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Star performance by machine tools

Star performance by machine tools Economic trends performance of machine tools this year, it is suggested that the progress Star performance of its individual constituents is well worth monitoring. As shown in Table 2 the shares of three of these nine companies have by machine tools appreciate by more than 100 per cent this year. Of these only John Brown & Co Ltd is rated at below the sector Beginning with this issue, James Millen looks at average, based on net PE at November individual company and industrial sector perfor­ 25, and for that reason still has very mances. Here, he reports on the encouraging strong appeal as an investment oppor­ tunity. progress of a sector which forms the bedrock of The shares are on a net PE of only manufacturing achievement — machine tools. 4.8 — little more than half that of the average for the FT 500-Share Index— WHEN MLR was raised from five to way (up to 91.79 per cent at Novem­ and the net dividend of 7.92 is more seven per cent on November 25 — the ber 25), followed by Machine Tools; than five times covered by earnings. first time interest rates had been Contracting, Construction; Light Elec­ marked up this year — the nine-day John Brown & Co underwent a tronics, Radio & TV; Stores; Building slide in share prices was at last regrouping exercise last year which Materials; Engineering (Heavy); and reversed. The FT Industrial Ordinary looks to be having the desired effect. Office Equipment (see Table 1 for full Index rose 9.3 points to 466. Pre-tax profits to March 31, 1977 details of gains). amounted to £10.9 million, compared That nine-day black spell, caused The Machine Tools sector, though, with £1.8 million the previous year. by industrial unrest, disappointing outperformed all others in the four company news and interest rate fears weeks to November 25, followed Chairman Lord Aberconway has already forecast appreciably higher contrived to produce the biggest set­ closely by Banks and Oils, though all profits for 1977-78 and it is thought back the Stock Market had experienced sectors lost ground over this period. for more than a year. these could well approach £15 million. In view of the consistently strong The question — 'what happens now' — is not easy to answer with TABLE 1 — BEST PERFORMING SECTORS OF THE STOCK MARKET conviction: even highly skilled invest­ FOR THE FIRST ELEVEN MONTHS OF 1977 ment analysts disagree on the inter­ pretation of recent price movements. Sector Index No. Index No. The majority view, however, is that at 31.12.76 at 25.11.77 % Gain we are now in a 'bear' market and that 80.5 0 154.3 9 91.7 9 1. Hire Purchase prices will resume their downward 55.8 8 104.9 9 87.8 8 2. Machine Tools movement. 164.5 0 305.8 8 85.9 1 3. Contracting, Construction The Cambridge-based analysts, In­ 128.4 1 225.4 3 75.5 5 4. Lt. Electronic, Radio, TV 64.4 4 110.43 .181.59 vestment Research, take the view that 5. Stores 64.4 4 6. Building Materials 109.69 180.3 7 the market will fall to a point some 25 63.4 2 165.31 270.1 5 7. Engineering (Heavy) per cent from its highest point this 61.7 9 72.9 1 117.9 6 8. Office Equipment year (549.2), implying a bottoming- 321.1 2 59.8 7 200.8 6 9. Newspapers, Publishing out Industrial Ordinary Index figure 411.7 8 55.0 6 265.5 7 10. Electricals 196.8 5 53.2 9 11. Food Retailing 128.4 2 of about 410. 208.5 0 50.3 8 138.65 12. Property The investing institutions, though, 466.0 0 31.3 8 354.7 0 FT Industrial Ordinary Index are tending to remain reasonably optimistic for equities on the view that the present state of industrial unrest will pass without doing very much TABL E 2 — COMPARATIVE PERFORMANCE OF CONSTITUENTS OF FT ACTUARIES damage to the inflation outlook and MACHIN E & OTHER TOOL S INDEX (JAN 1 T O NOV 25 INC) PE Share that markets will soon recover their 1977 1977 Price Price Net Gross (net) Price poise. High Low 31.12.76 25.11.77 Div Cover Yield 25.11.77 Gain % Company 140 1.73 7.7 1.9 10.3 141.38 1. Wolf Elec. Tools 150 58 58 Despite the sharp reversal in Nov­ 4.8 137.76 2. John Brown 260 98 98 233 7.92 5.6 5.2 ember, the FT Industrial Ordinary 3. R.C.F. Holdings 51 18 18 38 2.72 1.4 11.5 9.4 111.11 Index (the 30-Share Index) had still 4. B.Elliott 119 56 56 107 4.80 3.3 6.8 6.7 91.07 76.56 5. Desoutter Bros. 137 63 64* 113 5.08 3.8 6.8 5.9 appreciated by 31.38 per cent from 6. Jones Shipman 126 64 64 110 4.88 3.0 6.7 7.6 71.88 January 1 to November 25, 1977. But 7. Wadkin 117 69 69 103 5.38 3.6 7.9 5.4 49.28 throughout this year many of the 172 154 9.37 1.5 9.2 9.7 40.00 8. Spear & Jackson 110 110 78 4.83 2.2 9.4 7.4 30.00 9. Jas. Neill Hdgs 96 60 60 individual sectors of the market have consistently performed very much * Adjusted for Scrip issue better than this. NB. Average PE (net) for FT Actuaries Machine Tool Index at 25.11.77: 6.44. Average Gross Yield: 6.16 Average PE (net) for FT 500-Share Index at 25.11.77: 8.58. Average Gross Yield: 5.51. Since the beginning of the year, the small Hire Purchase sector has led the 28 INDUSTRIAL MANAGEMENT http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Industrial Management Emerald Publishing

Star performance by machine tools

Industrial Management , Volume 78 (1): 1 – Jan 1, 1978

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0007-6929
DOI
10.1108/eb056831
Publisher site
See Article on Publisher Site

Abstract

Economic trends performance of machine tools this year, it is suggested that the progress Star performance of its individual constituents is well worth monitoring. As shown in Table 2 the shares of three of these nine companies have by machine tools appreciate by more than 100 per cent this year. Of these only John Brown & Co Ltd is rated at below the sector Beginning with this issue, James Millen looks at average, based on net PE at November individual company and industrial sector perfor­ 25, and for that reason still has very mances. Here, he reports on the encouraging strong appeal as an investment oppor­ tunity. progress of a sector which forms the bedrock of The shares are on a net PE of only manufacturing achievement — machine tools. 4.8 — little more than half that of the average for the FT 500-Share Index— WHEN MLR was raised from five to way (up to 91.79 per cent at Novem­ and the net dividend of 7.92 is more seven per cent on November 25 — the ber 25), followed by Machine Tools; than five times covered by earnings. first time interest rates had been Contracting, Construction; Light Elec­ marked up this year — the nine-day John Brown & Co underwent a tronics, Radio & TV; Stores; Building slide in share prices was at last regrouping exercise last year which Materials; Engineering (Heavy); and reversed. The FT Industrial Ordinary looks to be having the desired effect. Office Equipment (see Table 1 for full Index rose 9.3 points to 466. Pre-tax profits to March 31, 1977 details of gains). amounted to £10.9 million, compared That nine-day black spell, caused The Machine Tools sector, though, with £1.8 million the previous year. by industrial unrest, disappointing outperformed all others in the four company news and interest rate fears weeks to November 25, followed Chairman Lord Aberconway has already forecast appreciably higher contrived to produce the biggest set­ closely by Banks and Oils, though all profits for 1977-78 and it is thought back the Stock Market had experienced sectors lost ground over this period. for more than a year. these could well approach £15 million. In view of the consistently strong The question — 'what happens now' — is not easy to answer with TABLE 1 — BEST PERFORMING SECTORS OF THE STOCK MARKET conviction: even highly skilled invest­ FOR THE FIRST ELEVEN MONTHS OF 1977 ment analysts disagree on the inter­ pretation of recent price movements. Sector Index No. Index No. The majority view, however, is that at 31.12.76 at 25.11.77 % Gain we are now in a 'bear' market and that 80.5 0 154.3 9 91.7 9 1. Hire Purchase prices will resume their downward 55.8 8 104.9 9 87.8 8 2. Machine Tools movement. 164.5 0 305.8 8 85.9 1 3. Contracting, Construction The Cambridge-based analysts, In­ 128.4 1 225.4 3 75.5 5 4. Lt. Electronic, Radio, TV 64.4 4 110.43 .181.59 vestment Research, take the view that 5. Stores 64.4 4 6. Building Materials 109.69 180.3 7 the market will fall to a point some 25 63.4 2 165.31 270.1 5 7. Engineering (Heavy) per cent from its highest point this 61.7 9 72.9 1 117.9 6 8. Office Equipment year (549.2), implying a bottoming- 321.1 2 59.8 7 200.8 6 9. Newspapers, Publishing out Industrial Ordinary Index figure 411.7 8 55.0 6 265.5 7 10. Electricals 196.8 5 53.2 9 11. Food Retailing 128.4 2 of about 410. 208.5 0 50.3 8 138.65 12. Property The investing institutions, though, 466.0 0 31.3 8 354.7 0 FT Industrial Ordinary Index are tending to remain reasonably optimistic for equities on the view that the present state of industrial unrest will pass without doing very much TABL E 2 — COMPARATIVE PERFORMANCE OF CONSTITUENTS OF FT ACTUARIES damage to the inflation outlook and MACHIN E & OTHER TOOL S INDEX (JAN 1 T O NOV 25 INC) PE Share that markets will soon recover their 1977 1977 Price Price Net Gross (net) Price poise. High Low 31.12.76 25.11.77 Div Cover Yield 25.11.77 Gain % Company 140 1.73 7.7 1.9 10.3 141.38 1. Wolf Elec. Tools 150 58 58 Despite the sharp reversal in Nov­ 4.8 137.76 2. John Brown 260 98 98 233 7.92 5.6 5.2 ember, the FT Industrial Ordinary 3. R.C.F. Holdings 51 18 18 38 2.72 1.4 11.5 9.4 111.11 Index (the 30-Share Index) had still 4. B.Elliott 119 56 56 107 4.80 3.3 6.8 6.7 91.07 76.56 5. Desoutter Bros. 137 63 64* 113 5.08 3.8 6.8 5.9 appreciated by 31.38 per cent from 6. Jones Shipman 126 64 64 110 4.88 3.0 6.7 7.6 71.88 January 1 to November 25, 1977. But 7. Wadkin 117 69 69 103 5.38 3.6 7.9 5.4 49.28 throughout this year many of the 172 154 9.37 1.5 9.2 9.7 40.00 8. Spear & Jackson 110 110 78 4.83 2.2 9.4 7.4 30.00 9. Jas. Neill Hdgs 96 60 60 individual sectors of the market have consistently performed very much * Adjusted for Scrip issue better than this. NB. Average PE (net) for FT Actuaries Machine Tool Index at 25.11.77: 6.44. Average Gross Yield: 6.16 Average PE (net) for FT 500-Share Index at 25.11.77: 8.58. Average Gross Yield: 5.51. Since the beginning of the year, the small Hire Purchase sector has led the 28 INDUSTRIAL MANAGEMENT

Journal

Industrial ManagementEmerald Publishing

Published: Jan 1, 1978

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