Down another 11.5p to 212.5p yesterday, Tomkins' shares have failed to recover their pre-RHM status, underperforming the stock market by a over a third since counter-bidding Hanson in the autumn.
Continued hostilities in the 'bread wars', provoked by the big supermarket groups to break the power of Associated British Foods and RHM, have left their mark.
The margin of 4.5 per cent implied by RHM's maiden five-month contribution of pounds 30.1m to operating profits is a good point below those last reported when RHM was independent.
Tomkins points to seasonal effects and more conservative accounting. But there is no disguising the pressures on margins from hefty price discounts to customers at a time when wheat costs have risen by 20 per cent in the wake of sterling's devaluation.
There should be some relief as the current year progresses once Tomkins' cost-cutting programme takes effect. So far it has shed 2,000 jobs, reducing bakery capacity by 8 per cent, and is phasing out RHM's main head office.
Only pounds 8m of Tomkins' pounds 90m provision against RHM had been used by the end of April and any cost savings to date were offset by the disruption caused by closures.
If it has not enhanced Tomkins' earnings, at least RHM has not diluted a 4 per cent rise in the year to 1 May. As it is, Tomkins' proud record of consistent growth in earnings per share since 1984 was only maintained last year by a heroic performance from its industrial products division.
Profits here soared by 36 per cent thanks to buoyant US markets in drainage, bathroom ware and recreational vehicles and mobile homes, the last boosted by weather damage. Tomkins argues this is a clear illustration of how sensitive its profits are to an increase in demand.
But there is precious little sign of improved demand in fluid controls and industrial distribution - about a quarter of the enlarged group's sales - where volumes have slipped and margins and profits have fallen. The US provided the only other significant good news with an upturn in demand for bikes and lawn mowers.
The current financial year is likely to provide something of a re-run of last year, with the exception that the full benefits of a higher dollar, when US earnings are reported in sterling, will come through as previous hedges unwind.
Pre-tax profits in the pounds 250m to pounds 260m range imply a prospective p/e of 14, in line with the market. But Tomkins should be a big beneficiary of economic recovery, a fact disguised by its impressive track record through the recession, and RHM may yet prove to be a far from half- baked idea. On balance, Tomkins is worth buying.Reuse content