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Real-Time news about Tomkins (London Stock Exchange): 0 recent articles
|wad collector: From the Mail,sim story in Independent
Event: Interim Results
Pretax loss: £69.6m, +89%
Dividend: 3 cents (1.8p)
One-year share price performance: +25%
The engineer Tomkins has suffered badly at the hands of the collapsing US automotive market.
But there are now signs it may have entered recovery mode.
The interims reveal that sales volumes were down sharply.
But in June and July the rate of decline slowed markedly and analysts predict that business will continue to improve.
The loss before tax included £74m of restructuring costs and another £20m of impairments.
Leaving them to one side for a moment, and appears the underlying performance was actually a lot better than the City had been predicting.
The dividend, which is paid in US cents, has been severely pruned back to 3.5 cents a share from 11.02 cents.
But this is again is in line with forecasts and allows the metal basher to make a full-year payout of 10 cents - which is what it promised investors.
Yet all this and more is factored into the share price, which has almost doubled since hitting a year low in November.
Tomkins is now valued at heady 37 times this year's earnings. This is just too expensive, even if 2009 proves the low point in the cycle.
Verdict: Too dear
I shall continue to hold.|
The Investment Column: Tomkins blown off course by strong US headwinds
by Cliff Feltham
Friday, 22 February 2008
Our view: Buy
Share price: 189.5p (+3.75p)
Tomkins was a bit of a conglomerate hotchpotch best known for making guns and buns before exiting to concentrate on supplying components for the motor and construction industries. A pity, then, that both are under the cosh at the same time.
Faced with what it calls US headwinds, it has been trimming its sails, selling unprofitable bits of the group, shutting plants where demand is weak and costs are high, and generally tightening up overheads.
The measures have proved timely at least for now. Profits for last year came in at £262m, up 7.3 per cent on slightly lower sales. Tomkins sells plastics baths, doors, windows and pipes to the residential housing market in the US which has been weak and is due to get weaker still.
Housing starts will fall 20 per cent this year. The industrial automotive division makes transmission belts, fluid hoses, wipers and radiator caps but will be tested by a sharp slowdown in the number of cars leaving US assembly lines this year.
The group has been pushing hard in emerging countries not only to exploit new opportunities but to provide a buffer for any decline in mature markets. Sales to China, where it opened seven plants last year, advanced 37 per cent, India 32 per cent, and Eastern Europe 25 per cent. Around 20 per cent of its manufacturing is now in low-cost countries.
Tomkins is becoming more innovative launching environmentally friendly products and those that will help automotive customers meet fuel economy and emission requirements. For example, a remote tyre pressure gauge, originally developed as a safety feature for US cars, is now in demand by European manufacturers for its fuel saving features.
A drive to cut costs across the group has targeted annual savings of £50m by 2010. With 60 per cent of its business in the US, it is exposed to dollar weakness against sterling which lopped 6.1 per cent off sales and over £19m off profits. In future the results will be reported in dollars to give a more accurate idea of the underlying performance.
As expected, the group held the final dividend at last year's level providing strong support for the shares which are trading on an attractive yield of 7.3 per cent. Buy.|
|wad collector: A 14% profit fall does not equate to a 14% price fall, not just because of the vagaries of the market, but because so much of the price is about confidence in future earnings .
So the effect on the share price cannot be calculated ,it can only be guessed.|
|criston3: If the concensus view was £93 million profit for the third quarter, one third of which is expected in September, then profits for July & August were down getting on for 25%. On that basis the 14% share price drop could have more to go.|
|topvest: It's only 5 weeks since a positive trading update with the results and so they will have lost a bit of credibility here. Not very impressed! I wouldn't expect a particularly strong recovery from that sort of bodge-up. Could be taken out I suppose as the share price is not expensive.|
|nil pd: I almost bought this a.m. based on the "two buy recs" post (but I couldn't find them) - also with a view to the share price history and the interims yesterday. Wish I had bought though. It looks oversold IMO, so may take a little dippy tomorrow.
Any views much appreciated.|
|2hugh: Tomkins has been a good stock with strong dividend yield and now a good share price this type of stock should weather most storms in the market|
|lbo: Well at least the share price is heading back down like they said!|
|lbo: They are also underated because the fundamentals indicate so (Valuation remains extremely undemanding. Tomkins is trading on 2006e P/E of 12x, EV/Sales of 0.8x (Vs 9-10% current EBITA margins), dividend yield of 4.8% and a DCF remains >300p) and also because of the recent strength in the dollar which will enhance earnings also as it generates the vast majority of its underlying earnings in dollars.Tomkins generates some 80% of EBIT from subsidiaries in $ related territories and of note Tomkins has a 7.5% EPS Sensitivity to a 10% move in £/$ Exchange Rate. A case can also be made that they are underdated by the fact the shares have considerably lagged other UK listed $ sensitive stocks and its European capital goods peer group.
Also whilst 2004 has seen Tomkins face tougher end markets than many had anticipated (lower GM production rates in the US and little recovery to date in US commercial construction markets) its believed that the outlook into H2 2005e and beyond is more encouraging and such the negative eps momentum that has surrounded the stock over the past year or so is about to lift which should be to the positive impact for the share price. Many believe that Tomkins will be able to achieve and sustain close to double-digit EBITA margins and outperform its end markets.
Some analysts have recently re-iterated their Outperform recommendations on Tomkins with a retained 290-300p TP. Following recent Q2 2005 results which demonstrated the ability of the group to maintain robust profit margins despite tough end markets, they have increased their eps forecasts for 2005E by 7% to avge. 22.16p.
Many people see that the lacklustre share performance since the beginning of 2004 is largely explained by negative eps momentum from significantly lower US automotive production schedules, some input/output cost squeeze and the weaker US$. In addition cashflow has been hampered by high capital investment towards the longer-term growth conduits of the group such as Stackpole. For this reason Capital spend appears to be peaking which should remove any lingering concerns on dividend per share sustainability. So many believe that eps momentum is turning and the weaker automotive production that has impacted Tomkins in recent quarters should be easing and aggregate lfl sales should be supported by the still strong industrial and construction markets.
Diversified group complicates any analysis of Tomkins with the main attractions being the dominant market position of some of its franchises particularly in powertrain and air systems components together with its capability in the industrial and automotive aftermarket. Many believe that Tomkins has scope to outperform its end markets and to maintain through-cycle double-digit EBITA margins. Many continue to see scope for M&A activity aimed towards improving the growth and return profile of the group (witness 4 bolt-on acquisitions completed in past 10 months)
Total return attractions remain intact for Tomkins with a near 5% dividend yield for 2006e...Many stress that cashflow should improve with capital spend likely to fall somewhat. On FY 2006e estimates Tomkins trades on P/E of 11.9x, EV/Sales of 0.79x (Vs EBITA margins of 9.6%), EV/EBITA of 8.3x, dividend yield of 4.8% and FCY of 5.9%.
But hey who knows but I do suspect a rise at the interims!|
|peter birch: Is Tomkins share price not at risk because of the marked downturn in the US manufacturing car market with several component suppliers calling it a day? Tomkins have a considerable interest in the automotive components business with their powertrain, fluid and wiper systems and other automotive products for which they are a major supplier to the American market.|
Tomkins Plc share price data is direct from the London Stock Exchange