So far this year, the FTSE 250 index has outperformed the FTSE 100 by a tiny margin of 0.7%. However, over the past five years, the FTSE 250 has outperformed by a staggering 45.3%.
Nevertheless, at present levels the index does look expensive. The FTSE 250 trades at a P/E of 18.1, compared to the FTSE 100’s P/E of 13.8. But there are opportunities out there. Here are three mid-cap companies that are beating the FTSE 250 index today off the back of good news.
Takeaway demand
The world’s largest online and mobile marketplace for takeaway food, Just Eat (LSE: JE) issued an interim management statement today that impressed the market.
For the three months ending 30 September, total orders increased by 56% compared to the same period last year. As a result, management is confident that the company will be able to meet full-year expectations.
Unfortunately, even though Just Eat is trading in line with full-year expectations, the group is still trading at a sky-high valuation, which does not leave much room for error.
For example, based on current figures the group is currently trading at a forward P/E of 105. City forecasts also indicate that Just Eat will earn 5.15p per share during 2015, which means that the company is trading at a 2015 P/E of 59.7.
World Cup boost
Betfair (LSE: BET) has also issued an upbeat trading statement today. The company has released a trading update for the three months ended 31 October 2014, ahead of a presentation for investors and analysts to be held later today.
The company announced that, due to strong growth in customer numbers, second-quarter revenue jumped 22% to £119m. Adjusting for unusually high gross win margins, Q2 revenue jumped 13%. What’s more, Betfair announced that thanks to a World Cup boost, the group’s customer base jumped by 30% during the second quarter.
And off the back of Betfair’s better-than-expected first-half trading, management is now confident that the group will meet full-year expectations. City analysts are expecting the group to report full-year earnings per share of 51.6p, which means that Betfair is currently trading at a forward P/E of 23.4.
Cash return
As Just Eat and Betfair rise after issuing upbeat trading statements, Dignity (LSE: DTY) is beating the FTSE 250 index after the company completed a cash return to investors. Investors are set to receive £1.20 per share as a special dividend, after the company announced earlier this year that it was going to distribute excess cash to shareholders.
It may be too late to get in on this cash return from Dignity, but additional cash returns are on the cards in the future. Dignity’s growth over the past five years has been explosive — if the group hits City expectations for full-year earnings this year, it will have doubled earnings in the space of five years.
Additionally, over the next two years the City expects the company’s earnings to expand at a low-teens percentage per annum. So it’s reasonable to assume that the company will look to return more cash to investors in the future.
However, this growth does not come cheap. At present Dignity is trading at a forward P/E of 19.3. Based on City expectations for growth, the company’s shares are trading at a 2015 P/E of 17.2.
