It is the FX impact that concerns me at the moment, not as straight forward as weak sterling equals better earnings due to overseas bias. The Mexican Peso in particular, which a lot of the sales to the US drinks manufacturers are in, is at an all time low. The visibility of this effect in the accounts is poor - except for the company stating that hedges to some degree and MXN is 2nd most important currency after USD.
I would also view NAFTA break up as a risk, as could slap on a tariff on those exports into the US. This won't happen overnight when Trump comes in, but he has already put some direct pressure on US car manufactures looking to build their new plants south of the border and had go at BMW recently to the same effect.
Some of the value metrics are attractive but not without political risk. The FT did a couple of good articles on the above during ~Q3 last year which could google if want further info.
All sensible comments of yours, m8. I used to hold TATE for several years and my image of it is as a serial disappointer over the long haul. Things may be different now but I'm disinclined to take a long position in it mesen. Good luck if you feel otherwise; you could well be right.
Buy-back is purely administrative, RNS on 13th. indicated
"The Company intends to hold these shares in Treasury to satisfy awards made under employee performance share plans."
I have been considering a purchase here. The valuation depends a lot on the growth TATE can achieve in their new products. They have built this business from scratch to sales of 86m since 2012. The indicated target sales of 200m by 2020 looks a stretch but they seem confident, there appears to be good progress in the speciality products division.
I think they have made a smart move in shifting out of sugar and focusing on other products, particularly those in the health food area which looks set to continue to grow. T&L are leading suppliers into the energy bar and yoghurt drink markets and splenda is a leading brand in the huge low-cal drinks market. Fx will support earnings which are nearly all overseas, but significant debt in USD/Eur likely to balance that somewhat.
Forecast EPS from Digital Look (normally adjusted) for 2017-19 is 44.8 47.77 49.0
4 traders normally quote unadjusted numbers - 41.3 43.6 46
Either way well up on 2016 EPS of 34.5p, 34.7p or 34.8p depending whether you take it diluted, adjusted or straight.
Div is forecast to rise modestly from 28p in 16 to 29.5p in 2019, a solid 4%+ at current SP with decent potential for capital gain.
Clearly there is some execution risk, food markets, especially health foods can be fickle, but on balance I am inclined to take a modest position here, maybe upto 3%.
Commencement of Share Purchase Programme
The Company announces that it will today commence a share purchase programme over 2,000,000 of its ordinary shares of 25 pence each in the capital of the Company (the ?Share Purchase Programme?).
Any purchase of ordinary shares done in relation to this announcement will be carried out on the London Stock Exchange and executed in accordance with the Listing Rules and the Company's general authority to make market purchases of its ordinary shares. The Company intends to hold these shares in Treasury to satisfy awards made under employee performance share plans.
The maximum pecuniary amount allocated to the Share Purchase Programme is ?15 million and the maximum number of ordinary shares that will be purchased under the Share Purchase Programme is 2,000,000. The Share Purchase Programme will commence on 13 January 2017 and will end no later than the expiry of the authority obtained at the Company?s last AGM on 21 July 2016. This authority expires at the latest on 30 September 2017, or, if earlier, the date of the Company?s 2017 Annual General Meeting.
This should give a boost to the SP as the EPS rises.
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