Are Growth drivers on track for these 2 FTSE 100 Stocks - Melrose Industries PLC & Meggitt PLC

  • Nov 21, 2019 GMT
  • Team Kalkine
 Are Growth drivers on track for these 2 FTSE 100 Stocks - Melrose Industries PLC & Meggitt PLC

Melrose Industries PLC

Melrose Industries PLC (LON: MRO) is the UK-based company, which owns manufacturing and industrial businesses with leading market positions mainly operating in several geographical regions and sectors. The company finances its acquisitions through the low level of leverage and develops the businesses by a mix of investment and improved management focus and sells them and returns the proceeds to shareholders. The company's businesses include Nortek Air & Security, Powder Metallurgy, Aerospace, Automotive and other industrials like Brush Turbogenerators.

MRO - Latest News

On 1st October 2019, Funmi Adegoke joined the board of the company as an independent non-executive Director. As per the company announcement, Funmi is well experienced in leading legal teams, especially in large multi-nationals and Bombardier.

MRO - Trading Updates

On 19th November 2019, the company published a press release to announce a trading update for four months from 1st July 2019 to 31st October 2019. The company attained sales growth of over 5% in the reported period compared to the same period last year in the aerospace segment. However, from 1st July 2019 to 31st October 2019, sales were down 5% year-on-year in the Automotive sector, due to the temporary effect of the General Motors strike in the US. Additionally, Powder Metallurgy segment was impacted more than Automotive segment due to the temporary influence of the General Motors strike, which led to a sales decline of 13% in the period compared to the same period last year. The Nortek Air & Security segment though showed improvement in year-on-year trends.

MRO - Financial Highlights for H1 FY19

The adjusted revenue of the company increased to £6,002 million for the first half of the fiscal year 2019, that is an increase of 102.01% as compared to £2,971 million in H1 FY2018. The adjusted operating profit of the company was recorded at £539 million in the first half of the fiscal year 2019 as compared to £284 million in H1 FY2018, an increase of 89.8%. The underlying PBT (Profit before tax) for the first half of the fiscal year 2019 was up by 75.8% to £429 million as against £244 million in H1 FY2018. The statutory basic earnings per share of the company stood at Negative 3.1pence in the first half of the fiscal year 2019 versus negative 10.6pence in H1 FY2018. However, the Adjusted diluted earnings per share of the company stood at 6.7pence in the first half of the fiscal year 2019 versus 6.0 pence in H1 FY2018.

Source: Company Website

MRO - Share price performance

While writing (as on 21st November 2019, at 19:30 GMT), MRO shares were trading at GBX 217.80 per share; down by 0.91 per cent as compared to the previous day closing price level. The company's total market capitalisation was approximately £10.68 billion.

MRO shares have made a high of GBX 227.70 (as on 19th November 2019) and a low of GBX 145.94 (as on 11th December 2018) in the past one year. At the current price point, the company's shares were trading 4.34 per cent below the 52-week high price point and 49.23 per cent above the 52-week low price point. The company's stock beta is 1.64, which makes it more volatile as against the benchmark index.

MRO - Outlook

The company is in the process of acquiring a leading player in 3D printing. This acquisition is expected to be completed by the year-end and could further expand Powder Metallurgy's abilities to become a prominent global player in this fast-expanding and energising market. The aerospace division of the company during the first half performed better in comparison to the Automotive and Powder Metallurgy segment, however, the Powder Metallurgy segment too is expected to grow with the proposed acquisition.

Meggitt PLC

Meggitt PLC (LON: MGGT) is the UK based manufacturing company of high-performance components. The company focuses on three core sectors which are Energy, Defence and Aerospace. It has over 12000 employees, and its businesses are spread across 5 continents and 16 countries. The unique technology and products of the company are supported by deep intellectual property, across a wide range of applications.

MGGT - Latest News

As per company release on 19th November 2019, it has signed $130 million agreement with the defence Logistics Agency for six years. As per the deal the company will provide fuel bladders.

MGGT - Trading Updates

On 12th November 2019, the company published a press release to announce a trading update for the third quarter and for the revenue guidance for the year to 31st December 2019. The company reported that the revenue of Original Equipment and Civil Aerospace strengthened by 4% in the 3rd quarter. Additionally, the defence segment revenue grew by 20%, whereas the energy segment revenue increased by 26%. The company continued witnessing the benefits of the strategic initiative, and improved performance of Engine Composite. The company also made savings in purchase costs and is making good progress on combining global footprint of four existing UK sites in 2020.

MGGT - Financial Highlights for H1 FY19

The Reported revenue of the company has increased by 12.5% to £1,071 million for the first half of the fiscal year 2019 as compared to £952 million in H1 FY2018. The reported operating profit of the company was up by 6.2% and recorded at £161 million in the first half of the fiscal year 2019 as compared to £151 million in H1 FY2018. The Reported PBT (Profit before tax) for the first half of the fiscal year 2019 was £145 million as against £136 million in H1 FY2018, that is an increase of 6.6%. The statutory basic earnings per share of the company stood at 7.3pence in the first half of the fiscal year 2019 versus 11.7pence in H1 FY2018. However, the Underlying earnings per share of the company rose to 14.7pence the first half of the fiscal year 2019 versus 13.9 pence in H1 FY2018. The Free cash flow also improved by 81.48% to £49m due to sale of land and buildings.

Source: Company Website

MGGT - Share price performance

While writing (as on 21st November 2019, at 19:30 GMT), MGGT shares were trading at GBX 631.80 per share; down by 0.47 per cent as compared to the previous day closing price level. The company's total market capitalisation was approximately £4.93 billion. MGGT shares have made a high of GBX 650.47 (as on 19th November 2019) and a low of GBX 456.10 (as on 3rd January 2019) in the past one year.

At the current price point, the company's shares were trading 2.87 per cent below the 52-week high price point and 38.52 per cent above the 52-week low price point. The company's stock beta is 0.75, which makes it less volatile as against the benchmark index.

MGGT- Outlook

The civil markets outlook of MGGT is good because of growing delivery of large jets and the company expects the organic revenue will grow between 6% and 7% for the full year. The scope of the defence market has improved as the spending of the US Department of Defence is expected to grow at around 3% in the coming years.

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