Three companies reporting today have had a mixed 12 months. Will their latest results turn things round?
BT or not BT
BT Group (LSE: BT.A) has been a great call over the last five years with its share price up 110%. But it’s down nearly 13% over the past 12 months. Today’s first quarter results have given it a lift, with the share price rising more than 3% in early trading.
Investors will be pleased with expectations-beating profits as BT continued the integration of its January purchase of EE and posted a 35% rise in revenue to £5.78bn. EBITDA rose 25% to £1.82bn, beating consensus estimates of £1.78bn. With a 16% rise adjusted pre-tax profit to £802m, chief executive Gavin Patterson can rightly claim “a good start to the year” with the promise of more to come.
BT can boast fibre broadband dominance with more than 25m premises and sporting success through its BT Sport offering, which includes renewed FA cup rights and more Premier League games at better time slots, on top of exclusive Champions League and Europa League coverage.
Success in the growing quad-play market shows BT hasn’t lost its edge and it looks a tempting buy at 12.11 times earnings, yielding 3.37%, especially if it retains its links with Openreach, which currently seems likely.
Shrinking assets
Asset management group Schroders (LSE: SDR) has also had a tough 12 months with the share price down 13%. Like all fund managers it has been hit hard by stock market volatility, only to cash in on the post-Brexit market rebound bonanza. The stock is up 28% over the last month but today’s half-year results have spoiled the fun, with the share price edging down on deflating news of a 2.76% drop in profit before tax from £290.3m to £282.3m.
Schroders has suffered a drastic decline in net inflows with the total just £0.7bn, down from £8.8bn in the same period last year. That was a blow to confidence even though assets under management hit a record £343.8bn, up from £309.9bn. Chief executive Peter Harrison blamed that catch-all scapegoat Brexit and warned of a further hit to investment demand, which sounds dubious as markets are actually soaring. At today’s 14.92 times earnings, the moment to buy Schroders may have passed for now.
Here Weir goes
Where the oil price goes, so goes hydraulic pump maker and shale supplier Weir Group (LSE: WEIR). It was hit hard by the oil price fall but is up 75% over the past six months, its share price graph enjoying a vertiginous climb as crude rose from $27 to $51 a barrel. The oil price is slipping again but the stock has held firm, at least until today’s underwhelming results.
Weir posted a 25% fall in pre-tax profit to £82m in the six months to 30 June, with revenue down 13% at constant currencies to £866m, as weak oil prices hit the business. Earnings per share fell 23% to 29.6p. Departing chief executive Keith Cochrane was bullish about the results, pointing out that the group remains highly cash generative and has been aggressively cutting costs. But with the stock now trading at a pricey 17.79 times earnings and oil slipping to $43, investors will be wishing they’d bought six months ago rather than rushing to buy today.