Just over a month ago HERE I concluded about FTSE 100 names easyJet (EZJ) and Imperial Brands (IMB) that there was value in both. Since I wrote those words, the former has rather (if you will excuse the pun) taken off with the share up almost 50% from the either side of five quid level it was previously at. Meanwhile Imperial Brands shares are showing more evidence of clearly forging a triple bottom in the twelve/thirteen quid range and are now breaking up/out. That is nice darts...though neither of their latest updates are flawless...
EasyJet is the simpler one to deal with as the company's prospects are patently interlinked with the speed of any pandemic recovery as widespread leisure and business travel is not going to bounce back without us all having much greater capability to move around. Vaccine realities can clearly be extremely helpful here and at least the news flow has improved on this front over the last ten days. In the meantime the company is racking up huge losses and running its fiscal first quarter at a 20% capacity utilisation level. Fortunately - as I noted at the link above - the company has enough cash to last it another year or so. To own the stock you do have to feel a bit lucky and I still do.
As I write easyJet shares are down on the day after a strong last few weeks. However, pushing up are Imperial Brands shares. Even though the tobacco name talked about a 5% fall in adjusted earnings per share due to the previously mentioned challenges in its next generation products area, the still newish CEO also talked about expecting to deliver a stronger 2021 performance. A return to a bit of growth and a continuation of its pretty phenomenal free cash flow is just what Imperial Brands shareholders want to see, because even in mixed times you can make a single digit EV/ebit multiple combined with a dividend yield (at prevailing share prices) still above 9%.
For Imperial Brands shareholders there will be more details about prospective progress following a capital markets day on 27th January. Undoubtedly this event is a clear opportunity to move decisively on from the notion that the company is too leveraged. The premium cigar disposal has helped reduced the net debt line to just over £10 billion, giving the company an EV of about £24 billion. If it can keep chucking out over £3 billion of annualised operating profit...then even if you view the name as a bit of a demerit one, you can still spot more than a bit of value. Back to the twenty quid share price, fifty-two week high anyone? Still also a buy / strong hold for me today.
Filed under: easyJet, Imperial Brands, Pensana, Centrica, Synectics, Centaur Media, British Land
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