Today I am looking at three of the FTSE’s newsmakers in midweek business.
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Security specialists G4S (LSE: GFS) failed to ignite the market after releasing its latest financial numbers, and the stock was last 0.1% lower in Wednesday business thanks to wider macroeconomic concerns. The Crawley firm advised that revenues ticked 2.8% higher during January-June, to £3.3bn, thanks to stunning performance in emerging markets and North America — sales in these places advanced 5.7% and 5.4% respectively.
New contract sales during the period clocked in at £1.4bn and, critically, G4S managed to keep contract retention rates around the historical 90% mark, a necessity for the business to punch robust organic growth in the coming years. With the business investing massively to generate growth and slashing costs after recent scandals, the City expects G4S to see earnings expansion of 17% and 15% in 2015 and 2016 correspondingly.
These figures leave the business dealing on decent P/E multiples of just 17.7 times for this year and 16 times for 2016, just above the barometer of 15 times that signals excellent value. And this slight shortfall is made up for by G4S’s progressive dividend policy — a prospective dividend of 9.8p per share for this year yields a market-beating 3.6%, a readout which rises to 3.8% for 2016 amid expectations of a 10.4p reward.
Shares shuttling higher
Unlike G4S, transportation services provider Tracsis (LSE: TRCS) has shot higher in midweek business following positive numbers of its own and is currently 3.2% higher on the day. The software company advised that “strong trading” during the 12 months concluding July 2015 should help it to outstrip forecasts, and revenues are expected to edge 11.6% higher from last year, to £25m.
Consequently Tracsis expects pre-tax profit to come in “comfortably ahead of market expectations of £5.5m,” and rise from £5m in the prior period. With the firm’s Software & Consulting and Data Capture divisions pulling up strips, the City expects the firm to register earnings growth of 27% in the year concluding July and 5% in the current period.
Investors should be aware that Tracsis deals on an elevated P/E multiple of 23.9 times for this year, while a projected dividend of 1p per share creates a yield of just 0.2%. But for many, Tracsis’ prime positioning in a hot growth sector merits this premium listing, while a strong capital pile — cash balances stand above £12m at present, up from £8.9m at the close of fiscal 2014 — and positive impact on the firm’s acquisition strategy also makes Tracsis an exciting growth selection.
Property experts perking up
Property listings play Zoopla (LSE: ZPLA) also defied the wider market slowdown in midweek trade and is 2.7% up from Tuesday’s close at the time of writing. The company, which reported a sharp dip in the number of agents listed on its portal after rival OnTheMarket.com launched in January, has seemingly struck back against its competition and added 213 new branches in the four months to July. Zoopla now boasts 12,556 agencies across its UK network, and 16,131 members including overseas and commercial agencies.
On top of this Zoopla saw the number of advertised properties on its site tick 7% higher during the period to some 882,000. Supported by a strong property market — not to mention recent expansions such as the spring buyout of uSwitch — the number crunchers expect the online portal to enjoy earnings growth of 20% in the 12 months to September 2015, and a further 38% advance is predicted for 2016.
As such, a massive P/E ratio of 31.6 times for the current year topples to a far-improved 22.5 times for 2016. And while projected dividends also fall short for this period — estimated payments of 3.1p per share for 2015 and 4.3p for next year create below-par yields of 1.3% and 1.7% respectively — I believe the business should provide resplendent returns for long-term investors as it strikes back against the competition.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.