Lloyds Banking Group
In the last three months, shares in bailed-out bank Lloyds Banking Group (LSE: LLOY)(NYSE: LYG.US) are up 23%. In the last year, they are 91% ahead. By comparison, in three months, the FTSE 100 is up 7%. In the past 12 months the blue-chip index is ‘just’ 12% ahead.
As the UK economy recovers, analyst forecasts for Lloyds’ profits have raced higher. This time last year, earnings per share (EPS) of 3.68p per share was forecast for 2013. Now, that figure is 5.29p. The increased profit forecasts have super-charged Lloyds’ share price growth.
The UK government has taken advantage of this rise to begin selling some of its stake in the bank. The expectation of more large government offerings will likely limit future price rises.
Investors have been encouraged by Shire (LSE: SHP)’s recent half-year results. In this announcement, Flemming Ornskov, CEO, confirmed the board’s expectations for double-digit earnings growth in the year. Investors were also informed that operating margins would likely increase in the future.
The positive vibe around the company has produced a 28% share price rise in three months.
Using the consensus of broker forecasts, the shares are today trading at 18.3 times full-year forecasts. More growth is expected in 2014, lowering the P/E ratio to 16.2. Although the dividend has been increased at an average rate of 12.2% a year for the last five years, the shares today come with a prospective yield of 0.5%.
Shire has always looked expensive. That hasn’t stopped the shares from rising 460% in 10 years.
Luxury goods firm Burberry (LSE: BRBY) is one of the UK’s great global successes. The most recent trading statement reported an 18% increase in revenues. This followed the announcement in May of an 8% increase in sales during the first six months of Burberry’s year.
Profit forecasts have been on an upward trajectory for the last 21 months. This has led to a 48% increase in the company’s share price. 21% of this rise has been delivered in the last three months alone.
The shares are today available at 20.5 times 2013 profit forecasts. Expected growth in 2014 brings this P/E down to 18.2. That seems about the right price for such a successful company.
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> David does not own shares in any of the companies mentioned. The Motley Fool has recommended shares in Burberry.