UK stock markets are mixed today, but these three very different companies from the FTSE 100, FTSE 250 and AIM stand out from the crowd. Here’s why.
London’s FTSE 100 has traded cautiously in Tuesday’s session, but familiar names have done well, among them the telecoms stocks following Vodafone (LSE:VOD)’s half-year results, which dragged BT (LSE:BT.A) higher. But other post-Covid crash laggards are also enjoying their day in the sun.
Land Securities (LSE:LAND) shares were changing hands for almost a tenner just before the pandemic hit. In the months that followed they were worth less than a fiver. Currently, they’re about half-way between the two. Even the slow-moving FTSE 100 index is approaching its February 2020 levels. Other international stock markets and many UK growth stocks did it months ago.
But first-half results from the UK offices giant showed a near-3% increase in net asset value (NAV) over the six months to 1,012p. It was down 6% year-on-year, but beat City consensus estimates and puts the shares on a 30% discount to net assets. That could be attractive to value investors. For comparison, British Land (LSE:BLND) trades on a 20% discount to NAV.
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With lower bad debt provisions, earnings per share also rose in the last six months, up 57% on a year ago at 24.3p. Again, that beat forecasts for just 19.7p. Remember, the equivalent 2020 results included a bad debt provision of £87 million.
And in another welcome improvement on market expectations, the dividend goes up 29% to 15.5p, much better than the 13.8p predicted by many analysts. LandSec currently has the highest forward dividend yield in the UK listed property sector at 4.3% for this year and 4.9% based on forecasts for 2022.
Further down the food chain, Restaurant Group (LSE:RTN) is the day’s top performer, adding as much as 16% following a positive trading update.
In the two months since the mid-cap company’s last update mid-September, we’re told like-for-like sales versus the 2019 equivalent at Wagamama and its other pubs and leisure businesses have outperformed the market. There’s also been a “minor” improvement in UK airport passenger volumes and “partial recovery” in the sales run rates at its concessions business.
This means management is confident enough to hike expectations for underlying profit to £73-£79 million assuming no more Covid disruption. Bosses also expect “robust” trading to push year-end net debt below £190 million. At the start of July it was £200 million, and £308 million in 2020.
Management is still as confident about 2022 as it was at the September interim results when chief executive Andy Hornby said:
“While there are some well-documented sector challenges to navigate in the short term, particularly around labour availability and supply chain, we believe the group is well positioned for the long term."
Watch out for full-year results in March.
Elsewhere, over on AIM, Focusrite (LSE:TUNE) is having a great day. The £900 million audio equipment supplier, named AIM company of the year last month, is up 10% and has now recovered the deficit suffered since a slump in share price early October.
Comment from Phil Dudderidge, founder and executive chairman, goes a long way to explaining reaction to these annual results.
"We are delighted with these outstanding results, having overcome disruption to component suppliers, factories, logistics and changes to working practices,” he said today. “With so many lockdowns around the world, musicians, podcasters, and other creatives in audio and sound have been investing in Focusrite interfaces and 'studio packs' in record numbers while we work hard to meet that challenging demand.”
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There’s also been “significant growth” in demand for its ADAM Audio monitor loudspeakers and Novation products. Meanwhile, investment in new generation products promises further growth in the live sound market during 2022 and 2023.
Revenue jumped 34% in the year ended 31 August, or 28% on an organic basis, to almost £174 million. North America grew by 47% to £74.6 million, Europe, Middle East and Africa by 23% to £69.3 million, and Rest of World by 32% to £30 million. Adjusted operating profit leapt 80% to £41.4 million and net cash is up significantly to £17.6 million.
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