Why Royal Dutch Shell Plc, William Hill plc and FirstGroup plc Should Lag The FTSE 100 Today

The FTSE 100 (FTSEINDICES: ^FTSE) hasn’t really moved so far today, standing just a point up from yesterday’s close at 6,816 as I write — today’s profit warning from Shell put the dampers on any optimism we might otherwise have had from what is looking like a fairly solid Christmas trading period.

Which shares are depressing the market today? Here are three:

Royal Dutch Shell

Royal Dutch Shell (LSE: RDSB) shares dipped 74p (3.2%) in early trading, to 2,232p, after the oil giant warned us that figures for the fourth quarter of 2013 are “expected to be significantly lower than recent levels of profitability“. Shell blamed current prices for oil and gas and pointed to weak markets for downstream products and higher exploration costs.

Earnings for the final quarter, to be announced on 30 January, should come in at around $2.2bn (on a current cost of supplies basis) with full-year earnings of about $16.8bn.

Shell shares are now only a couple of percent up over the past 12 months, lagging the FTSE’s 13%. The dividend for the full year had been forecast to yield 4.8%, but that might be affected now.

William Hill

Bookmaker William Hill (LSE: WMH) gave us a fourth-quarter trading update, and its share price dropped 11.8p (3.2%) to 391p in response — even though the quarter was described as “a strong end to the year“.

In online business, total net revenue gained 14% compared to the equivalent 13 weeks of 2012, with Sportsbook net revenue up 30%. Total retail net revenue was also up, by 13%. The full year saw overall group revenue up 18% on a 52-week basis, and operating profit should be around £334m.


In a third-quarter interim statement this morning, FirstGroup (LSE: FGP) told us of “Overall trading in line with management’s expectations”, but it seems the market’s expectations were higher — the share price fell 3p (2.2%) to 140p in response.

UK Rail operations, which provide around 40% of FirstGroup’s turnover, apparently put in a strong quarter with “volume growth across all our franchises“. But that awful “challenging” word was used to describe the market conditions facing First Student, with cost savings being a key part of the firm’s ongoing recovery plan — but revenue should still be broadly in line with last year.

The FirstGroup share price has now recovered more than 50% from the summer’s lows, after the share price collapsed in response to last year’s final results.

Finally, one way to beat share price shocks is to focus on dividends. If you want to learn how to identify great long-term dividends yourself, have a look at the new Motley Fool report "How To Create Dividends For Life", which gives you 5 Golden Rules for Building a Dividend Portfolio.

It's completely free, so click here to get your copy while it's available.

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