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Business, Finance, Occupation & Industry

Why National Grid, Tate & Lyle and Lonrho Should Beat the FTSE 100 Today

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By Alan Oscroft, The Motley Fool

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LONDON — After again closing below 6,400 points yesterday, the FTSE 100 has nosed above that level today, up 0.92% to 6,447. Although banks in Cyprus are open again (albeit with strict controls), sentiment across Europe is still shaky, as nobody yet knows the full suffering to be faced by uninsured savers in the island’s banks.

But plenty of constituents of the FTSE indexes are doing well in their own right. Here are three on the up today.

National Grid
National Grid released details of its new dividend policy this morning, sending its shares up 2.5% to 770 pence. The intention now is for the utilities supplier to grow its dividend at least in line with retail price inflation, with chief executive Steve Holliday telling us the policy “supports our long-term ambition to target a secure dividend in real terms for our shareholders while enabling the Group to sustain the strong balance sheet needed to fund the business.”

The firm also told us that trading is going well, and performance for the year to March 31 will be “modestly ahead” of previous guidance.

Tate & Lyle
Tate & Lyle shares picked up 2.3% to reach 844 pence after the firm told us in an update ahead of full-year results that it expects to make modest progress for the year. With volume growth for the second half ahead of the first, the company’s speciality food ingredients division should achieve “solid sales growth.” Net debt, though, will be higher than it was last year.

Prior to today, analysts were forecasting a modest fall in earnings per share and a 3% dividend yield, with a return to earnings growth expected in 2014. Results are due on May 30.

Lonrho
It’s about time something good happened for Lonrho shareholders after the share price has been on such a long slide. And today they’re being treated to a 32% price rise to 6.6 pence after the Africa-based oil and gas support and agriculture company released full-year results.

Revenue for the fourth quarter rose by 32%, with full-year revenue up 22% to 186.3 million pounds. The firm still made an operating loss of 3.4 million pounds, but that was well within the expected range of 3 million pounds to 5 million pounds.

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The article Why National Grid, Tate & Lyle and Lonrho Should Beat the FTSE 100 Today originally appeared on Fool.com.


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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Should You Buy Tate & Lyle Today?

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By Royston Wild, The Motley Fool

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LONDON — Giant sweetener-producer Tate & Lyle has ridden the equities wave since the start of the year and is still up 9% so far in 2013 despite the recent risk-aversion striking financial markets.

Although food producers like Tate & Lyle tend to harbor defensive qualities — populations still need to be fed, regardless of the economic climate — I believe the company could face severe earnings pressure in coming years as competition in its most important markets heats up.

Sucralose volumes headed lower
Tate & Lyle published worrying third-quarter numbers last month, showing weakening demand growth for its artificial sweetener sucralose. The firm now expects sales volume in the year ending March 2013 to come in lower than that of the preceding 12-month period.

Tate & Lyle is expected to face mounting competition in this market, particularly from the Far East, where sucralose production is set to take off. Last month, China’s JK Sucralose, the world’s second-largest producer of the product, announced that it hopes to ramp up capacity to 6,000 tonnes by 2018 from around 1,500 tonnes at present. It also said it expects sales to leap 50% this year.

Elsewhere, competitor PureCircle — the world’s leading manufacturer of natural sweetener stevia — is also reporting rocketing volumes as consumers switch from synthetic alternatives, and it’s due to roll out a range of fresh products in the near future.

Earnings expected to drop in 2013
City forecasters expect Tate & Lyle to post an earnings-per-share decline of 4% to 55 pence in 2013 before recovering modestly in the following years. Respective gains of 9% and 8% are expected in 2014 and 2015.

The sugar specialist was recently changing hands on a P/E ratio of 15, representing a premium to the forward reading of 11.9 for the entire food-producers and -processors sector. This is expected to head lower over the medium term to 13.8 this year and 12.8 next year.

However, the emergence of growing competition in Tate & Lyle’s key markets could pressure the company’s revenue forecasts, which I believe makes Tate & Lyle an expensive choice against its peers right now.

Dividend policy progressive but underperforming
Tate & Lyle is expected to provide a 26.1 pence dividend in 2013, up from 24.9 pence in 2012. And the firm is predicted to ramp these up to 27.6 pence and 29.4 pence, respectively, in 2014 and 2015. Further, these payments are well secured with projected coverage of between 2.1 and 2.2 times through to 2015.

Despite these expected dividend increases, the company’s yield is forecast to remain below the 3.5% mean reading for the U.K.’s 100 biggest listed firms over the medium term. Respective yields of 3.1% and 3.3% are expected this year and next before reaching 3.5% in 2015.

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If Tate & Lyle’s earnings outlook and low dividend yield fail to excite and you are looking for other FTSE 100 winners to really …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Should I Invest in Tate & Lyle?

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By Kevin Godbold, The Motley Fool

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LONDON — To me, capital growth and dividend income are equally important. Together, they provide the total return from any share investment and, as you might expect, my aim is to invest in companies that can beat the total return delivered by the wider market.

To put that aim into perspective, the FTSE 100 has provided investors with a total return of around 3% per annum since January 2008.

Quality and value
If my investments are to outperform, I need to back companies that score well on several quality indicators, and buy at prices that offer decent value.

This series aims to identify appealing FTSE 100 investment opportunities, and today, I’m looking at Tate & Lyle , which describes itself as a global provider of ingredients and solutions to the food, beverage, and other industries.

With the shares at 837p, Tate & Lyles’s market cap. is £3,907 million.

This table summarises the firm’s recent financial record:

Year to March 2008 2009 2010 2011 2012
Revenue (£m) 2,867 3,553 2,533 2,720 3,088
Net cash from operations (£m) 0 501 587 145 231
Adjusted earnings per share 35p 38.2p 39.1p 46.5p 57.5p
Dividend per share 22.6p 22.9p 22.9p 23.7p 24.9p

Tate & Lyle is a brand that many Brits grew up with, and may recently know for its consumer products such as Splenda and Lyle’s Golden Syrup. However, the firm also generates around 75% of revenue from supplying additives for the food and beverage manufacturing sector, mainly by the process of corn wet milling and the production of high-intensity sweeteners.

Tate divides its operations into two divisions: Speciality Food Ingredients delivered 60% of operating profit last year, and Bulk Ingredients provided 40%.

In recent news, the company said that it is expecting operating profits to come in flat compared to last year in the Speciality division, with a similar outcome expected in the Bulk division, due to factors like a challenging U.S. ethanol environment, and tight corn supplies in the U.S. and Europe. However, demand for liquid sweeteners and starches has been holding up in the U.S. and Europe, which could presage a steady total-return performance going forward.

Tate & Lyle’s total-return potential
Let’s examine five indicators to help judge the quality of the company’s total-return potential:

  1. Dividend cover: Adjusted earnings covered last year’s dividend around 2.3 times. 4/5
  2. Borrowings: Net gearing is around 40%, with net debt just over last year’s earnings. 4/5
  3. Growth: Revenue and earnings have been growing recently, with lumpy cash flow. 4/5
  4. Price to earnings: A forward 14 looks up with growth and yield expectations. 2/5
  5. Outlook: Satisfactory recent trading and a cautiously optimistic outlook. 3/5

Overall, I score Tate & Lyle 17 out of 25, which inclines me to be ambivalent about the firm’s potential to outpace the wider market‘s total return going forward.

Foolish Summary
Borrowings seem under control, and there is decent dividend cover. However, Tate’s cash flow seems lumpy, and the outlook is insufficiently robust to excite me at the current valuation. So, I’m not going to invest in Tate & Lyle right now.

But one of the Fool’s top investment writers …read more
Source: FULL ARTICLE at DailyFinance