Redrow(LSE: RDW) is surging today after the companys first half results beat expectations. Indeed, the homebuilder announced that, for the six months to 31 December 2014 revenue jumped 54%, pre-tax profit had surged 92%, and earnings per share had nearly doubled to 19.9p.
Off the back of these upbeat results, management has decided to pay aninterim dividend of 2pper share, double last years payout.
Looking ahead, the company reported thatcustomer traffic and sales to date in 2015 are encouraging. So, the group could be in line to report a strong year all round if the first halfs performance continues.
Whats more, as todays release smashed City expectations, Redrow now looks severely undervalued. For example, the City was expecting the company to report earnings per share of 35.4p for its 2015 financial year. However, todays numbers show that the company is likely to report earnings of around 40p per share for its 2015 financial year.
On that basis, even after todays double-digit gain, the group is only trading at a forward P/E of 8.2.
Redrow could be the perfect company for any investors seeking an undervalued play on the UKs booming house market.
All-share merger
TeleCity(LSE: TCY) is the best performing stock in London at time of writing as the company has announced thatreached a non-binding agreement on an all-share merger withInterxion Holding N.V..
TelecityGroup, is a provider of data centres in key European cities, while Interxion is a European provider of cloud and data centre colocation services, so a merger between the two companies makes sense. Demand for data centre services is evolving rapidly, and the scale, of the enlarged business, will help lower costs and improve the offering to customers.
And for TeleCity shareholders, this deal is great news. Its estimated that synergies from the deal will save the enlarged group 600m, a sizeable sum around six times TeleCitys annual pre-tax profit.
Still, as of yet information regarding the deal is thin on the ground. However, looking atInterxion and TeleCitys historic figures, the enlarged groups appears to have bright prospects. Indeed, for the past five years, both TeleCity and Interxion have reported revenue growth in the region of 10% to 15% per annum.
When combined, the enlarged group should be able to accelerate this growth rate as customers are drawn to the improved product offering. TeleCity is currently trading at a forward P/E of 22.5, which looks expensive at first glance but the companys rapid growth is worth paying a premium for.
Your decision
Still, as always, it remains your decision whether you buy, sell or continue to hold TeleCityor Redrowfollowing this news and I strongly recommend that you do your own research before making any trading decision.
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Rupert Hargreaves has no position in any shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
