Today I am looking at three headline grabbers in Thursday business.
Bag a beauty
Shares in fashion play Mulberry Group (LSE: MUL) were static on Thursday trade despite the release of blockbuster trading numbers.
Mulberry saw retail sales trot 8% higher during the 12 months to March 2016, to £118.7m, or 4% on a like-for-like basis. These results helped pre-tax profit surge to £6.2m from £1.9m a year earlier.
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The huge investment to improve Mulberry’s multi-channel presence is clearly delivering, and digital sales at the bag maker jumped 19% year-on-year. And Mulberry is confident that these moves — allied with huge product development — should continue to drive the top line.
This view is shared by the City, and Mulberry is expected to see earnings double in 2017 before rising a further 57% next year.
Subsequent P/E ratings of 93.5 times for the current period and 52.9 times may be too heady for many investors. But I expect the multiple to keep tumbling as demand for Mulberry’s goods accelerates across the globe.
Business booms
Financial giant Liontrust Asset Management (LSE: LIO) also greeted the market with bubbly trading numbers on Thursday. And investors have responded by sending the stock 6% higher.
Liontrust saw adjusted pre-tax profit leapt 21% during the 12 months to March 2016, to £14.6m, the asset manager benefitting from electric activity at its UK Retail arm.
Indeed, net inflows of £223m at the division helped drive total assets under management 7% higher from 2015 levels, to £4.8bn. Liontrust’s ambitious in-house expansion has helped drive inflows despite challenging market conditions, and the City expects these moves to pay off in the long-term.
Sure, earnings may be expected to slip 2% in 2017. But a 17% rebound is predicted for 2018. And these numbers result in mega-low P/E ratios of 10.5 times and 8.9 times respectively.
When you throw in dividend yields of 4.6% and 5.5% for these years, I reckon Liontrust is a great stock pick at present.
Construction corker
Housebuilder Taylor Wimpey (LSE: TW) has seen its share price collapse in recent weeks as fears of sinking buy-to-let demand have worsened.
Indeed, the Taylor Wimpey’s value has slipped almost a fifth from record highs above 210p punched just last month. And latest data from the Council of Mortgage Lenders would have done little to assuage market concerns.
The body advised that mortgage borrowing from landlords collapsed by 51% year-on-year in April, to 4,200 loans, as the impact of stamp duty hikes came into effect.
While a cooling buy-to-let segment takes the shine off the housebuilding sector, I believe the industry’s major players remain in rude health — demand from first-time buyers remains robust, and Britain’s chronic homes shortage looks set to persist.
As a consequence, Taylor Wimpey is predicted to see earnings shoot 17% and 9% higher in 2016 and 2017 respectively.
These figures create very-attractive P/E ratings of 10.5 times and 9.7 times. And when you throw in dividend yields of 5.9% and 7.4%, I reckon Taylor Wimpey is a steal at current prices.
