Investment Column: Ladbrokes remains a solid long-term bet

Cable & Wireless Worldwide; Umeco


Our view: Hold

Share price: 139.5p (-2.5p)

That the Ladbrokes share price fell back after the bookies posted full-year figures may be explained as nothing more than a case of buying on the rumour and selling on the news.

The stock had rallied into the results. Thus it would have made sense for some who had bought in on the hope of positive numbers to bank gains on news of healthy rise in annual operating profits (though the news on current trading was unimpressive).

That is one view. Another doing the rounds was that the market was unmoved by plans to pump £50m into developing new software over the next two years. The chief executive, Richard Glynn, declined to comment on the progress of takeover talks with 888, but said Ladbrokes was focused on engendering organic growth.

We suspect that the weakness is caused by a combination of the two views. We do, however, think that the former factor was the bigger driver. Organic growth is a good thing and we cannot see why the shares should be penalised for management's focus on the long term.

The last time we looked at Ladbrokes we held back from buying as it appeared fairly priced. At current levels it trades on forward earnings multiples of around 10.7 times, supported by a yield of nearly 5 per cent, according to Panmure Gordon. So it continues to command a decent valuation although it is far from pricey. Given the news on trading and the recent rally we might have been tempted to sell. But management's drive gives us confidence. Hold.

Cable & Wireless Worldwide

Our view: Hold

Share price: 75.5p (+1.95p)

Cable & Wireless Worldwide (CWW) has had a bit of a rollercoaster ride since it split from Cable & Wireless Communications last year. The telecoms provider's shares took a beating in the summer over Government spending fears but has recovered partially as the dust appeared to have settled and it signed new clients.

CWW released an interim statement yesterday although keen followers of the stock would not have learnt much. The brief release said the business "continues to trade in the current year in line with expectations". More will emerge at the full-year stage.

The nerves around the sector had seen the shares drop 20 per cent on one day in the summer after it warned of a "significant slowdown" in Government spending. About 12 per cent of its business comes from the state and by November it was able to tell investors that the cuts would not hit it as hard as feared.

Yesterday's statement did say the company had made progress during the second half with further Government and business wins, as well as the renewal from some of its most important contracts in the global business.

The company has concentrated on building a strong data network to offset the decline in revenues from voice traffic and the analysts at Killik believe it is well placed to capitalise on industry trends. Moreover, the update was positive and analysts believe investors will be reassured after the profit warning last year. RBS has the stock on a value of almost 10 times forward earnings. That looks about right to us. Hold

Umeco

Our view: Hold

Share price: 506.6p (-6p)

Trading is good at Umeco, the supply chain services and advanced composite materials group. An update yesterday showed revenues up by 15 per cent to £153m in the four months to the end of January, and the order book at the end of last month standing a £261m, nearly £20m higher than it was at the end of September.

It was not all good news. There will be a hit from the delays to the Boeing 787 programme. And the process materials business may feel a growing squeeze from rising commodities prices.

But the biggest factor in the company's future is the potential sale of its Pattonair supply chain business, which outsources components for aerospace customers, particularly Rolls-Royce.

There was little on the issue yesterday: non-exclusive discussions continue, "which may or may not lead a sale".

But while margins are being squeezed which is dragging down the rating of the company as a whole, there is strong likelihood the deal will be struck. Umeco's stock has already been on the rise for the past year; freed from the weight of Pattonair, it will go higher. Buy.

News
Food blogger and Guardian writer Jack Monroe with her young son
people
News
people
News
peopleSinger tells The Independent what life is like in rehab in an exclusive video interview
Arts and Entertainment
booksPhotographer Richard Young has been snapping celebrities at play for 40 years - but he says it wasn’t all fun and games...
PROMOTED VIDEO
News
i100
Sport
Aguero - who single-handedly has kept City's Champions League dreams alive - celebrates his dramatic late winner
footballManchester City 3 Bayern Munich 2: Argentine's late hat-rick sees home side snatch vital victory
News
Muhammad Ali pictured in better health in 2006
peopleBut he has enjoyed publicity from his alleged near-death experience
Arts and Entertainment
Tony breaks into Ian Garrett's yacht and makes a shocking discovery
TVReview: Revelations continue to make this drama a tough watch
News
news
News
ebooksNow available in paperback
Arts and Entertainment
TV
News
The assumption that women are not as competent in leadership positions as men are leads to increased stress in the workplace
science... and it's down to gender stereotypes
Life and Style
The racy marketing to entice consumers to buy Fairlife, which launches in the US next month
food + drink
Arts and Entertainment
Inner sanctum: Tove Jansson and friends in her studio in 1992
booksWhat was the inspiration for Finland's most famous family?
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Citifocus Ltd: Product Development - Asset Management

£Attractive: Citifocus Ltd: High calibre individual with significant product d...

Citifocus Ltd: Credit Ratings - Banking Sector

£Negotiable: Citifocus Ltd: Leading global bank seeks experienced credit analy...

Citifocus Ltd: Economic Crime Investigation & Analysis

£Attractive Package: Citifocus Ltd: High calibre individual with a high degree...

Citifocus Ltd: Snr Risk Analyst - Capital & Liquidity

£Attractive: Citifocus Ltd: High calibre individual with superior academics an...

Day In a Page

Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
Phil Hughes head injury: He had one weakness – it has come back to haunt him

Phil Hughes had one weakness – it has come back to haunt him

Prolific opener had world at his feet until Harmison and Flintoff bounced him
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital