Why BAE Systems, NEXT, and Melrose Industries Should Beat the FTSE 100 Today
May 8th 2013 3:26PM
Updated May 8th 2013 4:20PM
LONDON -- The FTSE 100 reached a five-year closing high of 6,557 points yesterday, and has already beaten that today to peak so far at 6,569 -- at the time of writing, the index is 6 points up on the day at 6,563. Trade news from China has improved in recent days, and a number of strong results updates from FTSE companies has renewed confidence. Mining shares are edging up again.
So which companies are giving us this good news? Here are three FTSE 100 constituents whose shares are on the up today:
BAE Systems shares perked up 7.9 pence (2.1%) after an interim management statement told us that "modest growth in underlying earnings per share for 2013 is anticipated." Things are going in line with prior expectations, but there are a few uncertainties -- particularly in the U.S. defense market due to budget uncertainty. But on the upside, a Saudi Arabia contract could add an extra 3 pence to underlying earnings per share.
With full-year guidance unchanged, we should be expecting an earnings per share rise of around 10%, putting the shares on a price-to-earnings ratio of under 10 and with a dividend yield of over 5% expected. With BAE in the Fool's Beginners' Portfolio, I'm happy enough with that.
NEXT shares have soared by more than 50% over the past 12 months, helped by a 119 pence (2.7%) boost to 4,525 pence this morning after the high-street fashion chain released a cheery update. For the first 14 weeks of the year, NEXT Brand sales were up 2.2%, with 1.5% of that from new outlets. Although NEXT Retail sales dropped 1.9%, possibly due to very cold March weather, NEXT Directory sales gained a very nice 8.9%.
For the full year, the firm expects to see pre-tax profit of 615 million-665 million pounds, with a growth in basic EPS of 4-13%. A 250 million pound share buyback is also expected.
Shares in Melrose Industries gained 10.5 pence (4.3%) after the company release a statement ahead of its AGM. The manufacturing turnaround specialist said that trading is in line with expectations, with revenue for the period 1% lower than last year but with a higher operating margin.
Current forecasts for December 2013 suggest a modest rise in EPS, and there's a dividend yield of about 3.3% forecast -- and that represents another year of steady rises in earnings and dividends.
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The article Why BAE Systems, NEXT, and Melrose Industries Should Beat the FTSE 100 Today originally appeared on Fool.com.Alan Oscroft has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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