Why Burberry Group plc, Euromoney Institutional Investor PLC And SDL plc Should Lag The FTSE 100 Today

The FTSE 100 (FTSEINDICES: ^FTSE) gained 50 points to 6,558 by late morning, on the realisation that the US will actually reopen for normal business after all, and it’ll probably be reasonably soon.

That takes the UK’s top index up 71 points on the week so far, so maybe its recent bearish run has come to an end — not that such short-term movements should be of any real concern to long-term investors.

Though the FTSE is up, there are a few notable fallers today. Here are three from across the indices that are on a downer: 

Burberry Group

There was mixed news for Burberry Group today. On the plus side, a first-half update told us that underlying revenue is up 14% to £1,031m, and retail revenue is up 17% to £694m with comparable-store growth of 13%.

But shareholders also learned that they are to lose chief executive Angela Ahrendts, who has been tempted away by Apple where she will take up a new position by mid-2014. Ms Ahrendts, who has been credited with Burberry’s impressive transformation in recent years, will be replaced by Christopher Bailey, who has been Burberry’s chief creative officer since 2007.

Euromoney Institutional Investor

Shares in Euromoney Institutional Investor (LSE: ERM) dipped a little, losing 9p (1%) to 1,061p, after the company announced an acquisition. The media group is to buy Infrastructure Journal, described as “a leading information source for the international infrastructure markets“.

The purchase cost of £12.5m in cash will come from existing borrowing facilities, and the acquisition is expected to add to earnings by 2014.

Euromoney shares are nearly 40% ahead over the past 12 months after several years of strongly rising earnings, and have reached a forward P/E of 15 with an expected dividend yield of just over 2%.


Our third price-loser for today is SDL (LSE: SDL), whose shares dipped 28p (10%) to 255p after the software firm issued another profit warning. Telling us that third-quarter performance is below expectations, SDL lowered its pre-tax profit guidance for the full year to around £8m — down from £35.5m in 2012. And that’s before one-off costs, so the reported figure is likely to be lower.

The share price is now down more than 50% over 12 months, having plunged in June after an earlier profit warning.

Before today, forecasts suggested a drop in EPS of more than 60%, but that still puts the shares on a P/E of more than 22. There is an earnings recovery expected for 2014, so is SDL a falling knife to avoid or is it a promising recovery prospect? That’s for you to decide.

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