Why Severn Trent, Babcock International, and ICAP Should Beat the FTSE 100 Today
May 14th 2013 9:24AM
Updated May 14th 2013 9:50AM
LONDON -- The FTSE 100 started the day well by setting yet another new five-and-a-half-year high of 6,649 points before settling back a little -- as of 9 a.m. EDT it's up 0.15% to 6,642. The big early driver today was the takeover-led surge in Severn Trent shares, but the big miners are once again falling and dragging the index back.
Here's a look at three companies whose share prices are rising today and helping to boost the FTSE indexes.
Shares in Severn Trent have soared 13.4% to 2,069 pence this morning after the provider of water and waste treatment confirmed rumors that it is the target of a takeover bid. Confirming recent press speculation, Severn Trent revealed that it has been approached by a consortium, comprising Borealis Infrastructure Management, the Kuwait Investment Office, and Universities Superannuation Scheme, which "may or may not" lead to an offer being made.
The leap in the share price has pushed the firm's forward P/E ratio to nearly 24, based on expectations for the year just ended on March 31, and dropped the predicted dividend yield to 3.6%.
Full-year results have sent Babcock International Group shares up 6% to 1,154 pence in early trading. Chief executive Peter Rogers told us, "We generated good growth in underlying revenue and further improved our operational performance to deliver increases in operating margin, underlying earnings and shareholder value." And the figures bear him out.
From revenue that rose 6% to 3.24 billion pounds, Babcock -- which provides engineering support to a number of sectors -- secured a 16% rise in pre-tax profit to 318 million pounds. Full-year earnings per share gained 16% too, to 71.3 pence, and that was reflected in the firm's dividend, also lifted 16%, to 26.3 pence per share for a yield of 2.3%
Shareholders of interdealer broker ICAP have enjoyed a 13.2% rise to 337 pence after final results came in a little better than expected. ICAP saw pre-tax profit fall 20% to 284 million pounds, but that was slightly ahead of the firm's earlier expectations. Adjusted earnings per share dropped 18% to 33 pence, but the company felt confident enough to keep its full-year dividend unchanged at 22 pence per share -- and that's a yield of 7%!
Chief executive Michael Spencer said, "This has been an extraordinarily tough year in the wholesale financial markets." However, he told us ICAP has beaten its annualized cost-savings target by 20 million pounds, adding, "Today we are a more efficient and collaborative business than we were a year ago and this will stand us in good stead for the future."
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The article Why Severn Trent, Babcock International, and ICAP 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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