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The Expert View: Balfour Beatty, Ashtead and Time Out

Our daily roundup of analyst commentary on shares, also including Elegant Hotels and Marston’s.

by Daniel Grote on Dec 13, 2017 at 05:00

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Key stats
Market capitalisation£1,905m
No. of shares out690m
No. of shares floating687m
No. of common shareholdersnot stated
No. of employees21829
Trading volume (10 day avg.)3m
Turnover£6,923m
Profit before tax£130m
Earnings per share0.29p
Cashflow per share7.75p
Cash per share111.45p

Balfour Beatty offers recovery potential

A short but sweet full-year update from Balfour Beatty (BALF) has reinforced Numis’ view that the infrastructure group offers strong recovery potential.

While the update declared the group was trading in line with expectations, analyst Howard Seymour took heart from the positive tone.

‘Body language about confidence to attain industry standard margins and further increase balance sheet strength are both important – and further illustrates why share price weakness on the back of Carillion’s woes is illogical,’ he said.

‘We retain the view that Balfour has the strongest recovery potential in the sector couples with balance sheet strength, which makes it a key pick on a recovery basis in the construction sector in the coming year.’

Seymour rates the shares a ‘buy’ on a 350p target price. The shares rose 1.5% to 276.2p yesterday.

Key stats
Market capitalisation£10,336m
No. of shares out499m
No. of shares floating487m
No. of common shareholdersnot stated
No. of employees14610
Trading volume (10 day avg.)3m
Turnover£3,187m
Profit before tax£1,631m
Earnings per share100.02p
Cashflow per share226.81p
Cash per share1.26p

Ashtead still offers value after rally

Shares in Ashtead (AHT) have rallied strongly over the last six months but Peel Hunt believes the tool hire group continues to offer value.

Analyst Andrew Nussey maintained his ‘buy’ rating and upped his target price to from £18 to £22, reflecting a 25% rally over the last six months that has taken the shares to £20.61.

But Nussey argued they still had further to go. ‘The shares have performed well over the last six months as investors started to anticipate further upgrades from strengthening markets (volume and rate), operational outperformance and bolt-on mergers and acquisitions,’ he said.

‘However, on our upgraded estimates, the rating (15.3 times April 2019 earnings) still fails to reflect the pace of growth, potential from the Project 2021 [five-year plan] expansion and underlying business quality / positioning.’

Key stats
Market capitalisation£179m
No. of shares out133m
No. of shares floating53m
No. of common shareholdersnot stated
No. of employees390
Trading volume (10 day avg.)m
Turnover£36m
Profit before tax£-11m
Earnings per share-18.88p
Cashflow per share-15.15p
Cash per share38.18p

Time Out’s Chicago news goes under the radar

Berenberg believes that media group Time Out’s (TOMT) leasing of a market in Chicago, set to open in 2019, has gone unnoticed by investors.

Time Out runs a number of markets housing local restaurants in cities around the world. The group funds the initial capital expenditure for restaurants and earns a revenue share of food sold.

Analyst Benjamin may said the Chicago news ‘seemingly has gone under the radar of many investors, with the shares showing little reaction to this newsflow’.

‘However, we continue to believe that clarity on this opening, alongside the recently announced Boston market could add double-digit upside to our current 2019.20 earnings estimates.

‘With scope for upgrades and the recent pullback in the share price, we reiterate our “buy” recommendation and price target of 200p.’ The shares were flat at 134p yesterday.

Key stats
Market capitalisation£75m
No. of shares out89m
No. of shares floating73m
No. of common shareholdersnot stated
No. of employees788
Trading volume (10 day avg.)m
Turnover43m USD
Profit before tax15m USD
Earnings per share0.12 USD
Cashflow per share0.14 USD
Cash per share0.03 USD

‘Buy’ Elegant Hotels on flight boost

Liberum believes 8%-yielding Elegant Hotels (EHGE) can receive a boost from Virgin Atlantic’s launch of direct flights from Heathrow to Barbados, starting today.

Elegant Hotels operates seven resorts in Barbados, where 11 Virgin Atlantic flights a week will now land, from three UK airports.

Analyst Wayne Brown rates the shares a ‘buy’ on a £100p price target. The shares fell 2.2% to 84.6p yesterday.

‘The shares offer an 8% dividend yield, and valued at c.33% discount to our net asset value calculation,’ he said.

‘The market share the group commands on Barbados, its sales and marketing office and its significant asset-backing all support a much higher valuation, let alone the opportunity to see material earnings upgrades over the next few years.’

Key stats
Market capitalisation£754m
No. of shares out634m
No. of shares floating616m
No. of common shareholdersnot stated
No. of employees13500
Trading volume (10 day avg.)4m
Turnover£992m
Profit before tax£214m
Earnings per share14.08p
Cashflow per share20.59p
Cash per share27.54p

Deutsche ups Marston’s target

Deutsche Bank has raised its target price on Marston’s (MARS) after solid results from the brewer and pub operator last month.

Analyst James Wheatcroft upped his price target to 115p from 100p and maintained his ‘hold’ rating. The shares were down 2% at 118.6p yesterday but have rallied strongly since it unveiled 2017 results.

The analyst unveiled his 2020 forecasts for the group, predicting revenues marginally higher than consensus but slightly lower earnings.

He has left his 2018 estimates, of 2.3% growth in revenues, with earnings just 0.3% higher, unchanged.

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  • Balfour Beatty PLC (BALF.L)
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  • Ashtead Group PLC (AHT.L)
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  • Time Out Group PLC (TMOT.L)
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  • Elegant Hotels Group PLC (EHGE.L)
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  • Marston's PLC (MARS.L)
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