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Should You Buy Marks and Spencer Group Plc, Homeserve plc & Darty PLC?

Today I am running the rule over three of the FTSE’s Friday headline-grabbers.

Marks & Spencer 

How the market cheered back in May when Marks & Spencer (LSE: MKS) announced a decent — albeit belated — turnaround in its fashionwear sales. General Merchandise like-for-like revenues rose 0.7% during January-March, the business noted, the first advance for 14 quarters. But a couple of months is an eternity on the stock markets, and news of a 0.4% dip in the following quarter led to news that divisional head John Dixon had fallen on his sword late last night.

Still, the company’s Womenswear lines are in a far better state that they were before Dixon took over, and with the company’s new M&S.com platform proving massively popular and High Street spending power surging higher, I believe sales should keep rising across the business. This assessment is shared by the number crunchers, and ‘Marks and Sparks’ is expected to report earnings rises of 6% and 9% for the years concluding March 2016 and 2017 correspondingly.

These figures leave Marks & Spencer changing hands on very attractive P/E ratios of 15.4 and 14 times for these years. And when you factor in predicted dividends of 18.9p per share for next year and 20.5p for 2017 — numbers that produce meaty yields of 3.5% and 3.8% — I believe the retailer is a compelling stock selection.

Homeserve

Despite the release of a bubbly stating statement, home emergency specialists Homeserve (LSE: HSV) were recently dealing 1.6% lower on Friday as wider risk aversion — combined with a smattering of profit-taking after recent share price strength — smacked the stock. Homeserve advised that trading remains in line with expectations, adding that “we expect to deliver good growth in 2016.”

The business has invested vast sums into improving customer service and marketing on both sides of the Pond in recent times, a strategy that has sent new customer numbers surging whilst boosting client retention. Indeed, Homeserve now boasts 2.1 million clients in both the UK and US. In light of this pan-global success, the City expects the company to churn out earnings growth of 3% for the period concluding March 2016, a figure which leaps to 11% for the following 12 months.

This figure leaves the business dealing on slightly-expensive earnings multiples of 21.2 times for this year and 19.1 times for 2017. Still, I believe the breakneck progress Homeserve is making in territories across Europe and the US justify this slight premium. And anticipated dividends of 11.6p per share for this year and 12.5p for 2017 sweeten the investment case, yielding 2.8% and 3% respectively.

Darty

European electrical goods seller Darty (LSE: DRTY) was recently bucking the wider weakness across FTSE indices, the stock having gained 2.5% in end-of-week trade. The London-headquartered business announced in June that revenues edged 3% higher in the year concluding April 2015, helped by new store openings, a refreshed multi-channel offering and improving market conditions.

And Darty was given further cause for optimism this month when latest eurozone retail sales data showed shopper activity in April leap 2.5% on an annualised basis. With recent cost-cutting and steady divestment of underperforming assets also improving efficiency across the business, the City expects Darty to record brilliant earnings growth of 35% and 19% in 2016 and 2017 respectively, leaving the company dealing on bargain-basement P/E ratios of 12.9 times and 10.6 times for these years.

These outstanding growth projections are expected to crank Darty’s progressive dividend policy back into life, too, and a reward of 3.5 euro cents per share for the past four years is expected to rise to 4.1 cents in 2016, yielding a juicy 4%. And this readout climbs to 4.3% for 2017 amid forecasts of a 4.3-cent payout.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Homeserve. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.