Financial Trading Blog
Stock of the day 07/10/2015 – Tate & Lyle PLC
After a tumultuous 2014, Tate & Lyle started the New Year at £6.10, and had soon risen to £6.81 by the end of January. That high, however, was to quickly become a distant memory, as the company issued its third profit warning in 12 months at the start of February, this time with the sugar and oil price slump blamed for Tate & Lyle’s poor performance. This took the stock all the way back to £5.73, effectively a 14% drop in one day of trading, and Tate & Lyle’s lowest prince in 6 weeks.
From this low the stock managed to climb beyond the £6 mark, boosted by an April trading statement that promised a new strategy to deal with the wealth of troubles Tate & Lyle had been suffering since 2014. The spectre of a Splenda-saving plan helped lift the stock to £6.50, only for the restructuring reveal, the key components of which included the sale of its remaining bulk ingredients businesses in Europe and a scaled-back sucralose operation, to put Tate & Lyle back on a declining path.
(Source: IT-Finance.com 07/10/2015)
Dipping below the £6 threshold on the eve of its full year results at the end of May, those figures merely added fuel to Tate & Lyle’s sell-off fire. A 30% fall in pre-tax profits (to £224 million) was joined by a dismal £51 million in gains (down from £277 million year-on-year) once the company’s pricey restructuring costs were factored in.
A near uninterrupted fall across June, and stagnation for most of July, saw Tate & Lyle trading between £5 and £5.20, its lowest price since 2010. There was, however, some rare good news at the end of July, when the company announced that it had begun to ship its new sweetener Dolcia Prima to the US and Chile, whilst stating that Splenda had seen a slightly improved performance in the company’s first quarter.
This update put Tate & Lyle back on track and, barring a China-inspired excursion to below £5 at the end of August and despite news of £18 million in damages to be paid to American Sugar Refining, is now at £5.80 (IT-Finance.com, 07/10/2015), the stock’s highest price since the start of July.
Investors will be hoping to see a profit-recovery after the restructuring costs incurred earlier in the year, alongside a more robust performance from Splenda after that slight pick-up in Q1.
Tate & Lyle has a consensus rating of ‘Hold’ alongside an average target price of £6.05.
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
