Shares round-up: Ithaca Energy, Mitie, Jet2
There are some big movers in both directions today as companies continue to publish results. City writer Graeme Evans runs through some of the day’s most interesting stories.
21st November 2024 15:41
by Graeme Evans from interactive investor
A dividend yield with the potential to “outperform almost any benchmark” today fuelled interest in Ithaca Energy Ordinary Share (LSE:ITH) following the North Sea producer’s combination with Eni UK.
The FTSE 250-listed group, which now has stakes in six of the 10 largest fields in the UK Continental Shelf, announced a special dividend of $200 million alongside third-quarter results.
The distribution planned for 20 December is part of $500 million due in relation to 2024 trading as Ithaca’s increased scale of operations and enhanced cash flows support both its growth aspirations and material distributions to shareholders.
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Broker Peel Hunt anticipates a further $500 million in cash dividends for the 2025 financial year, with the total of $1 billion across 2024-25 the equivalent to a prospective dividend yield of 24%.
It said: “Even if the share price remains flat over the next 12 months (which we do not anticipate), we believe the dividend yield alone is likely to outperform almost any benchmark.
“The metrics are impressive; if anyone can find a cheaper, higher-yielding stock, please let us know.”
The shares today rose 5.6p to 105.4p, which compares with Peel Hunt’s target price of 175p.
In today’s update, Ithaca reiterated its guidance for 2024 production, capital expenditure and operating costs and said a recent $2.25 billion refinancing and improved credit rating gave it the foundations for longer-term growth.
At the other end of the FTSE 250, MITIE Group (LSE:MTO) fell 7.2p to 103.8p as the poor November for the support services firm’s shares continued on the day of half-year results.
Revenues growth of 14% to £2.4 billion reflected a record period for contract wins and renewals alongside a 6% contribution from acquisitions.
Operating profit before one-offs lifted 14% to £101 million, while the dividend for payment on 4 February rose 30% to 1.3p a share based on one-third of the prior year’s total award.
The company reiterated confidence in 2025 expectations and its three-year plan, notwithstanding headwinds from the recent Autumn Budget caused by changes to employers’ National Insurance contributions from April.
Its current estimate is a £25 million impact of additional costs in the 2025-26 financial year, after contractual and commercial recovery through pricing as well as margin enhancement initiatives and other management actions.
Mitie, which employs about 72,000 people, said it had a strong track record of managing inflationary costs, including annual increases in the National Living Wage.
Panmure Liberum maintained its Buy recommendation and target price of 135p following the results, noting that a 2025 multiple of 9.6 times earnings is undemanding given the momentum.
AIM-listed Jet2 Ordinary Shares (LSE:JET2), whose £3 billion market capitalisation is large enough for a top 15 place in the FTSE 250, rose 100p to 1,518p after interim results came in ahead of City expectations.
Pre-tax profits increased 16% to £772.4 million on revenues of £5.1 billion, representing another record financial performance for the summer half year.
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It said average package holiday pricing remained resilient, growing by 6% to £904 as supply-led inflationary increases were passed on.
More passenger bookings were made closer to departure, but chief executive Steve Heapy said Jet2’s package holidays and scheduled holiday flights remain “popular and resilient products”.
He added: “Even in difficult economic times, the annual overseas holiday remains a highly valued and eagerly anticipated experience, often taking precedence over other discretionary spend.”
With a material amount of the winter season still to sell, the company is on track for annual pre-tax profits ahead of market forecasts. Its sale capacity of 18.74 million seats for next summer is 9% higher than 2024, including new bases at Bournemouth and Luton airports.
Peel Hunt reiterated a price target of 2,200p, adding that the figures offered a positive read-across for easyJet (LSE:EZJ) and On The Beach Group (LSE:OTB). It said: “These are very good results, supported by a 14% rise in inflight retail spend per customer and the delivery of 10 A321neo aircraft.”
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