Isn’t it nice when one of your companies releases great results and its shares head upwards? We’ve had a mixed bag today, but here are three whose shares responded well to the morning’s tidings.
Troubled estate agent
Shares in Countrywide (LSE: CWD), the UK’s largest estate agency group, gained 13% on the release of first-half figures, to 289p. The shares are, admittedly, still down 48% over the past 12 months, having received a bit of a kicking following the EU referendum result. But could today’s response suggest they’re oversold?
The company reported a 25% fall in adjusted pre-tax profit from a year ago, to £21.8m, and a 22% fall in adjusted earnings per share to 8p as the London market has stalled. We heard of a “market slowdown evident in May/June 2016 in the run up to the EU referendum,” with chief executive Alison Platt telling us that “since the referendum result this has become more marked in London, the South East and expensive prime markets.“
The company warned it won’t be able to match last year’s earnings levels, so the analysts’ consensus of an 8% rise in earnings per share now has to be scrapped. But even a 10% fall in EPS would still leave the shares on a low forward P/E of 10. With dividends likely to be healthy, Countrywide looks like a decent long-term candidate.
Computer security
Meanwhile, Sophos (LSE: SOPH) shares are up 5.8% to 242p after the computer security specialist reported a “strong first-quarter performance,” with “significant cash generation.“
With billings up 25.2% to $141.9m, revenue grew by 12.2% to $127.4m and by 11.9% at constant currency rates (CCR). Cash EBITDA was up 55.2% (48.6% CCR). Free cash flow of $28.8m was far more impressive than the $3.7m outflow recorded at the same stage last year.
Chief executive Kris Hagerman spoke of “our confidence in the outlook for the full financial year,” as the company “expects to deliver mid-teens percentage billings growth on a like-for-like basis” for the full year.
The shares are on a lofty forward P/E of 38 for the full year, but it’s still early days for a company that only floated in July 2015 and it’s surely a strong growth prospect — but difficult to value right now.
Brexit bargain?
Investment manager Henderson Group (LSE: HGG) suffered a sharp fall as a result of the EU referendum, but its shares have started to come back a little, and first half results today have pushed them up another 2% as I write, to 227p.
Henderson told us “retail outflows accelerated considerably in the immediate aftermath of the UK’s referendum on EU membership,” but that was mitigated to some extent by the diversity of the firm’s product range. The result was a net outflow of £2bn, though assets under management of £95bn were up 3% since the end of December.
Underlying pre-tax profit dropped 14% to £100.5m, with underlying earnings per share falling 20% to 7.1p. But the company’s capital easily exceeded its regulatory needs, and the first-half dividend was lifted by 3.2% to 3.2p per share.
Henderson shares are valued at 15 times forecast earnings, and there’s a dividend yield of 4.6% on the cards. That’s probably a fair valuation, but with the uncertainty ahead I think there are better financial services options out there.
