Today I am looking at three of the FTSE’s Friday headline makers.
Engineering giant IMI (LSE: IMI) disappointed the market in end-of-week trading with its latest set of numbers, and traders responded by sending shares 2% lower from Thursday’s close. The business reported that revenues slipped 5% during January-March, a result that forced operating profit down 15% to £116m.
Worryingly IMI advised that revenues are likely to fall by a similar percentage during the final six months of 2015, adding that difficulties in the fluids market mean that “some projects which are scheduled to ship this year could still shift into 2016, which may impact full year performance.” With the engineer also facing significant currency headwinds I believe the top line should remain under the cosh for some time.
The City currently expects IMI to record a 7% earnings decline in 2015, putting the business on a P/E multiple of 14.7 times. Although this drops within the parameter of 15 times or below than indicates decent value, given the enduring problems in several of its critical end sectors, I believe IMI could be due for further heavy share weakness should the newsflow begin to worsen, a very likely scenario.
With commodity prices continuing to sink, I reckon copper miner Kaz Minerals (LSE: KAZ) is a high-risk selection for those seeking any sort of earnings growth. Unfortunately for the London digger this view is also shared by the wider market, and a 3.3% decline in Friday trading means that the stock has shed some 40% of its value since mid-May alone.
Kaz Minerals announced yesterday that it was on track to meet its copper production guidance of 80,000-85,000 tonnes during 2015, but was forced to reduce its gold output forecast from 42,000-47,000 ounces to 34,000-38,000 ounces on the back of lower ore grades. This hardly does the Kazakh-focussed firm any favours considering that revenues already remain under pressure — the yellow metal remains perched perilously above recent five-year lows around $1,080 per ounce.
With a worsening supply/demand balance also affecting key product copper, a factor that looks set to drive red metal prices to fresh multi-year troughs below $5,200 per tonne, I reckon Kaz Minerals is nailed-on to remain under significant pressure. Indeed, the miner is expected to punch a fourth consecutive earnings dip in 2015 with a 97% decline. And I do not see the bottom line improving any time soon as global copper output increases and the Chinese economy moderates.
Still, chemicals and materials supplier Alent (LSE: ALNT) was able to give the market some reason for cheer and the business was recently dealing 0.3% higher in Friday trade. The Woking firm advised that net sales increased 1.9% during January-June, to £205.2m, thanks to solid pricing as a positive product mix from its higher-margin operations offset weakness in its end markets.
And promisingly Alent — which has agreed to a £1.35bn takeover from Platform Specialty Products — added that “we continue to expect an improvement in the second half of the year reflecting the normal seasonal cycle in electronics and new product launches from our customers.” Against this bubbly backcloth the City expects Alent to record earnings growth of 7% and 9% in 2015 and 2016 correspondingly, figures that push an earnings ratio of 17.9 times for this year to 16.5 times for 2016.
With the cash balance also improving at the firm, the number crunchers expect Alent to increase last year’s 9p-per-share dividend to 9.6p in 2015 and 10.3p next year. As a result the soldering material-manufacturer wields handy yields of 2% and 2% for these periods.
But regardless of whether you share my assessment of the firms mentioned, I strongly recommend you check out this totally exclusive report that picks out even more London-listed heavyweights waiting to deliver spectacular shareholder gains.
Our “5 Dividend Winners To Retire On” wealth report highlights a selection of incredible stocks with an excellent record of providing juicy shareholder returns. Among our picks are top retail, pharmaceutical and utilities plays that we are convinced should continue to provide red-hot dividends. Click here to download the report -- it's 100% free and comes with no further obligation.
Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended IMI. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.