Shares round-up: why Rentokil is FTSE 100’s best today
After a big crash last month and now trading at multi-year lows, City writer Graeme Evans runs through more news from Rentokil. He also looks at Chemring and GB Group.
17th October 2024 13:32
by Graeme Evans from interactive investor
Robust updates by Rentokil Initial (LSE:RTO) and GB Group (LSE:GBG) and the £1 billion revenues target of defence firm Chemring Group (LSE:CHG) today ensured their shares made headway in a dour London market.
Rentokil topped the FTSE 100 risers board amid relief that North American trading was slightly better than downgraded expectations at the time of September’s profit warning.
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The shares rose 31.2p to 372p, still 14% lower for this year and a far cry from the 600p seen a year ago before the extent of the challenges facing its US ambitions became apparent.
The most recent setback came after the pest control company expanded resources in readiness for the US peak season, only for trading in July and August to come in short of expectations.
Digital leads improved markedly in the second half of September, reinforcing the company’s view that North American pest control is an “extremely important and exciting market”. Its projections point to a growth rate of 4.8% a year up to 2028.
Chief executive Andy Ransom said: “In North America, we recognise the business has underperformed and we are focused on delivering the operational improvements required.
“We are expanding our initiatives to increase organic growth and we are taking action to mitigate cost overruns.”
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The rally for AIM-listed GB Group shares came as the expert in global identity fraud and location software reported half-year revenues and profits ahead of City estimates.
The top-line rise of 4.5% to £137 million has been driven by the Identity division, which continues to build on the momentum seen at the end of 2024 financial year.
The shares were 900p in 2021 but then fell sharply due to the dilutive acquisition of Acuant, two years of subsequent downgrades and weaker sentiment caused by higher interest rates.
The stock dipped to 250p in April but now stands at 324.8p as new chief executive Dev Dhiman focuses on removing complexity, improving the company's performance culture, driving innovation and aligning GB’s global footprint.
He said today: “We have made encouraging progress in each of these areas, and this is translating into our performance.” Dhiman reiterated confidence in the 2025 outlook and the company’s longer-term potential.
Broker Peel Hunt has an Add recommendation and 400p target price, noting that shares trade at a significant discount to historic multiples. It said today: “We believe continued momentum in Identity remains a key positive.”
In the FTSE 250 index, Chemring shares made a decisive move higher today after an update revealed a strong order intake alongside an in-line performance for the year to 31 October.
The order book now stands at £1.1 billion, up from £869 million the year before. This covers 95% of expected 2025 revenues in Countermeasures & Energetics and 47% in the shorter cycle Sensors & Information sector.
Countermeasures order cover for 2026 and 2027 revenues currently stands at about 75% and 45% respectively, which Chemring said demonstrates the long-term nature of demand.
Chief executive Michael Ord added: “These awards strengthen our order cover over the near to medium term, and position the group well to meet our ambition to increase annual revenue to £1 billion by 2030."
Revenues were £472.6 million in 2023, leading to an operating profit of £69.2 million.
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