Here I am looking at three of the movers and shakers in Thursday business.
Betfair Group
Shares in gambling house Betfair (LSE: BET) have leapt today on the back of a bubbly financial update, and were recently trading 15.7% higher on the day. The firm upgraded its profit guidance by 15% for the full year, to between £113m and £118m, after it reported another strong top-line performance for November-January — revenues leapt 20% during the period, to £114.6m.
City analysts expect the company to clock up a 32% earnings gain in the year ending April 2015, leaving it changing hands on a P/E rating of 27.4 times prospective earnings. This may seem expensive at first glance, although a PEG readout of 1.1 for this year — around the benchmark of 1 which represents excellent bang for one’s buck — underline’s Betfair’s terrific value relative to its growth prospects.
The company’s decision to splash the cash on marketing and product investment is certainly delivering the goods, and Betfair saw the number of active customers surge 35% in the last quarter to 760,000 users. With the company also pulling up trees in the critical mobile market, I believe that the betting firm is in great shape to enjoy terrific long-term earnings growth.
Spirax-Sarco Engineering
Steam pump and value manufacturer Spirax-Sarco (LSE: SPX) has jumped 8.5% in Thursday trade on the back of a flurry of good news. Despite the effect of cyclical problems in key markets and adverse currency movements, adjusted pre-tax profit remained stable at £151.1m as operating margins surged — at constant exchange rates profits advanced 12%.
On the back of this robust performance the company elected to award a special dividend of 120p per share. And the City is convinced that the good times look set to keep rolling, and have chalked in growth of 5% and 6% for 2015 and 2016 respectively. These projections produce P/E ratings of 21.5 times and 20.3 times for this year and next, some way above the value watermark of 15 times above.
Still, I believe that the firm remains a strong bet on the back of splendid performance in emerging markets — today’s update underlined the progress the industrial play continues to make in The Americas. With Spirax-Sarco also announcing plans today to open a brand new, wholly-owned operation which will sell directly into India, the engineer is in great shape to enjoy surging revenues in the coming years, in my opinion.
Hardy Oil & Gas
Fossil fuel play Hardy Oil & Gas (LSE: HDY) has suffered a body-blow in today’s trading session, and was recently dealing 13.4% lower from Wednesday’s close. With investor appetite in the oil sector seemingly waning by the day, the Douglas-based firm has seen its shares collapse by almost three-quarters from the Brent benchmark’s collapse last summer.
Even though the oil price has stabilised in the past month on the back of reduced US shale activity, question marks over the degree of OPEC pumping — not to mention whether the weak global economy is strong enough to mop up bulging inventories — is casting doubts over the economic viability of Hardy’s projects in India.
Although the business advised in November that it “is well funded to meet its future work commitments” — cash stood at $22.9m in cash and cash equivalents as of the end of September — a lack of news since then has rattled investor nerves, particularly as oil prices have conceded much ground since then. Like the rest of the oil market’s bigger and smaller operators, I believe that Hardy is a risk too far for savvy investors.
