal that should net Glaxo an estimated £1.3bn.

Glaxo shares have been slipping back a bit over the past couple of months, and they’re now barely ahead of the FTSE with a 12-month gain of around 16%. But there are earnings rises forecast, together with a 4.5% dividend yield, from shares on a very average forward P/E of 14.


A quarterly update did some damage to Whitbread (LSE: WTB) shares this morning, sending them down 77p (2.4%) to 3,139p, even though total sales for the 11 weeks to 15 August were up 10.8%. The drop is apparently due to investors being disappointed by a rise of only 16.5% at Costa Coffee. Costa sales gained 20.8% over the first six months, but that was biased towards the colder first quarter, though it beats me why that is apparently so surprising.

The shares are still up around 35% over the past 12 months, and forecasts suggest strong earnings growth for this year and next.

Oxford Instruments

And AGM-day update sent Oxford Instruments (LSE: OXIG) shares down 89p (5.9%) to 1,421p, despite things apparently going pretty well. The firm is in the second year its 14 Cubed plan, which aims to achieve a return on sales of 14% and an annual revenue growth rate of 14% by 2014. And in the second year of the plan, to March 2013, the nanotechnology specialist saw revenue up 15.6% over the two years, with a return on sales of 14.2% last year.

We’ve seen five years of strong earnings growth, with the City forecasting two more years at a single-digit pace, and some might see a forward P/E of over 20 as perhaps a little high. Dividends are yielding less than 1%.

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. The Motley Fool has recommended shares in GlaxoSmithKline.

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