Genus Plc (LSE:GNS) is a FTSE 250 company I really like the look of. Today saw the release of its interim full-year results and shares have jumped nearly 10% on the back of the positive news.
FTSE opportunity
What does an animal genetics company actually do? Genus breeds better pigs and cattle for farmers so they can produce higher quality meat and milk more efficiently. This involves a scientific and technological process involving DNA, identifying desirable characteristics and much more that a scientific mind would understand better than me. GNS also owns intellectual property for its own technology, which enhances its processes.
I feel I know a good opportunity on the FTSE when I see one. Although the pandemic and ensuing market crash has battered many industries, anything linked to food, production of food, and consumer staples are safe stock options in my opinion. I firmly place Genus in this category.
When the market crashed GNS lost just over 25% of its share price value. The beginning of March saw shares trading at 3,644p per share. Fast-forward two weeks and you could pick up shares as cheap as 2,650p. Since this low point, GNS has recovered to pre-crash levels and surpassed the beginning of March price. At the time of writing, shares can be purchased at close to 3,850p per share.
FY results
This morning GNS released its FY results ending 30 June 2020. The results were impressive in my opinion especially in the midst of an economic downturn and difficult market conditions. Revenue increased 13% from £488.5m last year to £551.4m this year. Profit before tax jumped a stellar 16% from £61m to £71m. Free cash flow rose from £10m last year to £35.2m, too.
There was further good news for investors as the board maintained the dividend would be retained. Many other FTSE-listed companies have suspended or cancelled dividends to conserve cash in the crisis. GNS’s board recommended a final dividend of 19.7p per share. This is a healthy increase of 5% over the prior year final dividend. If you combined the interim dividend increase of 6%, this will result in a total dividend for the year of 29.1p per share. You can be paid this dividend in December as long as you are a shareholder on the register by close of play on 20 November 2020.
Stroke of Genus
Genus has been affected by the Covid-19 pandemic. With a global footprint and customer base, there have been logistical issues and restrictions. That said, it has not affected GNS as much as anticipated and there is a favourable outlook moving forward in the light of easing restrictions. I believe its global footprint as well as key strategic partnerships in China and the US will help continue its impressive performance.
I feel Genus is well protected as there will always be demand for food products, especially staples such as meat and milk. Although the share price is not the cheapest, full-year results show GNS has performed well against the backdrop of the Covid-19 pandemic and downturn. There is also a dividend to be paid out which has increased on last year too. I would not be surprised if the share price rose further still as other FTSE counterparts are still struggling.
