For the year to date, Euromoney Institutional Investors (LSE:ERM), Mediclinic International (LSE:MDC), and QinetiQ (LSE:QQ) lead the way in share price performance. While the way the shares move is obviously important, I want to delve deeper to understand what the driving forces are behind these moves.

Euromoney

Euromoney was subject to a takeover offer from a couple of private equity firms and the current offer on the table is equivalent to 1,461p per share. At the time of writing, the shares are trading at 1,314p.

The private equity companies seem keen to complete the takeover of Euromoney, a financial publishing firm, given that they’ve made four previous offers.

For the six months to 31 March, the company reported that revenue had increased by 14% year on year. Furthermore, adjusted pre-tax profit grew by 16% to £38.6m over the same time period. 

However, it’s still unclear how the economic environment and the war in Ukraine may impact the business, and whether these factors will lead to a fall in demand for services, which means this is a risk.  

Mediclinic

Like Euromoney, Mediclinic has also been subject to an offer from a consortium. The approach, worth somewhere in the region of £3.4bn, was rejected last month. Despite this, the takeover deadline has been extended, meaning that talks are still under way.

The shares are currently trading at 474p.

For the year ended March — which included some months when the effects of the pandemic were still visible — operating profit at the business surged 34% to £280m and revenue was above pre-pandemic levels. Of course, these figures make sense, given that there were likely increased levels of client demand during the pandemic.

However, with the worst of the Covid crisis behind us, it’s possible that results will not be as impressive in the future.

QinetiQ

Finally, the QinetiQ share price has performed well this year. The company – a defence specialist – has a strong forward order book to supply governments around the world with weapons and equipment.

Indeed, there has been heightened interest from investors due to the ongoing war in Ukraine and the shares are currently trading at 380p. 

The business had a net cash balance of £225m at the end of March, while it estimates that it will derive £900m in revenue from contracts due in 2023. 

However, while the company is in a healthy financial position, much of the share price performance of late has come from the fallout from the war in Ukraine. That conflict won’t last forever, and I wonder if an end to hostilities might result in the shares falling.

Overall, these three firms top the index for share price performance in 2022. But while they’re all attractive propositions, there are too many unknowns for my liking. Yet I won’t rule out purchases in the future, when things are a bit clearer.

The post Here are the best performing FTSE 250 stocks in 2022 so far! appeared first on The Motley Fool UK.

Euromoney is a UK business-to-business information company, which publishes a flagship English-language monthly magazine focused on business and finance. The firm also sells subscriptions, events to financial professionals.

Why did Euromoney shares take off?

Shares in the B2B firm shot up this morning after the company said it was in talks over a potential takeover. Management said it has received a number of approaches from a consortium comprising private equity company Astorg Asset Management S.ar.l and Epiris LLP, looking to take Euromoney private.

The latest offer of £14.61 a share is a 34% premium to the company’s closing price of £10.94 on Friday.

The consortium had previously made a number of offers for the company, valuing Euromoney at £11.75, £12.50, £13.10 and £13.50 per share.

Under the UK’s Takeover Panel rules, Euromoney has until 18 July to either accept a formal offer, or walk away. Euromoney’s management has warned there is no certainty a deal would be struck.

One to buy?

Euromoney shares traded for around £13.58 on Monday morning, rising 25% from Friday’s closing price. So the current price is still less than the most recent £14.61 offer.

However, as there is no guarantee that the deal would go through and If none can be agreed, the Euromoney share price would likely slump. However, the current price does factor in some of the risk that the deal might not go through.

Euromoney looked pretty expensive, even prior to the share price surging on Monday. In fact, it had a price-to-earnings ratio of 93.

However, pre-tax profits were hit massively during the pandemic. The firm made £106m in pre-tax profit in 2018, and this fell to £26m last year.

In its last half-year report, the firm said 73% of group revenue was generated from subscriptions as Euromoney announced a restructuring of its conferencing business during the pandemic.

It’s clear that the company’s events business struggled during the pandemic. Having worked in the industry, I’m aware how thin the margins are in this sector.

Meanwhile, Euromoney also highlighted that it would review its property requirements with its 2,500-strong workforce now working from home. This could make the business a lot leaner in future.

So I don’t think I’ll be adding this stock to my portfolio. There’s obviously risk the proposed deal might not take place. In which case, the share price would plunge.

And, in the long run, I’m concerned about any company operating in the events space. Margins are thin at the best of times, and inflation might exacerbate Covid-related challenges.

They’re also heavily reliant on graduates, and with the labour market so tight, I think grads have got better places to work. I also don’t think virtual events will ever be able to deliver quite the level of the revenues that physical conferences can.

The post Euromoney shares surge! Am I too late to buy? appeared first on The Motley Fool UK.

B2B information services

Euromoney is a global business-to-business information services company. It sells subscriptions to businesses to provide tailored data, research, analysis, and intelligence to help them perform in their respective industry.

So what’s been happening with the Euromoney share price recently? Well, as I write, the shares are trading for 942p. At this time last year, the shares were trading for 956p, which is a 1.5% drop over a 12-month period. On 8 March, ERM shares dropped to 829p due to a stock market correction but rallied 20% to reach 995p by 1 April. It is worth noting many FTSE 250 stocks saw share prices drop due to this correction.

For and against buying shares

FOR: Reviewing Euromoney’s performance, I can see revenue grew between 2018 and 2019. Revenue fell in 2020 due to the pandemic but grew for 2021 once more. I do understand past performance is not a guarantee of the future, however. Coming up to date, a half-year report released at the end of last month was positive, in my opinion. The firm reported revenue growth due to post-pandemic recovery and a rise in subscription numbers. It also said it had decided to review its property requirements with its 2,500-strong workforce now working from home. This could lead to considerable savings.

AGAINST: Euromoney shares seem to be trading at a premium and don’t look like good value for money to me. The shares are currently on a price-to-earnings ratio of close to 80! The average P/E ratio for firms in the same sector is closer to the 40 mark. This tells me Euromoney shares are twice as expensive as the general market.

FOR: Euromoney does pay a dividend, which would help me build a passive income stream if I decided to add the shares to my holdings. I am a passive income seeker but I do understand that dividends can be cancelled at any time. Recent performance leads me to believe ERM’s dividend is sustainable. Crunching the numbers, its dividend yield stands just less than 2%. This is in line with the FTSE 250 average yield.

AGAINST: Euromoney’s growth is underpinned by extensively acquiring businesses in its industry to increase its portfolio of products and enhance its offering. I am buoyed when a business is able to do this. However, there is always a big risk that acquisitions fail to pay off. One of the common issues that a company can suffer from is overpaying for a business, which can affect the bottom line and shareholder returns. Another issue is a lack of synergy and difficulty integrating the new business into the parent company.

A FTSE 250 stock I would avoid

Reviewing the investment case, I would not buy Euromoney shares right now for my holdings. I like the fact it pays a dividend to help build a passive income stream and performance seems consistent too. My biggest issue is its current valuation. If the shares were to drop substantially, I would consider adding them to my holdings.

The post Should I buy or avoid this FTSE 250 stock? appeared first on The Motley Fool UK.

The company provides pricing, research, data and other business-to-business services focusing on the global financial community in the areas of asset management, banking & finance, commodities events, and pricing, data and market intelligence. Its brands include Euromoney, Institutional Investor, BCA Research and Metal Bulletin.

An encouraging update

I find today’s AGM trading statement to be encouraging. During the last three months of 2018, trading was “in line with board expectations.” Underlying revenue came in 1% higher compared to the equivalent period the year before. Within that figure, underlying subscription revenue rose 1%, and 9% growth in the Pricing, Data and Market Intelligence segment “more than offset”a 4% slide from activities in the Asset Management segment. Meanwhile, the Events segment grew 3%.

City analysts expect revenue to increase by 2.9% for the full year to September 2019 and for earnings to decline by 8%. However, the company disposed of its Global Markets Intelligence Division in April 2018, which makes earnings comparisons less useful than they might have otherwise been. The forecast is for a 6% rebound in earnings during 2020.

I like the apparent strength of the balance sheet, and net cash stood at almost £94m on 31 December, up almost 20% from 30 September. The directors explained in the report that the increase occurred because of proceeds of £20m received from the sale of a business and because of “continued strong operating cash flow.” Cash gains were offset by a one-off withholding tax payment and because of payments made on the completion of two acquisitions.

Strategy progressing well

Overall, the directors said that the strategy is “progressing well,” and there is “increasing recognition” of the firm’s pricing products. On top of that, restructuring in the asset management segment is complete. We can find out more with the interim results report, which is due on 16 May.

At today’s share price close to 1,264p, the forward-looking earnings multiple sits just below 16 for the trading year to September 2020 and the anticipated dividend yield is just over 2.6%. Those expected earnings should cover the dividend around 2.4 times. I think the valuation looks fair, but the main attraction for me is that the dividend has increased by 42% over the past five years and that kind of growth looks set to continue.

I think the ongoing growth potential makes Euromoney International Investor one for me to keep an eye on and I’d be keen to revisit the shares on dips and down-days with a view to picking up a few as part of my balanced and diversified portfolio.

The post Should I invest in this FTSE 250 dividend-growing company? appeared first on The Motley Fool UK.

However, it’s not the only income stock with dividend growth potential. Announcing news on Monday was one company which could become a top dividend stock over the medium term.

Asset disposal

The company in question is media company Euromoney Institutional Investor (LSE: ERM). It focuses on media and information services provision within the financial services industry. It announced on Monday the sale of Adhesion Group and its 74% stake in World Bulk Wine Exhibition to Comexposium.

The former business is a Paris-based exhibitions company which has been owned by Euromoney for over two decades. The latter takes place in Amsterdam each year and is the top event for buyers of bulk wine. The decision to sell the businesses is in line with the company’s strategy as it seeks to recycle capital towards big investment themes such as asset management, price discovery and telecoms. Such areas could provide it with stronger growth potential in the long run.

Dividend growth

Looking ahead, Euromoney is forecast to grow its dividends per share by over 16% a year during the next two years. Even with such a rapid rate of growth, its dividend coverage ratio is expected to remain relatively high at 2.5 times. This suggests that it should be able to deliver further growth in dividends over the medium term which could allow it to grow its forward dividend yield of 2.8%.

Of course, that’s still a long way behind the 5.9% dividend yield which Imperial Brands is expected to deliver in 2018. The company could have further growth in shareholder payouts ahead in the long run due to its payout ratio being just 67%, which is relatively low for a tobacco company. It is also making substantial investment in next generation products such as its e-cigarette, blu. With smokers seeking less harmful products and regulations moving against tobacco products, next generation products could be a strong growth area for the company in future years.

Value appeal

With Imperial Brands trading on a price-to-earnings (P/E) ratio of 11.6, it appears to be relatively cheap at the present time. Similarly, Euromoney’s P/E of 15.2 does not appear to be overly generous given the company’s growth potential. As such, both stocks could prove to be sound buys for the long term at a time when the FTSE 100 is trading towards record highs and inflation is moving higher. They could offer a mix of value, dividend growth and earnings growth appeal which allows them to generate high total returns in the long run. 

The post A ‘secret’ dividend growth stock I’d buy alongside Imperial Brands plc appeared first on The Motley Fool UK.

It said conditions remain “challenging” for some businesses in the group but advised: “The outlook for the Group as a whole is in line with market expectations, with adjusted earnings per share towards the higher end of the range and adjusted profit before tax towards the lower end of the range.”

Major changes

DMGT has recently undergone management changes with a new chief executive and finance director. One of the first major things the company did under the new CEO was reduce its 67% stake in fellow mid-cap listed media group Euromoney Institutional Investor (LSE: ERM) to 49%.

Euromoney will cease to be a subsidiary and will be accounted for as an associate. However, the change is more than a paper exercise and the tangible benefits of it for both companies are part of the reason I reckon they could be brilliant turnaround stocks from the levels they’re currently trading at.

De-ratings

Before coming to their turnaround prospects, the tables below show where the two companies are at today, compared with their last share-price highs of February 2014.

As you can see, the market has de-rated both companies. DMGT’s earnings per share (EPS) has declined 7% but its share price has dropped a massive 41%. As a result, the multiple of 19.3 times earnings investors were paying back in 2014 has dropped to just 12.2 times for investors buying today. Meanwhile, the combination of the falling share price and the increasing dividend (still well covered by earnings) means the yield has risen from 1.9% to 3.6%. It’s a similar story, only less pronounced, for Euromoney.

Turnaround prospects

I believe both companies have prospects of delivering good earnings growth in the coming years. If so, share price rises will almost certainly be given an extra boost by the market affording the companies higher earnings multiples. Even if the multiples don’t reach the previous 19-odd levels, a re-rating could still add significantly to the gains.

The reduction of DMGT’s stake in Euromoney means the latter’s balance sheet is now independent of DMGT’s. This has increased Euromoney’s financial flexibility to be acquisitive and add to its already well-respected brands and high-quality stream of recurring subscription revenues.

At the same time, DMGT has been able to reduce net debt from the proceeds of the share sale, likewise increasing its financial flexibility. This will help it pursue its strategy of allocating capital investment in market-leading positions, both organically and through acquisitions.

Both companies have good management in my view and look well capable of executing on what also appear to me to be sound strategies. On the basis of reinvigorated earnings growth and rising earnings multiples if this plays out, I rate both stocks as very buyable.

The post 2 brilliant turnaround stocks that could make you rich appeared first on The Motley Fool UK.

Over the last 10 years, shares in the company have lost 26% of their value as the group has struggled with a number of headwinds. However, it now looks as if management has pulled the business back on track. Over the past five years the shares have gained 19.2% excluding dividends, and over the previous 12 months, shares in UBM have added 9%. And for the first time in five years, last year revenue expanded by a noticeable amount.

Back to growth?

Between 2011 and 2015 UBM’s revenue bounced between £794m and £550m, with an average of around £750m. For 2016, revenue of £863m was reported, and analysts have pencilled-in revenue of £1bn for 2017. What’s more, for 2017 the company is expected to report a pre-tax profit of £250m, more than the past two years combined. Earnings per share are set to come in at 50.4p, up 26% year-on-year and based on these figures the shares trade at a forward P/E of 14.

As well as UBM’s earnings growth, the shares also support a relatively attractive dividend yield of 3.2%, and the payout is covered twice by earnings per share.

So, after a decade of floundering it now looks as if it could be time to bet on UBM’s recovery as the group builds on the foundations put in place over the past few years. As well as the company’s attractive growth profile, it also boasts a healthy cash balance of nearly £300m, as reported at year-end 2016.

Freedom to grow

Like UBM, data services Euromoney (LSE: ERM) has struggled to find growth over the past five years. City analysts have pencilled-in earnings per share of 71.4p for the year ending 30 September 2017, up only 5.3% from fiscal 2012’s reported number of 67.8p.

Still, while the company has struggled to find growth in the past, analysts are predicting bright things for the firm. For example, they expect earnings per share growth of 7% for this fiscal year followed by growth of 8% for 2018, the company’s only two-year growth run since 2013.

According to management, the recent reduction of DMGT’s stake in the business, from 68% to 49% has helped speed up diversification efforts, which explains why analysts now expect Euromoney’s growth to pick up after several years of stagnation.

Looking after investors

Shares in Euromoney might look expensive today as they trade at a forward P/E of 14.4, but this multiple seems appropriate for the business. The company is highly cash generative and during its last fiscal interim period spent £200m buying back shares from DMGT. This deal has sent debt skyrocketing to £83.6m from a net cash position of £55.9m, but with around £50m of free cash being generated every year, it shouldn’t be long before this debt is eliminated.

As well as the buybacks, which show that management is set on creating value for investors, the shares support a dividend yield of 2.4% at the time of writing. The payout is covered 2.8 times by earnings per share.

The post 2 exciting growth stocks with untapped potential appeared first on The Motley Fool UK.

Business information

Shares in Euromoney Institutional Investor (LSE: ERM) fell a couple of percent this morning, 1,028p, on the release of preliminary full-year results, although they actually looked quite reasonable and were pretty much in line with expectations.

Adjusted pre-tax profit fell by a modest 5%, to £102.5m with adjusted EPS down a similar proportion to 66.5p, and the firm maintained its full-year dividend at the expected 23.4p per share to yield 2.3% on the current share price.

The business and financial publisher and event organizer has suffered along with the rest of the print media business, as the idea of sending out information written on dead trees is really becoming old hat these days.

But according to chief executive Andrew Rashbass, the company’s recovery strategy, instigated in March is working, and he pointed to “the acceleration in subscription growth, which constituted a record 58% of our business in 2016, and in the flow of successful product launches” as examples of its success.

The firm is also changing direction through acquisition, having snapped up metals news and prices platform FastMarkets during the year, and Reinsurance Security, which rates reinsurance companies.

Euromoney shares are on a forward P/E, based on next year’s forecasts, of around 16 now, which is a bit above the FTSE average, and its dividend looks set to yield a below-average 2.3%. That, coupled with the decline of the print publishing business, might make the shares seem like a poor investment.

But it looks to me as if Euromoney is managing the shift to digital publishing and information provision competently, and the firm could well be at the bottom of a relatively modest downturn cycle with EPS growth on the cards again for 2017.

If that’s the case, we could be looking at a decent long-term investment here.

Traditional publishing

Turning to a more traditional publisher, shares in Daily Mail and General Trust (LSE: DMGT) have been under pressure since early 2014, but they’ve been staging a bit of a rally in the latter half of this year. The price took a dip immediately after the Brexit vote, but since a low on 6 July we’ve seen a 37% rise to today’s 790p.

A pre-close update in September helped, confirming that the group’s outlook remained in line with market expectations with underlying revenue growth of 4%.

The group continues to own 70% of Euromoney Institutional Investor, so the fortunes of the two companies are closely tied, with Euromoney’s revenues effectively contributing around 15% to Daily Mail’s returns on a revenue basis.

Full-year results should be with us on 1 December, and analysts are expecting them to show a fall in EPS of around 10%. But that would put the shares on a perfectly respectable P/E of 15 which would drop to under 14 if the predicted return to earnings growth for 2017 comes good.

Dividend yields are looking pretty average at around 3%, but the cash handout is growing and it should be more than twice covered by earnings.

It’s a sector not without risk, that’s for sure, but I see the recent share price recovery as being backed by sustainable earnings, and this is a share worth a closer look.

The post Is Euromoney Institutional Investor plc a good investment in these troubled times? appeared first on The Motley Fool UK.

However, despite its problems, Standard Chartered still offers tremendous investment potential. Certainly, it may take time for its compliance function to be successfully overhauled (which is apparently a key aim of its new management team) but for long term investors it is a superb buying opportunity.

That’s at least partly because Standard Chartered trades on a super-low valuation. For example, it has a price to book value (P/B) ratio of only 0.6 which, for a highly profitable bank with excellent long term growth potential, is exceptionally difficult to justify. In fact, while Standard Chartered’s bottom line is due to fall by 36% this year, a rebound of 24% is forecast for next year. This could begin to positively catalyse investor sentiment in the coming months and stabilise the bank’s share price after its fall of two-thirds in the last five years.

In addition, Standard Chartered also has a great yield, with it due to be as high as 4.6% next year. This is considerably higher than the yield offered by BT (LSE: BT-A), with it being expected to yield 3.8% next year. In fact, a higher yield is not the only reason why Standard Chartered appears to be a better buy than BT. The latter trades on a rather unappealing valuation, too, with it having a price to earnings (P/E) ratio of 13.3 despite its profit being forecast to fall by 3% this year.

Certainly, BT has a bright long term future and its investment in a mobile network, superfast broadband and pay-tv (plus sports rights) is likely to position the business as the dominant quad play offering in the UK. However, the risk is that BT boosts its top line but fails to deliver the same rate of growth in its bottom line, with highly competitive deals and high levels of investment having the potential to put margins under pressure.

Similarly, Euromoney Institutional Investor (LSE: ERM) is struggling to grow its bottom line and, as today’s update from the financial services information company shows, its full-year profit is now due to fall versus last year. Pretax profit is expected to fall from £116m last year to £107m in the current year and, looking ahead, growth of just 3% is being forecast for next year.

This puts Euromoney Institutional Investor on a price to earnings growth (PEG) ratio of 5.3, which indicates that its shares may be fully valued at the present time. Certainly, it is a sound business with significant long term appeal. But, while a downturn in the energy sector is being partially offset by impressive performance from its asset management and investment banking divisions, its shares may fail to post index-beating returns in the near term.

As such, Euromoney Institutional Investor seems to be worth holding on to for existing investors, while Standard Chartered appears to be a strong buy at the present time. For investors in BT, though, the risks seem to outweigh the rewards right now and there may be better opportunities to make gains elsewhere.

The post Why I’d Buy Standard Chartered PLC, Hold Euromoney Institutional Investor PLC And Sell BT Group plc appeared first on The Motley Fool UK.

That takes the UK’s top index up 71 points on the week so far, so maybe its recent bearish run has come to an end — not that such short-term movements should be of any real concern to long-term investors.

Though the FTSE is up, there are a few notable fallers today. Here are three from across the indices that are on a downer: 

Burberry Group

There was mixed news for Burberry Group today. On the plus side, a first-half update told us that underlying revenue is up 14% to £1,031m, and retail revenue is up 17% to £694m with comparable-store growth of 13%.

But shareholders also learned that they are to lose chief executive Angela Ahrendts, who has been tempted away by Apple where she will take up a new position by mid-2014. Ms Ahrendts, who has been credited with Burberry’s impressive transformation in recent years, will be replaced by Christopher Bailey, who has been Burberry’s chief creative officer since 2007.

Euromoney Institutional Investor

Shares in Euromoney Institutional Investor (LSE: ERM) dipped a little, losing 9p (1%) to 1,061p, after the company announced an acquisition. The media group is to buy Infrastructure Journal, described as “a leading information source for the international infrastructure markets“.

The purchase cost of £12.5m in cash will come from existing borrowing facilities, and the acquisition is expected to add to earnings by 2014.

Euromoney shares are nearly 40% ahead over the past 12 months after several years of strongly rising earnings, and have reached a forward P/E of 15 with an expected dividend yield of just over 2%.

SDL

Our third price-loser for today is SDL (LSE: SDL), whose shares dipped 28p (10%) to 255p after the software firm issued another profit warning. Telling us that third-quarter performance is below expectations, SDL lowered its pre-tax profit guidance for the full year to around £8m — down from £35.5m in 2012. And that’s before one-off costs, so the reported figure is likely to be lower.

The share price is now down more than 50% over 12 months, having plunged in June after an earlier profit warning.

Before today, forecasts suggested a drop in EPS of more than 60%, but that still puts the shares on a P/E of more than 22. There is an earnings recovery expected for 2014, so is SDL a falling knife to avoid or is it a promising recovery prospect? That’s for you to decide.

The post Why Burberry Group plc, Euromoney Institutional Investor PLC And SDL plc Should Lag The FTSE 100 Today appeared first on The Motley Fool UK.