Its a day of judgment for these three companies delivering their latest reports this morning.
Passing the test
Global testing, inspection and certification services group Intertek (LSE: ITRK) has had a good year, with its share price up50% in that time. However, todays half-year report has left markets underwhelmed, with the share price dipping1.5% at time of writing. Thats despite the company postingdouble-digit revenue and earnings growth, plus aninterim dividend of 19.4p, up 14.1% from 17p last year, maintaining itsprogressive dividend policy.
Pre-tax profit rose 15% from 149.8m to to 172.5m, with revenues up 13.2% to 1.2bn. Managementsaid Intertek is on track to hit full-year targets and Brexitwas unlikely to hurt futuregrowth opportunities. The company has grown strongly through acquisitions and perhaps the main reason for todays market scepticism is that at 25.5 times earnings and yielding 1.46%, future success is priced-in.
Food for thought
Back in February,RealGood Food (LSE: RGD) hadlost its flavour. It issued a profit warning after investingheavily in staff and product development, as it shifted focus to its three pillar marketsof cake decoration, food ingredients and premium bakery. The 22m cap companyclaimed this was just a temporary setback and its net debtswould be greatly reduced by the 44.4m proceeds from the sale of sugar business Napier Brown.
Todays full-year profits evidently tastedbittertoinvestors, with itsshare price down almost 10% at time of writing. Real Good Foodstrading update on 26 April 2016 forecastprofits before tax of13.9m,but that number wascutto 12.9m today due toworking capital adjustments, written-off acquisition costs and higher staff pension costs. Executive chairmanPieter Tott said recent trading was satisfactory but sounded downbeat with warningsof challenging times for thefood industry with increasing legislative burdens, the growth in the minimum wage and ever-demanding consumers.Yet withnet debt cut from 30.1m to 5.1m, investors may soon regain their appetite.
Mirror, Mirror
Publishing group Trinity Mirror (LSE: TNI) is the only one of these three stocks to enjoy a boost today, its share price up 6% after publishing its half-yearly report. TheDaily Mirror publisher reporteda 44.3% leapin adjusted operating profit,driven by the benefits of Novembersacquisition of Local World and tight cost control.This offset itslosses from the launch of daily newspaper New Day, which closed inMay. Its digitalaudience and revenues grew strongly, the latter up14.4% to 39.7m, althoughdigital classified revenue fell.
Like every newspaper group, Trinity Mirror is hoping to manage the shift away from print by protecting revenues fromthis source while driving further digital growth. Its a tricky balancing act, one the group says has been made harder by Brexit, with subsequent lower UK growth forecasts hitting revenues. The share is down 43.1% over the last year and trades at just 2.21 times earnings, yielding 6.48%, so despite todays positive reaction it remains a risky stockto invest in.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Intertek. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
