Today I am looking at four London giants making the news in end-of-week trading.
Legal & General Group
Life insurance leviathan Legal & General Group (LSE: LGEN) has led the FTSE 100 field following news of a gigantic North American deal, and the business was last 3.1% higher on Friday. The business announced an agreement with Royal Philips to provide the electrical giant’s US subsidiary with retirement payments under a group annuity contract. The deal will cover 14,000 retirees and other previous employees of Philips.
The US has been identified as a key territory for Legal & General looking ahead, and today’s deal marks its entry into the pension risk transfer market. And with the financial giant also making steady headway into other overseas markets, the City expects earnings growth of 14% and 7% in 2015 and 2016 respectively, creating very attractive P/E multiples of 12.9 times and 11.9 times. On top of this, projected yields of 5.4% for this year and 5.8% for 2016 will no doubt cheer income hunters.
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Paragon Group of Companies
But Legal & General is not the only FTSE play lighting up the boards in end-of-week trade, and diversified finance provider Paragon Group of Companies (LSE: PAG) was recently chugging 10.6% higher from Thursday’s close. The Solihull firm advised it had bought Five Arrows Leasing Group from Rothschild & Co. for $117m, a provider of equipment, vehicle and construction equipment financing, as well as lease servicing.
The City expects Paragon Group of Companies to have enjoyed earnings expansion of 9% for the year ending September 2015, resulting in a P/E multiple of just 11.9 times. And this reading falls to a splendid 10.3 times for fiscal 2016 as strong market conditions — particularly in the buy-to-let market — create a 15% bottom-line bounce. The finance house’s bubbly outlook is expected to keep driving dividends confidently higher, too, pushing a yield of 2.7% for the outgoing year to a very decent 3.2% for the current period.
Treatt
Industrial chemicals producer Treatt (LSE: TET) — which provides ingredients for the food and fragrance sectors — also enjoyed a bump in Friday’s session and was last 1.9% higher. Investors cheered the firm’s latest trading update which revealed that Treatt had “performed well in the second half of the financial year,” meaning that revenues and profits for the 12 months to September 2015 should meet management’s expectations.
And with demand for speciality foods and beverages heading steadily higher — and especially in the craft beer segment — the number crunchers expect Treatt to deliver delicious returns in the years ahead. Earnings are expected have risen 7% in fiscal 2015, and an extra 8% rise is forecast for 2016, pushing a P/E reading of 15.3 times to just 14.1 times for the current period. And dividend yields of 2.7% for 2015 and 2.9% for 2016 sweeten the firm’s attractive investment case, in my opinion.
SDL
Information management specialist SDL (LSE: SDL) also rose nicely in the final trading session of the week and was last 9.7% higher from the previous close. The Bury St Edmunds business advised that founder and current chief executive Mark Lancaster will be stepping down at the end of the month. It added that “trading for the full year remains in line with its expectations.“
Due to strength across the business — and particularly from its Language Services arm — SDL saw group revenues rise 4% in January-June, to £133.9m, it advised in August. And thanks to the firm’s robust pipeline, the City expects earnings to grow 28% and 24% in 2015 and 2016 respectively, resulting in very appealing P/E ratios of 16.9 times and 13.3 times. And a yield of 0.9% for 2015 and 1% for 2016 provides a handy-if-not-quite-astonishing bonus.
