Johandesilva
07 Sep 2017
Re: Interestin' piece in the FT ... johnnygibberWhat about Lloyds, is relatively cheap at the moment. It has a P/E of less than 9 and a chunky dividend as it fell this summer.I don't have enough money and there too many "bargains" right now.@Bill what have you been selling to buy AA, ITV and considering to buy this?
johnnygibber
07 Sep 2017
Re: Interestin' piece in the FT ... This is the first time in 10+yrs that WPP qualified for my 15 lowest PE stocks from the FTSE 100 - along with the AA (gulp !) and IMT (ooooh !)Anyway, as the bumpf says - don't try to second guess the numbers - throw them in the fortpolio for 1 year then rebalance.Its been working well........so far......GLAJGPS. Wow - Sir Sorrell earns a 'kin packet from just his divi's ...
scruffee
06 Sep 2017
Wait For A Tenner ... Hot and Sweaty Sorrell ............... Best Wishes.x
Johandesilva
05 Sep 2017
Re: Interestin' piece in the FT ... Divi yield is 4.43%, my mistake apologies I was looking at the wrong number on my screen. With Bill's your ITV over 5% divi perhaps I am being too overly picky as there are a number of falls at the end of this summer showing covered dividends close to 5% (AA, LLOY, ITV, WPP) that all offer growth.
Hardboy
05 Sep 2017
Hargreaves' View WPP’s profit warning was a less stressful affair for shareholders (than Provident Financial) although the shares still fell 8.5% in August.Advertising has always been a cyclical industry, and despite weak sterling boosting profits, WPP’s underlying numbers suffered in the first half. A slowdown in global GDP growth has seen major consumer goods companies, which account for a third of the group’s revenue, rein back on marketing spend and forced WPP to trim guidance for the full year.There are reasons to be positive though.The faster-growing emerging market businesses continue to perform better than the wider group, supporting CEO Martin Sorrell’s strategy of increasing exposure to these parts of the world. The group also has an excellent track record of controlling costs, helping it to grow margins, while acquisitions mean revenue continues to move forward. Excellent cash conversion means all this is being achieved without significantly increasing debt.As a result the group remains confident in its longer term target of raising margins to around 20%, and growing earnings per share by around 10-15% per annum.
Hardboy
05 Sep 2017
Re: Interestin' piece in the FT ... I'm with Bill. I think this is a profitable company which will continue to be profitable with good cash flow for many years to come.Yes like for like revenue is likely to be flat this year, and maybe next year too (though a world cup year is usually good for advertising) as the cyclical nature of the advertising market has its effect; BUT thanks to acquisitions and currency movements, the first half figures saw rises in revenue of 13% & profit of 15% with the dividend up 16%; and they were forecasting a slightly stronger H2. I expect sterling to stay weak at least through to the completion of Brexit; and this currency weakness may provide actually improving figures for WPP whilst the sector bottoms out. So I see this as a good entry point, but I also agree there is probably no rush, and geopolitical factors may offer even better entry points.
Bill1703
05 Sep 2017
Re: Interestin' piece in the FT ... "Otherwise the P/E and share price in my opinion should drop further not supported by anything..."Not sure it's as black and white as that, JDS? I think the divi yield is more like 4.0% currently... on last FY historic, will grow again this year. And growth or no growth, the current business is still highly profitable, with very good FCF... not sure I'd put much less than 11x on that alone?We know underlying (organic) growth is fairly flat this year, maybe next too... but no evidence that all M&A growth has ground to a sudden halt, never to resume. And I doubt the current cyclical and structural headwinds are here forever... with the prospect of a "busier" ad market year next year, as previously described.I agree to an extent... possibly no rush into this one, and there be some further downside in the near term. But the medium term risk/reward looks favourable indeed to me, at anything around the current level.
Johandesilva
05 Sep 2017
Re: Interestin' piece in the FT ... Perhaps investors are bailing as they don't see continued growth to 2000p as they believe growth through acquisitions has to stop at some point (see partly Capita slow recovery, I expected more at this point).If Bill you believe growth is not in large as a result of acquisitions and can be maintained then its a screaming buy. Otherwise the P/E and share price in my opinion should drop further not supported by anything including a 3.41% divi at these levels. At cr5% divi maybe.
Bill1703
05 Sep 2017
Re: Interestin' piece in the FT ... "... with WPP on 11x, the wheels must be coming off the M&A wagon... steering clear of WPP, while not yet attributing "munter" status to it..."The key for me is, at 11x current business, you no longer have to pay anything really for that particular wagon!But just as well, I hear you say, as it is broken ... but beyond repair? The market has already moved to accord "Munter" status here, but I am not so sure... you could argue, if it is no longer a secular "value creation" story (impressive as that has been), but now a more mature, cyclical ad market play, then 11x P/E is about right. Which might be true, on historical experience... but the market is also terribly short-sighted and forgetful about such things. It is loathe to pay more than 10-11x for such plays on a cyclical downswing, but then plenty happy to pay 14-15x as the cycle swings back up - and often on a higher earnings figure, by that point. Even without an element of M&A growth on top of this. So no reason why WPP wouldn't be any different, even if it is now to become a more mature play? And even without any cyclical down trend, this was always a "quiet" ad year - no big footie tournament, no Olympics, no US presidential election. But next year, we have the World Cup and Winter Olympics (though no US pres vote - more's the pity), and every chance the market will suddenly decide that even the current earnings are worth quite a bit more in that context.Still watching and waiting... I'm not sure there is any hurry here, for the above reasons. My particular issue here is, if WPP is now a classic ad play, I already have a biggish chunk of ITV (and where is the bid there?? Come on, it's September now, and it ain't that difficult!!) But I remain reasonably receptive, and reasonably keen to dive in here.
LK Hyman
05 Sep 2017
Re: Interestin' piece in the FT ... Bill,"And - crucially - it's not as if it's on a "growth" rating... around 11x P/E"Perhaps that low rating merely reflects where WPP is at this stage of the biz cycle, m8?There was a time, in Sir Owen Green's day at BTR, when BTR's shares sold at a go-go rating (can't remember what it was) and it was then that Owen could keep the show going by buying companies at lower ratings. The whole ball of wax continued to be rated (for a bit) at the high rating and everything was tickety boo .... right up until the moment when it wasn't.I don't know what P/Es small advertising and PR advisory companies sell for these days ... though you could probably pick up Bell Pottinger for less than 11x LOL ... but I would have thought that, with WPP on 11x, the wheels must be coming off the M&A wagon.Hmm. I see that WPP already owns a small indirect stake in Bell Pottinger via Chime, of which WPP owns a quarter.LKH on the flybridge steering clear of WPP while not yet attributing "munter" status to it
Bill1703
04 Sep 2017
Re: Interestin' piece in the FT ... "... equating WPP with Hanson Trust and BTR..."Hmmm, not sure I'm buying it LKH ... not that you are necessarily the one who is selling it, of course!I'm with Hardboy, WPP is a pretty focused advertising vehicle, really... I am no ad biz expert, but it seems to be all about people, market knowledge and client relationships, and it strikes me there must be a huge amount in each area that can be shared across the apparently fragmented group, making the whole much greater, and more powerful, than the sum of the parts?Whereas Hanson and BTR - along with the likes of Lonrho and Tomkins - were very much creatures of the 1970s and 80s, with flamboyant deal-maker figureheads, unashamed conglomerates in both substance and style... not much synergy, in Hanson's case, between distributing electricity, selling fags, making bricks, and... I forget the other bits. There WAS considerable tax synergy in putting it all together, as I recall, but such advantages tend not to last... the taxman cottons on eventually and, much like the moguls in Vegas, they get it in the end.The conglomerates didn't "fall apart", although the dinosaur deal-makers eventually did... they merely went out of fashion, in a world where a more vocal consensus among fund managers was that it was THEIR job to diversify their portfolios. Tomkins was bought out a decent price (grateful as I was at the time), cannot recall what happened to BTR, but the break-up of the Hanson empire delivered a lot of value (despite the negative tax effects) and many of the constituent parts continue to prosper today ("not prospering enough" I hear LKH cry, with a beedy eye on the Imperial Brands SP... time, LK, give it time!)No, this strikes me more as lazy journalese, the reptiles kicking a man while he's down... easy to write the obituaries at the bottom. My guess is that Sir Martin still has the last laugh here... if he has any more laughs to give, once he's finished counting his money...
Hardboy
04 Sep 2017
Re: Interestin' piece in the FT ... LK: I've not seen the article, but your synopsis is excellent. I don't remember BTR so clearly, but Hansons were a diverse empire into all sorts of different businesses. At WPP the business is very much focussed on advertising; and there is little diversification, more change of emphasis. However I agree it seems silly to have so many individual companies. There must be some benefits in integrating the smaller companies into larger ones.
LK Hyman
04 Sep 2017
Interestin' piece in the FT ... ... equating WPP with Hanson Trust and BTR. Suggests that WPP has done much too much "growth via acquisition" and that, similar to Hanson and BTR, there is a risk that, when the M&A wheel stops spinning, the whole thing may fall apart. I exaggerate, but not by too much.Looking at the WPP website and the 400-odd companies in the group it does seem strange that there are so many small companies, each in their own silo. I don't know to what extent there is synergy (or horizontality in WPP-speak) between 'em, but my earlier temptation to take a small position in WPP has dissolved on reading the article.LKH on the flybridge
Johandesilva
01 Sep 2017
Re: Interims - O/T I speculate share holders (majority institutional) see the company as rudderless under SB and the rate of fall indicates to me that they believe they cannot find one. I think they have found one but not making it public as of yet
gamesinvestor
29 Aug 2017
Re: Interims - O/T QQ LK -- I just bashed out some stuff on the QQ board.I guess anything with a high P/E is now off the menu -- the likes of Abcam etcI'm was getting ready to exit it, until Kim whatsit upset the applecart.On a bounce I think that will be one less and Glencore possibly out shortly after that.Games
