Stock of the day 10/08/2015 – Balfour Beatty PLC

Whilst Balfour Beatty may be in far more robust health then it was at its 2014 nadir, 2015 has hardly been a year without incident.

The company announces its half year 2015 results on Wednesday.

Since its 10 year lows back in October last year (Balfour’s decline inspired by the one, two, three hit of a rejected merger attempt by Carillion, a profit warning in September and the closure of its Blackpool International Airport subsidiary) the stock has managed to recover a decent portion of its losses, if still a way away from its pre-May 2014 profit warning highs. From that mid-October low of £1.46 Balfour opened 2015 at £2.12, and by the start of March had climbed to £2.53.


(Source: IT-Finance.com 10/08/2015)

This climb came despite another profit warning in January, cautioning that its yearly profits would be £70 million lower than initially thought due to contract issues. However, investors still poured into the stock as January came to a close, and combine this with the mid-February acquisition of a £352 million Welsh wind power deal and the stock had reached its aforementioned £2.12, 7 and a half month high at the beginning of March.

The rest of March, however, couldn’t bring with it as much good news, and that’s putting it mildly. Its full year results at the end of the month revealed total losses of £59 million and the suspension of the company’s dividend, pushing the stock back down to £2.32. Balfour managed to crawl to around £2.40 across April, before the Tory election win in May put the stock on the path to fresh 10 month high of £2.62.

June saw the stock flit between £2.45 and £2.55 before another profit warning (its seventh in two years) carried it back down to £2.06 as the company notified investors about a shortfall of between £120 million to £150 million at the start of July. However, an end of July announcement that the company, in partnership with NG Bailey, had been named the preferred bidder for the £460 million Hinkley Point C nuclear power station contract helped lift the stock away from this 4 and a half month low, with Balfour at a current trading price of £2.45 (IT-Finance.com, 10/08/2015).

In terms of Balfour Beatty’s half year results, the company is expected to post revenue of £3.94 billion and has a consensus rating of ‘Hold’ with an average target price of £2.39.

Monday’s stock news:

Despite losses across much of the sector, Vedanta Resources has posted huge gains this Monday, jumping nearly 10% to a one month high of £4.94 as the company announced it was to resume iron ore mining in Goa. This news couldn’t come at a better time for Vedanta, which has been hovering near 10 year lows of late.

Things weren’t as rosy for esure, which fell by almost as much as Vedanta rose, hitting a 3 month low of £2.36 in the process. The reason for this fall was a set of half year results that saw underlying pre-tax profits slide 21.3% to £46.5 million, with the company pointing to a surge in small injury claims as the reason behind the dramatic decline.