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Real-Time news about Eaga (London Stock Exchange): 0 recent articles
|keywestcopy: This is the first share i have owned that is now party to a takeover, what is the normal procedure? What is the share price likely to do? Do you sell or take shares in the new company? .... any tips would be appreciated.|
|rk23: Keen on cheap, high yielders
In the past year or so, my own inclination - and the advice I have had from my IFA - has been to "buy on the dips" in the equity market. But the dips have been few and far between. So I haven't quite got round to it with any great enthusiasm, with the result that my portfolio is still around 11 per cent in cash.
Outside of my pension fund and Sipp, where I did recently reduce the cash holdings with positive results, and some additional investments into my coin collection, equity investments I have made recently have tended towards the higher yielding end of the spectrum.
The three holdings I have added - National Grid (LSE: NG.L - news) , Merchants Trust and Local Shopping REIT - are all now in profit and have collectively more than made up for a hefty loss incurred in a premature investment in BP at the height of Gulf of Mexico oil well debacle.
Given the success of this policy, I am wondering whether to do more of the same. The problem is that many of the stocks with decent yields and respectable cover fall into the insurance category.
Catlin, with a cover of 3.6 and a projected yield of 7.8 per cent, might ordinarily seem attractive, as might Novae (cover of 3.3; yield of 6.3 per cent) or Beazley (2.5 and 6.4 per cent) or even Aviva (2.3 and 6.4 per cent). But I am cautious about investing in this sector. Despite having worked for two insurance groups, this is neither an area that I pretend to understand in any depth, nor one where I have had any conspicuous investment success.
Instead, I am turning to companies that appear to be casualties of the recent public spending review, but where the share price action may have been excessively negative.
One obvious candidate here is Eaga (LSE: EAGA.L - news) , the energy efficiency business. It derived a considerable amount of revenue from the government's "warm front" scheme, designed to foster energy efficiency measures in poorer households. Funding for this scheme has been cut to a third of its previous level. I make no further comment on the trivial amount of money that this rather mean-spirited decision has saved.
While revenue from the Eaga division, of which the "warm front" initiative formed a big part, represented more than half of the company's total revenue, in profit terms it was less important, contributing only around a fifth of operating profits. Nonetheless, while it is possible that Eaga may be able to cut costs to reduce the impact of the lost revenue, there is little doubt that profits will suffer. However, this is not really the point. The question with high yield investing is whether or not the dividend that generates the yield is secure.
Here, one can perhaps be more confident about Eaga. The payout is currently covered three times. Even if profits were cut in half, the cover for the dividend, though not generous, would still be adequate. The cost of the dividend, at £5.7m, is not large in the context of a company that generated £26m in operating cash flow last year and which, in addition to the dividend, spent £4.8m on share repurchases.
Also, the employees are large shareholders, both directly and through the employee share trust, which also argues against a cut. Finally, the group has no borrowings and substantial cash balances. All of which makes a near-halving in the share price in the past few weeks look like something of an overreaction. So does this add up to a risk worth taking? I haven't made up my mind yet.
Peter Temple is an active private investor writing about his own investments. He may have a financial interest in any of the companies and trading strategies mentioned.|
|nicobellic: Not quite as rosy as you make out. I honestly don't think the CNT situation has had any effect here - look at the share price since float and you'll see it's avg is c140p. Probably undervalued at present but with good reasons:
People were more worried by the loss of WF's £1.5bn than they were about dso's £500mn. I'd remained worried as it's unlikely that WF will be replaced with a scheme rolled out in a similar way - I expect it will be via local initiatives rather than centrally. Large number of MP's unhappy with WF/eaga and DECC aren't likely to forget the volume of criticism coming from the heating and insulation lobbies about the way contractors have been treated.
CERT extension isn't the answer either - BG have decided to enter the insulation marketing and will take market share and be big competition.
CNT will probably lose some of their contracts, but with a c3% profit margin on contracts such as FM/emergency or planned repairs I'm not convinced I'd want eaga to take them. Cash in the bank shouldn't be wasted on resourcing this.
BPO - have eaga won anything yet? What happened to the 'real partnership' with one of the northern city councils? FA.|
|shauney2: In line really. Some instalations have slowed. Won't do much for the share price for now but future tie ins with energy or social housing look on the cards.
|needs_to_be_perservd: i think it will be anytime next week and i wont be suprise if its any earlier, but i was assured next week diff for trading update and thy cant understand why the share price gone down after this positive announcement nor can we|
|simon gordon: I wonder if it is going to the 80p area?
I can't see any near term catalysts to change the trend.
I think it is the brittle business model that is now being factored into the share price.|
|janes bond: I sometimes wonder if some folk buy first and then think later. The writing's on the wall, for the time being. It's a falling knife and we know what happens with those. The company is geared to the government and we know what a 2 & 8 that's in. It's a relatively new kid on the block and with the share price not proving a winner from day one, many investors, myself included, will be staying on the side lines watching and waiting for the right time to make a grab for some when the coast looks clear.|
|davius: In for a small punt at just under 123p. I'm surprised that the director buys didn't offer a little more support to the share price but it 'feels' like it might have bottomed out. Not looking for anything spectacular in the short term but would hope to see the share price heading back to 130p...|
|simon gordon: eaga upgraded to "hold"
04/17/08 - Landsbanki Securities
LONDON, April 17 (newratings.com)
Analysts at Landesbank Securities upgrade eaga PLC (EAGA-GBX) from "reduce" to "hold," while reducing their estimates for the company. The target price has been reduced from 160p to 145p.
In a research note published this morning, the analysts mention that the company's social housing activities have been adversely affected by a rise in costs of fuel and copper and improper estimation by the company of the infrastructure and build costs required for social housing contracts won in the previous year. There is substantial uncertainty surrounding the company's ability to recover a rise in costs, the analysts say. The upgrade in the rating follows the recent decline in the company's share price, Landesbank Securities adds. The EPS estimate for FY08 has been reduced from 10.9p to 10.4p.|
|cyberbub: hmm, i bought these at 200, got out at 180, pleased I did! there is something wrong with the share price, i suspect it is lots of employees selling. most employees got a huge £100K share of the company when it floated, but I suspect that most of them will be inexperienced shareholders, and panic-selling now. remember that EAGA are based in Newcastle (like me), where there has been wide coverage of the share price collapse in Northern Rock. some employees will read the headlines about economic storm-clouds gathering and decide to take a 30% loss, it's still free money to them. but the long-term prospects for this company have to be very good, in a growth industry. if you come back in 12-18 months i would expect it to be back at 250 or higher. personally if i had any funds iw ould be looking to buy back at maybe 120p.|
Eaga share price data is direct from the London Stock Exchange