Bartle Doo Article Archives

By Alan Oscroft, The Motley Fool

FTSE Shares That Soared This Week

April 28, 2013 Bartle Doo Leave a comment

Filed under: Investing

LONDON — The FTSE 100 was more upbeat this week, after a number of positive earnings reports from some of the U.K.’s biggest public companies helped send it up 140 points (2.2%) to 6,426. That’s still some way down from the five-year high of 6,534 points that the index of top U.K. stocks set on March 12, but it’s a nice pullback from recent falls.

Here are four of the companies that gave the FTSE a boost this week.

Standard Life
Insurer Standard Life led the FTSE 100 with a rise of 53 pence (16%) to 387 pence over the week, after the company announced that its total assets under management rose 7% to 233 billion pounds during its first quarter. The company also told us business was doing well in Canada, saying it “remains well placed in the growing pension market.” Forecasts for the full year put Standard Life on a P/E of 15, just slightly ahead of the FTSE‘s long-term average of around 14, and there’s a dividend yield of about 4% expected.

ARM Holdings
A bumper set of first-quarter results sent the price of chip designer ARM Holdings soaring on Tuesday, and it ended the week up 106 pence (12.2%) to 979 pence. Earnings per share surged by 58% to 5.31 pence, after the number of ARM-based chips shipped during the quarter climbed by 35% to 2.6 billion and helped push revenue up 28% to 170 million pounds and pre-tax profit up 44% to 89.4 million pounds. CEO Warren East told us that “ARM‘s royalty revenues again outpaced the wider semiconductor industry.”

Lloyds Banking Group
Lloyds Banking Group, which is the result of a series of mergers of Lloyds Bank, Trustee Savings Bank, and HBOS, announced on Wednesday that it is to split off the TSB arm again. A total of 632 of Lloyds’ branches will be rebranded as TSB Bank, and the new division will be floated on the stock market. The cooperative had originally agreed (in non-binding terms) to acquire the branches, but Lloyds confirmed that it has pulled out of the deal. Lloyds stock gained 5.4 pence (11.4%) to 52.9 pence by the end of Friday.

Associated British Foods
Associated British Foods, which owns the successful Primark clothing chain, pleased the market with an upbeat first-half report, sending its stock up 78 pence (4.2%) to 1,925 pence. The six months to March 2 saw revenue up 10% to 6,333 million pounds, with adjusted EPS up 22% to 41.9 pence, and the interim dividend was lifted by 10% to 9.35 pence per share. These results, according to the board, “exceeded our expectations at the start of the year.”

What now?
Dividends form a core part of many a successful long-term portfolio. Whether you need that income to live on, or want to reinvest it for the long term, there’s nothing wrong with collecting robust and attractive payouts. And that’s what the Fool’s

Source: FULL ARTICLE at DailyFinance

By Zarr Pacificador, The Motley Fool

GlaxoSmithKline: Buy, Sell, or Hold?

April 15, 2013 Bartle Doo Leave a comment

Filed under: Investing

LONDON — I’m always searching for shares that can help ordinary investors like you make money from the stock market.

Right now, I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index.

I hope to pinpoint the very best buying opportunities in today’s uncertain market, as well as highlight those shares I feel you should hold… and those I feel you should sell!

I’m assessing every share on five different measures. Here’s what I’m looking for in each company:

Financial strength: low levels of debt and other liabilities;
Profitability: consistent earnings and high profit margins;
Management: competent executives creating shareholder value;
Long-term prospects: a solid competitive position and respectable growth prospects, and;
Valuation: an under-rated share price.

A look at GlaxoSmithKline
Today I’m evaluating GlaxoSmithKline , a British global pharmaceutical company, which currently trades at 1550 pence. Here are my thoughts:

1. Financial strength: The company is in solid financial health with net debt of only 2 times operating profits and interest obligations covered a comfortable 10 times. Also, the company is a cash machine and consistently converts 17% of revenues into free cash flow yearly. Over the past three years, free cash flow has averaged more than 4 billion pounds per year.

2. Profitability: In the last 10 years, revenues per share and earnings-per-share growth have barely outpaced inflation compounding by 4% and 3% per year, respectively, but dividends per share growth has been solid at 7% per year. Operating margins have been consistently around 30% while the 10-year average return on equity has been a remarkable 70% per year.

3. Management: Sir Andrew Witty succeeded Dr. Jean-Pierre Garnier as the company’s CEO in May 2008. Under his leadership, the company has returned a total of 25 billion pounds to shareholders through dividends and share buybacks, improved R&D returns from 11% in 2010 to 12% in 2012, and generated cost-savings of 2.5 billion pounds annually.

4. Long-term prospects: GlaxoSmithKline is one of the largest pharmaceutical companies in the world with a market capitalization of 76 billion pounds and annual revenues of 26 billion pounds. For the past five years, to mitigate the effects of the patent cliff and global financial crisis, the company shifted its focus into higher growth areas like biopharmaceuticals, vaccines, consumer health care, and emerging markets while restructuring its U.S. and European operations. Although the U.S. and Europe still account for the bulk of the company’s revenues, at 32% and 28%, respectively, sales from Japan, Latin America and Asia-Pacific now account for 40% of the total group revenues. Furthermore, under its new operating model, R&D productivity and returns have improved — the company is on target on achieving a 14% return on R&D by 2014 and has a total of 15 new vaccines and medicines it could potentially launch over the next three years.

5. Valuation: GlaxoSmithKline’s shares are trading at a trailing price-to-earnings ratio of 14, slightly above its 10-year P/E average of 13 and the sector P/E of 12.5. It also sports a current dividend yield of 5%, twice covered.

From: http://www.dailyfinance.com/2013/04/15/glaxosmithkline-buy-sell-or-hold/

By Douglas Adams, The Motley Fool

Why Barclays Is Up 43% Since This Time Last Year

April 15, 2013 Bartle Doo Leave a comment

Filed under: Investing

LONDON — Barclays has advanced 34% to 299 pence during the last 12 months, making the share one of the best performers in the FTSE 100.

The bank, which operates in more than 50 countries with nearly 150,000 employees, seems to have impressed investors with a series of encouraging statements.

During July, Barclays announced half-year results for 2012 that showed adjusted profits before tax gaining 13% to 4.2 billion pounds alongside an adjusted return on average shareholder equity of 9.9%.

The half-year results also revealed what the bank called a “resilient” Tier 1 capital ratio of 10.9%, down from 11% at at December 2011.

During October, Barclays’ third-quarter statement revealed a further improvement to adjusted profits before tax, which were up 18% to almost 6 billion pounds, as well as a 4% reduction in operating expenses to less than 14 billion pounds.

Then in January, Barclays’ full-year statement revealed a rise for both basic earnings per share and dividends per share, at a rate of 24.5% to 34.5 pence, and 8.3% to 6.5 pence, respectively.

Antony Jenkins, Chief Executive for Barclays, said:

We committed last year to a journey to bring down our compensation ratio and have made good progress this year, with the Group compensation to net income ratio declining to 38% (2011: 42%). While this is progress, not the destination, we believe a ratio in the mid-30s is a sustainable position in the medium term which will ensure that we can continue to pay our people competitively for performance while also enabling us to deliver a greater share of the income we generate to shareholders.

Jenkins affirmed that, under his leadership, Barclays would become the “Go-To bank” for shareholders by building a culture embedded with five core values: respect, integrity, service, excellence, and stewardship.

Barclays’ first-quarter update for 2013 will be published on 24 April, which may reveal further positive news that can encourage investors.

If you already own Barclays shares and are looking for additional blue-chip winners, this exclusive wealth report reviews five particularly attractive FTSE possibilities.

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The article Why Barclays Is Up 43% Since This Time Last Year originally appeared on Fool.com.

Douglas does not own any share mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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From: http://www.dailyfinance.com/2013/04/15/why-barclays-is-up-43-since-this-time-last-year/

By Alan Oscroft, The Motley Fool

Why Ladbrokes, Tullow Oil, and Premier Oil Should Lag the FTSE 100 Today

April 15, 2013 Bartle Doo Leave a comment

Filed under: Investing

LONDON — The FTSE 100 has opened the week poorly, falling 0.61% to 6,490 points by 7:50 a.m. EDT after the latest figures from China saw first-quarter economic growth come in lower than expected. Amid a sell-off of commodities, the gold price fell 5% to its lowest level for two years — it’s now down 25% since its peak of September 2011.

But even with the index falling, there are companies doing worse. Here are three whose share prices are tumbling today.

Ladbrokes
Ladbrokes‘ shares have dropped 8.2% to 190 pence after the bookmaker issued a first-quarter profit warning. Full-year operating profit is now expected to come in at the bottom end of expectations after Q1 was hit by “a significant reduction in profit” from horse racing at Cheltenham and weakness in online gambling. Operating profit for the quarter dropped 13 million pounds to 37.4 million pounds.

Ladbrokes shares are now down more than 20% from a mid-March peak of 245 pence, with the previous six months’ bull run now almost completely reversed.

Tullow Oil
Shares in Tullow Oil have fallen 4.3% to 1,110 pence after the explorer delayed its Sabisa-1 well in Ethiopia, citing “hole instability issues” that require the drilling of a secondary “sidetrack” bore. Exploratory results are now due in late May. But on the upside, initial drilling did reveal hydrocarbon indications.

In other positive news, we were told that the first of the firm’s six well tests at Ngamia-1 in Kenya has demonstrated flows of 281 barrels of oil per day. Further tests should soon reveal the area’s full production potential.

Premier Oil
Premier Oil have also slipped 4.3% today, despite the firm announcing the first oil flows from its Huntingdon field in the North Sea, which commenced last Friday. Chief executive Simon Lockett said: “This marks the first of four U.K. North Sea projects from our development portfolio which will come on-stream over the next few years.”

After ramping up from an initial 30,000 bopd, the field is expected to produce 250,000 bopd to 300,000 bopd when in full flow.

Finally, reliable dividends can more than compensate for the day-to-day ups and downs of share prices. So how about a company that’s offering a 5.7% yield and could be set for some nice share-price appreciation, too? It’s the subject of our brand-new report “The Motley Fool’s Top Income Share For 2013,” which you can get completely free of charge — but it will only be available for a limited period, so click here to get your copy today.

The article Why Ladbrokes, Tullow Oil, and Premier Oil Should Lag the FTSE 100 Today originally appeared on Fool.com.

Alan Oscroft has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30

From: http://www.dailyfinance.com/2013/04/15/why-ladbrokes-tullow-oil-and-premier-oil-should-la/

Will GlaxoSmithKline, HSBC Holdings, and Vodafone Group Push the FTSE 100 to Record Highs?

By David O’Hara, The Motley Fool

Filed under: Investing

LONDON — Shares of pharmaceutical giant GlaxoSmithKline have performed well in the last month. While the FTSE 100 is down 1.5%, Glaxo is up 4.5%. Since the beginning of the year, Glaxo shares are up 16.3%. That’s a stonking performance for such a large company.

According to analyst forecasts, the shares are expected to pay 77.6 pence of dividends for the year. At today’s price, that equates to a yield of 5%.

The average FTSE 100 company trades on a price-to-earnings (P/E) ratio around 15.2 times forecast earnings. Sitting on a P/E today of 13.3, Glaxo is trading at a significant discount. That seems unfair for such a successful and reliable company.

HSBC
At current prices, HSBC makes up 7.8% of the FTSE 100. It shares have the most influence on the FTSE 100.

The banking giant currently trades on just 10.7 times consensus forecasts for 2013. Considering the resilience that HSBC has demonstrated during an industry crisis, that’s pretty mean.

There is no escaping the fact that bank shares remain very unpopular. However, I am beginning to see signs that politicians are tiring of banker bashing. The media is also starting to move on, as writers run out of new angles on old stories.

HSBC is forecast to grow earnings next year, putting the shares on a 2014 P/E of 9.4, with a prospective yield of 5.3%.

Vodafone
Recent speculation over the future of Vodafone‘s U.S. mobile investment in Verizon Wireless has pushed the shares to their highest level since 2007.

Making up almost 6% of the FTSE 100 by itself, the market‘s recent setback would have been more painful for index investors without the telecom giant’s recent rally.

While Vodafone is not likely to push the FTSE 100 to a 10-year high by itself, a new high for 2013 could be achieved. A sale of Vodafone’s stake in Verizon Wireless, or a takeover approach for Vodafone, could push the shares as high as 250 pence. A 25% rise in Vodafone’s share price would see the FTSE 100 rise beyond 6,500.

In the absence of a takeover, shareholders will be comforted by a reliable dividend stream. Vodafone is expected to pay 10.7 pence in the current calendar year, a 5.6% yield at today’s price.

These three big blue-chips may hold a dominant position in their markets today but are they safe to tuck away for the long term? Analysts here at The Motley Fool have prepared a new report “5 Shares to Retire On” with the lowdown on their five top income stocks to own for the years ahead. Just click here to get your free copy of this report today.

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The article Will GlaxoSmithKline, HSBC Holdings, and Vodafone Group Push the FTSE 100 to Record Highs? originally appeared on Fool.com.

David owns shares in Vodafone but none of the other companies mentioned. The Motley Fool recommends GlaxoSmithKline and Vodafone Group.

From: http://www.dailyfinance.com/2013/04/12/will-glaxosmithkline-hsbc-holdings-and-vodafone-gr/

Should You Buy Burberry Today?

By Royston Wild, The Motley Fool

Filed under: Investing

LONDON — Shares of luxury goods institution Burberry have posted decent gains in recent months, rising 6% since the start of the year in oft-turbulent trading.

And I believe that the stock should head convincingly higher as the firm’s strategy to boost retail store space and increase activity in exciting new geographies turbocharges growth.

Developing markets powering growth
Burberry has undertaken a significant retail space expansion plan in recent times, and opened seven new stores and four concessions during the three months to Dec. 2012. This helped to drive retail sales 13% higher during the period, to 464 million pounds. The firm aims to boost retail space by 14% during the second half of the year ending March 2013, with an emphasis on new store openings in Asia-Pacific and Europe.

Indeed, the company is witnessing surging popularity in key emerging markets, and saw retail and wholesale revenues from Asia-Pacific rise more than 15% to 242 million pounds in the three months to Dec. 2012. In comparison, revenues from the Americas rose just 1% while turnover from Europe was flat. And Rest Of World revenues rose more than 10%.

Gear up for double-digit earnings growth
City analysts expect earnings per share (EPS) to rise 8% in the year ending March 2013 to 68 pence. The firm’s trading statement due on April 17 should yield clues regarding which. And forecasters expect growth to ratchet up from this year onward — EPS are predicted to rise 15% in 2014 to 78 pence before rising a further 14% in 2015 to 89 pence.

Burberry currently trades on a price-to-earnings (P/E) ratio of 16.4 for this year, above a forward earnings multiple of 14.8 for the wider personal goods sector, but it is expected to fall to 14.4 in 2015. Indeed, the luxury goods firm’s position as an excellent value stock is underlined by a price/earnings to growth (PEG) readout of 1.1 and 1 for this year and next. A reading around 1 is generally classified as stellar value for money.

A highly attractive dividend scheme
Burberry is an exciting dividend play in my opinion, having steadily built its dividend in recent years — indeed, it hiked its total 2012 dividend 25% to 25 pence. And the company is expected to raise the payout to 28 pence in 2013 before increasing it to 32 pence and 37 pence in 2014 and 2015, correspondingly.

The dividend for this year and next carry a yield below the current 3.3% FTSE 100 average, with figures of 2.6% and 2.9% projected, although the firm’s dividend policy could well drive it above this threshold further out. In addition, 2014 and 2015 dividends boast coverage well above the generally regarded safety watershed of two times and are covered 2.4 times for both years.

The canny guide for clever investors
If you already hold shares in Burberry, check out this newly updated special report, which highlights a host of other FTSE winners identified by ace fund manager Neil Woodford.

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From: http://www.dailyfinance.com/2013/04/12/should-you-buy-burberry-today/

Why GlaxoSmithKline Beats AstraZeneca and Shire

By Alan Oscroft, The Motley Fool

Filed under: Investing

LONDON — After offering my pick of our telecom companies last week, today I’m turning my attention to the FTSE 100 Pharmaceuticals and Biotechnology sector. This time there are three companies that make the top flight — GlaxoSmithKline , AstraZeneca and Shire .

I’ll start with a few fundamentals:

Company	GlaxoSmithKline	AstraZeneca	Shire
Market cap	76.9 billion pounds	41.5 billion pounds	10.9 billion pounds
Share price	1,576 pence	3,308 pence	1,992 pence
Share price growth	13%	19%	-1.3%
Historic EPS growth	-1%	-12%	-14%
Forward EPS growth	2%	-18%	68%
Historic P/E	11.8	7.0	21.6
Forward P/E	13.5	9.6	13.3
Historic Dividend	5.5%	6.3%	0.6%
Historic Cover	1.5x	2.3x	7.7x
Forward Dividend	5.1%	5.5%	0.6%
Forward Cover	1.5x	1.9x	11.8x

Share price growth is over the past 12 months, historic figures are for December 2012, forward figures are based on December 2013 forecasts.

Shire
I’m going to reject Shire, for a couple of reasons. Firstly, it isn’t paying any meaningful dividends yet, and if I’m considering investing in top FTSE 100 shares, I want to see mature companies offering decent annual income.

Shire also seems a little too specialized to me, with a large proportion of its annual turnover coming from just a couple of relatively minor therapeutic areas.

The giants
That brings me to the battle of the giants, and at the moment I can see only one winner. AstraZeneca has been suffering falling earnings in recent years, largely because of the famous “patent cliff” of losing intellectual protection for some of its blockbuster drugs, and increasing competition from generic drug manufacturers.

AstraZeneca has also lagged GlaxoSmithKline in expanding into new areas of biotechnology, with its acquisition record not being a glowing success.

Last month, AstraZeneca announced a new strategy for returning to growth, and the firm’s new chief executive, Pascal Soriot, does seem to be the sort of person to get things done. But to me, I thought the announcement lacked meat, and there were too many marketing buzz phrases in it — “building a culture,” “leveraging business development,” “exploiting our unique combination of strengths,” “maximizing the potential,” and so on. The plan to expand more into specialty care products and to concentrate mainstream research on core areas sound concrete, but overall I thought I was reading “More of the same, only better.”

The winner
My pick, obviously, is GlaxoSmithKline — and I already have it in the Fool’s Beginners’ Portfolio. Back in June, I reckoned Glaxo had been preparing for the blockbuster drugs pipeline crunch better, and had been more successful in biotechnology expansion and acquisition.

Earnings forecasts, albeit short term, are better — there’s a 9% growth in earnings per share forecast for 2014, with AstraZeneca’s still expected to be falling. And though the shares are on a higher P/E multiple, I think that rightly reflects a greater level of confidence in Glaxo’s future.

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From: http://www.dailyfinance.com/2013/04/12/why-glaxosmithkline-beats-astrazeneca-and-shire/

Can Aviva Outperform Amlin?

By Roland Head, The Motley Fool

Filed under: Investing

LONDON — If you’re interested in building a profitable, diversified portfolio, then you will often need to compare similar companies when choosing which share to buy next. These comparisons aren’t always as easy as they sound, so in this series, I’m going to compare some of the best-known names from the FTSE 100, FTSE 250, and the U.S. stock market.

I’m going to use three key criteria — value, income, and growth — to compare companies to their sector peers. I’ve included some U.S. shares, as these provide U.K. investors with access to some of the world’s largest and most successful companies. Although there are some tax implications to holding U.S. shares in a U.K. dealing account, they are pretty straightforward and — I feel — are outweighed by the investing potential of the American market.

Today, I’m going to take a look at two of the highest-yield shares in the FTSE 350, Aviva and FTSE 250 member Amlin , which specializes in commercial and risk insurance.

1. Value
The easiest way to lose money on shares is to pay too much for them — so, which share looks better value, Aviva, or Amlin?

Value	Aviva	Amlin
Trailing price-to-earnings ratio (P/E)*	6.2	7.7
Forecast P/E	7.0	9.3
Price-to-book ratio (P/B)	1.1	1.4
Price-to-sales ratio (P/S)	0.2	1.1

*Based on normalized earnings — excluding restructuring costs and losses from discontinued operations.

I used Morningstar’s 2012 normalized earnings when calculating the trailing P/E ratios above, because Aviva took a 3.3 billion pounds writedown last year on the value of its discontinued U.S. business, plunging it into a full-year loss. Using normalized earnings provides more of a meaningful comparison between Aviva and Amlin.

Both of these companies look like a good value for your money, and while Aviva is cheaper on all metrics, its ultra-low price-to-sales ratio shows just how cautiously the market views the company, which is still in a state of transition. In contrast, Amlin is slightly more expensive but still looks like a good value, and offers a far more certain outlook. Both companies look attractive to me as value investments, but Aviva has an edge, as Amlin’s share price has risen 28% over the last year, suggesting it may be fully valued for now.

2. Income
With low interest rates set to continue for the foreseeable future, dividends have become one of the most popular ways of generating an investment income. How do Aviva and Amlin compare in terms of income?

Value	Aviva	Amlin
Trailing dividend yield	6.2%	5.8%
5-year average historical yield	6.9%	5.9%
5-year dividend average growth rate	-10.5%	9.9%
2013 forecast yield	4.8%	6.1%

Aviva cut its 2012 final dividend by 44%, and its recent results also signalled that the interim dividend would be “rebased” by the same amount, leaving its shares with a forecast yield of 4.8%. This is the third time since 2003 that Aviva has cut its dividend — a poor record compared to that of Amlin, whose dividend has risen each year since 2003. However, I do agree with Aviva’s

From: http://www.dailyfinance.com/2013/04/12/can-aviva-outperform-amlinr/

The Men and Women Who Run Kingfisher

By Tony Reading, The Motley Fool

Filed under: Investing

LONDON — Management can make all the difference to a company’s success and, thus, its share price.

The best companies are those run by talented and experienced leaders, with strong vested interests in the success of the business, held in check by a board with sound financial and business acumen. Some of the worst investments to hold are those run by executives collecting fat rewards as the underlying business goes to pot.

In this series, I’m assessing the boardrooms of companies within the FTSE 100. I hope to separate the management teams that are worth following from those that are not. Today, I am looking at Kingfisher , owner of B&Q and Europe‘s largest DIY retail chain.

Here are the key directors:

Director	Position
Daniel Bernard	(non-exec) Chairman
Ian Cheshire	Chief Executive
Karen Witts	Finance Director
Kevin O’Byrne	CEO, B&Q and Koctas
Phillipe Tible	CEO, Castorama and Brico

Frenchman Daniel Bernard joined the board as deputy chairman in 2006, stepping up to become chairman in 2009. He has worked for several European retailers, and was chairman and CEO of Carrefour from 1998 to 2005.

Ian Cheshire was schooled at Boston Consulting Group, Guinness (where he was Ernest Saunders’s executive assistant), and Sears, before joining Kingfisher in 1998 as strategy director. He became CEO 10 years later in 2008, after being B&Q CEO from 2005.

Checkered history
He has thus seen Kingfisher’s checkered history first hand. The group grew to be a sprawling conglomerate in the late 20th century, before a failed bid to buy Asda led to shareholder pressure to refocus.

Mr Cheshire has increased operating margins, with emphasis on exploiting synergies between the company’s various international operations. The share price has doubled during his tenure, and though barely above what it was 10 years ago, that’s a considerable achievement given the economic background. The business is sensitive to consumer spending and housing markets in the U.K. and Europe.

A chartered accountant, Karen Witts has worked for several companies in finance roles, and was CFO of BT retail and CFO of Vodafone Middle East and Asian region before joining Kingfisher in October 2012.

Witts took up the job vacated by Kevin O’Byrne, who had been finance director since 2008. He had previously been finance director of DSG, and was poached after being passed over for the top job there.

Reshuffle
Philippe Tible has spent his career in the French retail industry, joining Kingfisher’s French subsidiary in 2003. He joined Kingfisher’s board in 2012 as part of the reshuffle involving O’Byrne and Witts, intended, in part, to broaden the executive team’s experience. Also promoted to the board was the U.K. CEO, but he unexpectedly decamped to be CEO of the Co-op last December.

An impressive line-up of six non-execs includes a former CEO of Ikea, and CFO of Cadbury.

Ian Cheshire has 3.8 million pounds’ worth of shares, but the other executive directors, albeit recently appointed, have much smaller holdings, and sold substantial option awards last year.

I analyze management teams from five different angles to help work out a verdict. Here’s my assessment:

1. Reputation. Management CVs

From: http://www.dailyfinance.com/2013/04/11/the-men-and-women-who-run-kingfisher/

The Men Who Run Compass Group

By Tony Reading, The Motley Fool

Filed under: Investing

LONDON — Management can make all the difference to a company’s success and, thus, its share price.

The best companies are those run by talented and experienced leaders with strong vested interests in the success of the business, held in check by a board with sound financial and business acumen. Some of the worst investments to hold are those run by executives collecting fat rewards as the underlying business goes to pot.

In this series, I’m assessing the boardrooms of companies within the FTSE 100. I hope to separate the management teams that are worth following from those that are not. Today, I am looking at Compass Group , the world’s largest contract caterer.

Here are the key directors:

Director	Position
Sir Roy Gardner	Chairman
Richard Cousins	Chief Executive
Dominic Blakemore	Finance Director
Gary Green	CEO, North America
Andrew Martin	CEO, Europe and Japan

Heavyweight
Sir Roy Gardner has been chairman since 2006. In his executive career, he rose through the finance functions of GEC to succeed Arnold Weinstock as Managing director of GEC-Marconi. He joined British Gas as finance director in 1994 to oversee the demerger of Centrica, subsequently becoming CEO of Centrica.

Regarded as a City heavyweight, his non-executive career has not been without controversy. He became chairman of “fast-growing” property services group Connaught in May 2010, only to go into administration six months later. In the world of football, he became chairman and part-owner of Plymouth Argyle in 2009, resigning the next year shortly before it entered administration.

Sir Roy recently announced he will retire next year.

Low profile
Richard Cousins has also been in post since 2006, but the CEO is a lower-profile character. He began his career in planning roles with Cadbury Schweppes and BTR, joining plasterboard maker BPB in 1990, and rising to become CEO in 2000. He took BPB into the FTSE 100, leaving for Compass when the firm was taken over by Saint-Gobain.

Compass’s shares have tripled during the tenure of the current chairman and CEO.

More accountants
A chartered accountant, Dominic Blakemore has been finance director for just 12 months. He was previously FD of Iglo Foods, which he joined from Cadbury, where he held various posts, including European Finance Director, and Group Financial Controller.

Compass’s two divisional directors are also former finance professionals. Gary Green has been with the company since 1986, initially in finance roles, joining the board in 2007.

Andrew Martin joined as finance director in 2004, having previously been FD of First Choice Holidays. His move to run Europe and Japan was part of a reshuffle on the arrival of Dominic Blakemore, to free the CEO to concentrate on developing Compass’s emerging markets business.

Compass’s senior independent director Sir James Crosby abruptly resigned this week in the wake of criticism over his stewardship of HBOS. The timing is unfortunate, with the chairman having recently announced his retirement, but the company swiftly replaced him with Sir Ian Robinson, a director since 2006, and former chairman of Ladbrokes. However, the team of five non-execs look a little thin.

I analyze

From: http://www.dailyfinance.com/2013/04/11/the-men-who-run-compass-group/

Should You Buy Smith & Nephew Today?

By Royston Wild, The Motley Fool

Filed under: Investing

LONDON — Shares in Smith & Nephew have risen steadily in recent months, and were recently up 11% in the year to date.

And I believe that the company’s concerted drive toward higher-growth areas and regions should drive the stock higher as earnings and dividends head northwards. Citi have plonked a 797 pence price target on the company’s stock, providing chunky upside from current levels.

Transformation plan to deliver excellent rewards
Smith & Nephew is changing its product mix to focus on more lucrative markets, and late last year purchased Healthpoint Biotherapeutics — a leader in the area of wound management — as it seeks to address sales difficulties in other areas of the group

The health care giant is also looking to significantly boost its operations in lucrative developing markets to offset weakness in its traditional geographies. The company saw growth of just 1% in the US in quarter four, it announced in February, 2% in its Other Established Markets, and 14% in its Emerging and International Markets division.

The firm announced the acquisition of Brazilian sports medicine, trauma product and orthopaedic reconstruction distributor Pro Cirugia Especializada earlier this month. And the company’s healthy balance sheet should support further M&A activity moving forward.

Earnings growth expected to accelerate
Earnings per share are set to rise 3% in 2013 to 51 pence, according to City forecasters, before picking up speed next year to rise 9% to 55 pence.

The company has registered solid annual earnings growth dating back a number of years, and this has helped it to develop a progressive dividend policy — indeed, the company hiked its final dividend 50% to 16.2 cents (10.5 pence) per share last year, providing a total dividend of 26.1 cents.

And analysts expect this to keep heading higher, with total payouts of 17.6 pence and 19.3 pence predicted for this year and next, respectively. Dividend yields for these years are expected to come in below the current 3.3% FTSE 100 average, at 2.3% and 2.6%, respectively, although rapid growth could see it shoot above the average in coming years. And these payouts are extremely well protected, with coverage of 2.9 times for the next two years well above the widely regarded benchmark of 2 times.

Smith and Nephew currently changes hands on a P/E rating of 14.9 and 13.7 for 2013 and 2014, respectively, providing a discount to a forward earnings multiple of 15 for the entire health care equipment and services sector. In my opinion the likelihood of solid earnings growth and robust dividend increases make the company an excellent pick for investors.

The canny guide for clever investors
If you already hold shares in Smith and Nephew, check out this newly updated special report that highlights a host of other FTSE winners identified by ace fund manager Neil Woodford.

Woodford — head of UK Equities at Invesco Perpetual — has more than 30 years’ experience in the industry, and has identified two other fantastic health care plays in the report

From: http://www.dailyfinance.com/2013/04/11/should-you-buy-smith-nephew-today/

Should I Buy Rexam?

By Harvey Jones, The Motley Fool

Filed under: Investing

I’m shopping for shares, and I’ve found plenty of goodies for sale. Should I pop Rexam into my basket?

It’s in the can
If you’re reading this while sipping from a can of drink, there’s a good chance you are contributing to the profits of Rexam. This solid FTSE 100-listed stock earns most of its income by manufacturing drinks cans, and is one of the world’s top five consumer packaging firms. Should I buy it?

I have developed a quiet respect for the unsung heroes of the FTSE 100, names such as distribution group Bunzl, outsourcer Serco, plumbing merchant Wolseley, and now can-maker Rexam. These companies may be low on glamour but they have quietly knuckled down to the admirable job of boosting sales, pioneering new markets and boosting shareholder value. Rexam is up 77% in the last three years and 29% in the past 12 months. That puts it nicely ahead of the FTSE 100 as a whole, which grew 11% and 14% respectively in that time.

T-Rexam
Its full-year results for 2012 showed a 6% rise in beverage can volumes and 5% rise in operating profits to £456 million. Sales rose 2% to £4.31 billion, while adjusted profit before tax rose 1% to £418 million. There was good news for shareholders, with the board proposing a 6% hike in its final dividend to 10.2 pence, taking the total dividend to 15.2 pence for the year. Rexam is stripping out its non-core business to focus on beverage cans, a strategy that included the sale of its Personal Care business in December, which allowed it to return £395 million to shareholders.

While acknowledging “less than ideal” market conditions, chairman Stuart Chambers has highlighted Rexam’s “underlying resilience”, with disciplined capital spending and healthy cash generation maintaining a strong balance sheet. Its health care operation had a difficult year, largely due to one of its customers products coming off patent, with operating profit plunging from £65 million in 2011 to £48 million. But its return on capital employed (ROCE) looks healthier 14.7% in 2012, and Chambers says it is on course to hit its 15% target this year.

Tin cups
One of the key things I look for in a FTSE 100 company is exposure to fast-growing emerging markets. Rexam doesn’t disappoint on that score, with a market-leading position in beverage cans in three out of the four BRIC countries, and a new Brazilian plant coming online just in time for both the World Cup and Olympics. In these troubled times, I also like its focus on cost savings, which helped cut group net debt from £1.2 billion to just £800 million. Although I’m concerned about its exposure to the cost of one single commodity, aluminum.

Rexam now yields 2.9%, against 3.3 for the FTSE as a whole, neatly covered 2.3 times. Earnings per share growth looks strong at 15% this year and 8% in 2014. For me, the figure that really stands out is

From: http://www.dailyfinance.com/2013/04/11/should-i-buy-rexam-2/

Is Melrose Industries the Ultimate Retirement Share?

By Roland Head, The Motley Fool

Filed under: Investing

LONDON — The last five years have been tough for those in retirement. Portfolio valuations have been hammered and annuity rates have plunged. There’s no sign of things improving anytime soon, either, as the eurozone and the U.K. economy look set to muddle through at best for some years to come.

A great way of protecting yourself from the downturn, however, is by building your retirement fund with shares of large, well-run companies that should grow their earnings steadily over the coming decades. Over time, such investments ought to result in rising dividends and inflation-beating capital growth.

In this series, I’m tracking down the U.K. large-caps that have the potential to beat the FTSE 100 over the long term and support a lower-risk income-generating retirement fund (you can see the companies I’ve covered so far on this page).

Today, I’m going to take a look at Melrose Industries , an unusual company which specialises in turning around manufacturing businesses, before selling them on. Melrose’s current portfolio of businesses contains German utility meter maker Elster, Brush Turbo Generators and Marelli Motori, which make electric motors and generators, and Bridon, which makes rope and wire products used in the oil and gas industry.

Melrose Industries vs. FTSE 100
Let’s start with a look at how Melrose has performed against the FTSE 100 over the last 10 years:

Total Returns	2008	2009	2010	2011	2012	2013 YTD	5 yr trailing avg
Melrose Industries	-40.7%	115.7%	77.7%	-10.7%	-31%	18.8%	10.2%
FTSE 100	-28.3%	27.3%	12.6%	-2.2%	10%	9.9%	5.3%

Source: Morningstar. (Total return includes both changes to the share price and reinvested dividends. These two ingredients combined are what make it possible for equity portfolios to regularly outperform cash and bonds over the long term.)

In 10 years, Melrose has grown from a 13 million-pound AIM company to a 3.3 billion-pound FTSE 100 member. It moved onto the main market in 2005, and its five-year average trailing total return of 10.2% is almost twice the FTSE 100’s 5.3% figure. Clearly, the company’s management has been skilled at creating shareholder value, but will Melrose have the longevity required for a retirement share?

What’s the score?
To help me pinpoint suitable investments, I like to score companies on key financial metrics that highlight the characteristics I look for in a retirement share. Let’s see how Melrose shapes up:

Item	Value
Year founded	2003
Market cap	3.3 billion pounds
Net debt	997.7 million pounds
Dividend Yield	3.1%
5-Year Average Financials
Operating margin	9.1%
Interest cover	4.9x
EPS growth	-6.8%
Dividend growth	9.2%
Dividend cover	1.7x

Here’s how I’ve scored Melrose on each of these criteria:

Criteria	Comment	Score
Longevity	It’s still early days. Will it work over the long term?	2/5
Performance vs. FTSE	Very strong, but its track record is short.	4/5
Financial strength	No obvious problems.	4/5
EPS growth	Earnings tend to fluctuate due to the nature of the business.	3/5
Dividend growth	57% dividend growth since 2008.	4/5
Total: 17/25

Melrose is essentially a publicly traded investment company, which plays an active role in turning around its acquisitions before targeting a sale within a typical timeframe of three to five years. The firm’s

From: http://www.dailyfinance.com/2013/04/11/is-melrose-industries-the-ultimate-retirement-shar/

Should You Buy Admiral Group Today?

By Royston Wild, The Motley Fool

Filed under: Investing

LONDON — Shares in Admiral Group have continued to surge in recent weeks, striking 18-month peaks in recent weeks and are currently trading 16% higher from the start of the year.

The insurer announced last month that group pre-tax profit leapt 15% in 2012 to 354 million pounds, helped by a slight 1% uptick in revenues to 2.2 billion pounds. The move prompted the firm to supercharge the dividend to 20% for the year, boosting enthusiasm for the stock.

Revenues forecast to experience heavy pressure
Although last year’s results exceeded analysts’ expectations, I expect revenues to heavily dip moving forwards, crimping earnings growth and putting future payout prospects under the cosh.

Almost 60% of Admiral’s profits last year originated from non-core operations, and broker Investec expects revenues from these activities to drop as legal referral fees are banned and other referral fees begin to drop. Meanwhile, increasing rate competitiveness in the motor insurance sector is also likely to hit group turnover looking ahead.

City forecasters expect earnings per share — which advanced 16% to 95.1 pence last year — to accelerate lower in the medium term. A 2% predicted drop this year, to 93.4 pence, is expected to collapse to 80.9 pence in the following 12-month period, a 13% decline.

Heady dividend rises set to fizzle out
Admiral is a favorite pick among income investors owing to its ultra-progressive dividend policy — the insurer hiked its dividend by a fifth, to 90.6 pence last year, accelerating from the 11% rise to 75.6 pence awarded in the prior 12-month period.

These payouts pushed the firm’s dividend yield well above the 3.3% FTSE 100 average, and prompted the share price to spike again as the firm’s forecast-busting payout hike drove fresh interest in the insurer.

However, I believe that the dividend will be forced to moderate moving forwards as earnings look set to fall. Indeed, broker consensus puts the dividend for 2013 and 2014 dividend at 87.7 pence and 73.9 pence correspondingly, and coverage of just 1.1 times for these years exacerbates the likelihood of a cut should revenues dip lower.

Admiral currently changes hands on a P/E rating of 14.4 and 16.6 for this year and next, trading at a chunky premium to a forward earnings multiple of 10.2 for the broader non-life insurance sector. These lofty valuations exacerbate the view that the insurer looks chronically overbought at current levels.

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From: http://www.dailyfinance.com/2013/04/11/should-you-buy-admiral-group-rtoday/

The Utility Stocks That Margaret Thatcher Gave Us

By Tony Reading, The Motley Fool

Filed under: Investing

LONDON — Baroness Thatcher will be remembered for many reforms, but one enduring legacy for investors is that she gave us the stock market we know today.

Privatization became a key plank of economic policy, and nine of the firms in the FTSE 100 are the direct descendants of state-owned companies privatized during her time as prime minister.

Thirty-five years ago, the precursors to BG , Centrica , Severn Trent , United Utilities , BP, BAE, International Consolidated Airlines, BT, and Rolls-Royce were all state-owned enterprises (in a companion piece, I have covered the five industrial and service companies). Today, they are successful blue-chip firms with a combined market capitalization of more than 200 billion.

The gas industry
British Gas, the U.K.’s monopolistic gas utility, was privatized in 1986 in the famous “Tell Sid” campaign to attract private investors.

The downstream operations were spun off as Centrica in 1997. The gas-distribution assets were demerged as Lattice Group and subsequently became part of National Grid in 2002. The remainder, British Gas‘ upstream activities, became BG Group.

Neither Centrica nor BG stuck to its existing business. Centrica has expanded upstream, and it is now the largest investor in the Cygnus North Sea gas field. A dominant market position in gas distribution has secured good returns for shareholders, and the country’s dependence on gas should boost opportunities in the future.

BG moved into, and then back out of, downstream distribution overseas. The retreat was partly to finance development of its massive discoveries in Brazil’s Santos Basin, and a significant part of the company’s value now rides on how soon and successfully it can start production. It also built a solid and successful international liquefied-natural-gas business.

The water industry
Britain’s regional water companies were privatized in 1989. (The electricity-distribution companies followed a year later, just falling outside Margaret Thatcher‘s premiership.)

Several companies have been snapped up by foreign investors keen to tap into a secure and profitable income stream. Just three listed companies remain: United Utilities in the North West, Severn Trent in the Midlands, and the FTSE 250 company Pennon.

The water companies’ fortunes ebb and flow with five-year regulatory reviews, the next of which begins in 2015 and is now being negotiated. Severn Trent has an almost unblemished dividend record; United Utilities less so.

Margaret Thatcher believed individuals should take responsibility for their own well-being. There’s no question that’s even more important today, especially when it comes to saving for retirement. That’s why The Motley Fool has created a brand-new report: “Five Shares To Retire On.” It describes five companies with healthy balance sheets, dominant market shares, and robust cash flows that could form the core of any portfolio, whether you’re saving for retirement or shorter-term goals. You can download it by clicking here — it’s free.

The article The Utility Stocks That Margaret Thatcher Gave Us originally appeared on Fool.com.

Fool contributor <a target=_blank

From: http://www.dailyfinance.com/2013/04/11/the-utility-stocks-that-margaret-thatcher-gave-us/

Marks & Spencer Delivers Best-Ever Easter Week

By Sam Robson, The Motley Fool

Filed under: Investing

LONDON — Shares in Marks & Spencer have risen 4% to 399 pence as of 8:50 a.m. EDT following the release of the high-street retailer’s trading statement for the fourth quarter, which saw the strongest quarterly sales growth in the last two years.

Group sales increased 3.1% year on year, with total U.K. sales averaging out at a 2.6% rise. Another strong performance from its food operations, which saw a 6.3% lift (helped by its biggest-ever Easter week), more than offset the 2.2% drop-off in general merchandise. It was a similar story for like-for-like sales in the U.K., which saw a marginal increase of 0.6% as food soared 4% and general merchandise fell 3.8%.

Chief executive Marc Bolland commented:

We are working hard on improving our performance in General Merchandise and, despite difficult trading conditions, we made progress in our operational execution. We delivered an excellent result in Food, with performance well ahead of the market, as customers continued to trust us for provenance and quality. We are increasingly seen as the destination shop for special occasions.

An increased push in multichannel sales saw a 22.9% rise in the operations year on year, helped by increased participation in M&S’ click-and-collect offer “Shop Your Way,” while mobile sales soared more than 70% compared with the same period last year thanks to an improved mobile-shopping experience implemented.

Elsewhere, international sales grew by 7% following a good performance by its franchise business in the Middle East, while key markets in India and China continued to trade strongly. Management also highlighted the performance of its European stores, stating, “Despite the macro-economic issues in some of the legacy markets, our performance in Europe improved in the quarter.”

So Marks & Spencer appears to be making ground in its directive to become an international multichannel retailer despite the continued decline of its clothing operations. However, Bolland and the rest of the management team are addressing this with “selected tactical offers,” and they revealed in this morning’s update that customers are responding well to “better editing” of its spring and summer range. If they can return the general merchandise department to former glory, coupled with its excellent food division, then Marks & Spencer, on a prospective yield of 4.5%, might just return to prominence — both on the high street and in investors’ eyes.

If you are looking for alternative opportunities in the FTSE 100, this exclusive wealth report reviews five particularly attractive possibilities. Indeed, all five blue chips offer a mix of robust prospects, illustrious histories, and dependable dividends, and they have just been declared by The Motley Fool as “5 Shares You Can Retire On.” Simply click here for the report — it’s completely free!

The article Marks & Spencer Delivers Best-Ever Easter Week originally appeared on Fool.com.

Sam Robson has no position in any stocks mentioned. The Motley Fool has no position in any of the

From: http://www.dailyfinance.com/2013/04/11/marks-spencer-delivers-best-ever-easter-week/

PZ Cussons "In Line With Expectations"