2014 has been a turnaround year for both the retail and the oil and gas sectors, though sadly in different directions. We have two prime examples today:
Rag trade champion
NEXT (LSE: NXT) is widely considered one of the FTSE 100‘s best retailers, and it has maintained double-digit growth in earnings per share (EPS) right through the recession while its competitors have been struggling. That’s led to a trebling of its share price over five years — and today we saw a 3.5% rise to 6,740p in response to the company’s December trading update.
We heard that full-price sales were up 2.9% for the period between 28 October and 24 December, with year-to-date sales up 7.7%. And that is towards the top end of guidance given in October.
Full-year pre-tax profit is now expected to come in at approximately £775m, up 11.5% on last year and a bit ahead of the current analysts’ consensus for £771m. Earnings per share should be up 13.5%, again ahead of prior expectations.
And looking ahead, NEXT opined that “low inflation, an end to real wage decline, healthy credit markets and strong employment all paint a somewhat more positive picture than recent years“.
Oil price casualty
At the other end of the scale today we see Falkland Oil and Gas Limited (LSE: FOGL), which is being hit by the double-whammy of being an oil explorer in a time that oil prices are plummeting and being focused on the so-far disappointing South and East Falklands basins.
Despite the share price having rebounded from a recent low of just 16.75p, today we saw it come close again with a dip to 19.98p — as I write it’s back up a little to 20.4p, but still down 14% on the day.
That’s a drop of 8% in 2014 so far, which is actually pretty good going compared to some others in the sector, but shareholders are still sitting on a painful loss of 81.5% over the past five years.
Recovery prospect?
There are no profits in the horizon yet, but the company still has plenty of cash and is fully funded for its 2015 drilling programme scheduled to start in the first quarter, so it’s certainly not one to be written off yet. And seven of eight brokers have the stock on a Strong Buy rating right now — though I’d rate it as one for Strong Stomachs only.