Is NOW The Time To Buy Fresnillo Plc, Enterprise Inns plc & SVG Capital plc?
Today I am running the rule over three London-listed headline makers.
Toast brilliant returns
Shares in Enterprise Inns(LSE: ETI) have exploded 8% in Tuesday trade following the release of bubbly trading numbers.
The pub operator advised that like-for-like sales advanced 1.5% in the leased and tenanted estate division during the six months to March 19th. As a consequence, Enterprise Inns said that it remains on track to meet its expectations for the full year.
And following today's solid results, Enterprise Inns announced plans to embark on a £25m share buyback programme.
The City expects Enterprise Inns to flip from a 1% earnings dip in the year to September 2016 with a 2% advance in the following period. These figures create mega-low P/E ratios of 4.3 times and 4.2 times correspondingly, very decent value in my opinion given the solid momentum of the firm's growth strategy.
A capital selection
Investor appetite for SVG Capital(LSE: SVI) also bumped higher in today's session, the business last dealing 3% higher from Monday's close.
SVG Capital advised that net asset values surged by double-digit percentages for the sixth year on the spin in the year to January 2016. Net asset values improved 11% from the previous year, the company advised, compared with a 5% slide in the FTSE 350.
Looking ahead, however, chief executive Lynn Fordham advised that "the year ahead is likely to present a number of macroeconomic, geopolitical and financial market challenges and we expect volatility to continue."
The number crunchers expect these problems to push earnings 41% lower in the current period, resulting in a P/E rating of 16.1 times. But a predicted 74% earnings advance in 2018 drives the multiple to just 9.3 times.
Given that SVG Capital has already proved it has what it takes to succeed despite heavy macroeconomic turbulence, I reckon the business could once again surprise to the upside this year and beyond. The investment specialists could prove a canny purchase for stock pickers with the right appetite for risk, in my opinion.
Mammoth risks at current prices
Precious metals play Fresnillo(LSE: FRES) has also leapt in Tuesday business on the back of rising gold and silver values, the business last dealing 3% higher on the day.
Fresnillo has seen earnings dip for four years on the bounce as metal prices have eroded. But earnings are expected to surge 237% and 120% in 2016 and 2017 respectively, according to the City, the result of recent commodity price improvements and vast cost-cutting at the firm.
However, these estimates still leave Fresnillo dealing on massive P/E multiples of 58.9 times and 29.3 times respectively.
I believe that these figures fail to reflect the huge risks facing the business in the near-term and beyond. Silver demand continues to steadily decline, while the prospect of a resurgent US dollar also casts doubt on the strength of precious metal price advances. I believe the risks at Fresnillo continue to outweigh the potential rewards.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.