Wednesday, 25 November 2015

A few thoughts on Thomas Cook and Daily Mail & General Trust

Two of the bigger movers in the large cap UK stock market today are by Thomas Cook and DMGT (or the Daily Mail & General Trust).  So what to think?

I have been a fan - incorrectly - of Thomas Cook for a while and until today at least the share has had a shocking last few months due to some specific but mostly general issues:

Today's update - a return to profitability after tax - and the reduction in debt was rightly celebrated with the shares up 8%+ as I write.  

Looking through the numbers geopolitical factors such as Tunisia were a drag but insufficient to offset cost cutting initiatives even with negative FX and strategic OPEX added into the mix.  

Not every target was reached however.  The sales one is little problem given pricing should be prioritised but web penetration remains a disappointing KPI:

Still with good forward sales/pricing and further profit augmentation anticipated for the next 2-3 years as the turnaround plan continues...

...aligned with the clear possibilities of developing the Chinese angle:

Thoughts? x6s EV/ebit and the reinstatement of a dividend...there is clearly value here.  

As for DMGT, I kind of summarised it on Twitter:

Gp showing that is a changing world. still going great guns (ok I admit i do read it a bit)

some will like this but can get 3.5% yield elsewhere. x11s EV/ebit ok, key managing ongoing transition

My thoughts with the share down at multi-year lows (at 658p as I write the lowest since early 2013) is that I am getting more interested.  Clearly managing the aforementioned transition kind of difficult but not devoid of a range of ok media assets...

With the yield approaching 3%...kind of getting more interested here.  

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