As the volatility in the stock continues to attest to - notwithstanding the fact that it no longer owns Branston pickle - Premier Foods' finances continue to be - well, in a pickle. The fear, at least up until recently, has been that the firm will drown in its own debt and pension deficit. That continues to stand at £1.3bn, or at four times its market value, despite the sale of multiple brands, yesterday's sale of Hovis included. Compounding its misfortunes, supermarkets have been introducing their own brands. To that one can add consumers' restraint when spending, courtesy of depressed real incomes.
The firm, however, claims that it can now concentrate its investments on its remaining brands and ceding control of Hovis makes it more attractive to investors, should it go to them cap in hand for new funds. Unfortunately, in the opinion of the Daily Telegraph's Questor team, there remains too much uncertainty surrounding the firm's capital structure. In fact, the outfit may yet carry out both a debt issue and a capital increase, while its cash continues to be under pressure. Yet perhaps the worst thing is that while Premier tries to figure out how best to finance its debt, amassed after a string of ill-timed acquisitions, its competitors continue to invest in their own brands. Avoid, Questor says.
BG Group seems to have got it wrong in Egypt and the US, yet it is hard to lay responsibility for the write-downs in either region at the company's door. The group's fortunes will be decided not in either of those two jurisdictions but in Australia and Brazil. By Credit Suisse's - no cheerleader for the stock - calculations, production from the outfit will rise to just under 1.2m barrels of oil equivalent by 2020, from just over 600,000 at present. Rose tinted glasses aside, that is all very well and good but after Monday's warning the stock will be left trading at a forward price-to-earnings multiple of approximately of 15, versus roughly 10 times earnings over at Shell and BP. And on what basis? The company's own production targets? This is an outfit which has cut its own estimates on four occasions throughout the last 18 months, Deutsche bank reminds us. That multiple prices in a lot of confidence that the company can deliver, says the Financial Times' Lex column.
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