How to read share price listings
... weeks. So, there is not nay trouble with the stock market, the problem is the way of Sainsbury’s management. “Struggling supermarket firm Sainsbury's has announced what is believed to be its first ever loss. For the six months to 9 October, it has reported a pre-tax, post-exceptional loss of £39m ($72m), compared to a profit of £323m a year earlier. Sainsbury's chief executive Justin King recently admitted the firm had been failing to properly stock its shelves after struggling with faulty distribution systems. ” (BBC NEWS, 17 November, 2004) The poor performance of sales can be one of the major reasons of the fall in Sainsbury’s share. Sainsbury had made its first ever loss in this summer, which was due to its transformation program involving IT infrastructure, new supply chain and modernized stores. Sainsbury’s wants to build a solid foundation for future growth. However, it seems that the sales had been disrupted. It is evident from graph 1 that Sainsbury’s share had been fallen rapidly from March to October, which was the six months that Sainsbury’s made a loss. A fiercely competition can also be a causation of Sainsbury’s failure to capitalize on this year’s hot summer. Morrison reveals its ambition of possessing more market place as the purchase of Safeway. Peter Davis, group chief executive of J Sainsbury plc, said: “The basis of Morrison’s submission to the competition commission – to cut prices in Safeway stores by a minimum of five per cent, and more in many stores – would pressurize Morrison into swift action and accelerate price reductions across the marketplace.”( www.freshinfo.com, 13 Feb 04) Sainsbury’s also announced to launch a price based campaign this summer. Therefore, the pressure of competition can be a reason of Sainsbury’s decease in the sales, which directly result in the fall of its stock market. 52 WEEKS Volume Company Price Change High Low Yield % P/E 000s Sainsbry 267 12 -3 14 312 34 242 5.9 --- 11,190 According to Financial Times on Tuesday NOV 23 04, the yield of Sainsbury is up to 5.9 percent, and it is the highest rate in Food and Drug Retailers, but the company does not have a P/E ratio. That means Sainsbury wants to use a high dividend to attract more investors, although their company’s earning is still in a loss. However, higher dividend does not mean higher profit to investors, because Sainsbury’s share price is still going down. This can be seen from the volume, Sainsbury’s volume is 11,190,000 but Tesco is 23,124,000 and Morrison is 21,465,000. Therefore, investors would choose Tesco or Morrison rather than Sainsbury. (Graph 2, selected from http://uk.finance.yahoo.com/) Tesco’s share performance is the mediocre of the 3 companies, is a supermarket giant and has the most market place in the UK. Tesco is also a global player, it is well established in Ireland, Central Europe (Poland, Slovakia and the Czech Republic) and Asia (Thailand and South Korea). And its share seems to be relatively safe and trustable. As can be seen from the graph 2, the trend of Tesco’s share price appear to be mediocre, it grew slowly and steadily and follow the FTSE index on the whole. during the first 6 month, Tesco’s share price was under the normal level, which is FTSE index. However, it increased gradually and exceeded the FTSE index during the latest six month. In general, Tesco’s share performance played mediocre in the last 52 weeks. Observer Business columnist Richard Watchman said: “Shareholders argue that the rationale for putting their money into Tesco is watertight. Tesco is wiping the floor with the competition, but there are a few clouds on the horizon. As growth in the UK slows, Tesco’s chief executive Terry Leahy's investment in places such as Poland and the Czech Republic should pay off, boosting the top line. And when Eastern Europe comes off the boil, Tesco’s businesses in the Far East, including China will begin to make a contribution. About 50 per cent of Tesco's floor space is based abroad, one wonders whether this risk has been factored into the share price of around 250p." (NEWS from www.freshinfo.com, 12 Apr 04) The above paragraph shows that Tesco has an aggressive marketing strategy, which they launch competitions in Eastern Europe while they invest in Central Europe and Asia. The foreseeable future growth may attract more investors, and increase their share performance. As shown in graph 2, Tesco’s market share price grew slowly in the first six months as the company’s earning grows gradually, and then it increased rapidly from the end of July as the FTSE index rise, and this is also the time when Tesco was reported the success of online shopping. In September, Tesco reported its first half profit jump up to £822m, and this success encouraged more people invested in the company and remarkably increased its share prices. 52 WEEKS Volume Company Price Change High Low Yield % P/E 000s Tesco 295 12xd -1 14 301 237 2.4 17.9 23,124 According to Financial Times on Tuesday NOV 23 04, the yield of Tesco is 2.4 percent, which is increased 0.33 percent comparing with the figure last year. It is in the normal level to investors. The P/E ratio is a relative high figure (17.9), which reflects the high demand of the shares, it can be seen from the volume (23,124,000). In general, Tesco’s shares is safe and watertight, people may like to invest in Tesco for less risk. (Graph 3, selected from http://uk.finance.yahoo.com/) Cadbury Schweppes PLC is a global giant in the candy and non-alcoholic drinks giant, and operates in more than 200 countries on every continent. The company’s share performed brilliant as it is shown in graph 3 that its share price increased about 28 percent during the previous 52 weeks, it is the winner among the 3 companies. It can be seen that Cadbury’s share always above the normal level by comparing the company’s share and FTSE index. In the end of May 2004, Cadbury said its US business was doing particularly well. This was being led by strong sales of its Dr Pepper brand soda and its range of diet drinks. And UK sales over Easter were ahead of last year and it was continuing to grow market share. The first half profit was increased 2 percent to £371m comparing last year."We have had an encouraging start to the year with good results from all our key business units," said Todd Stitzer, Cadbury Schweppes' chief executive. (BBC NEWS, 21 May 2004) The paragraph above shows that Cadbury had a very good start during the year 2004, its company grew both in the UK and US, while its stock climbed rapidly in the first seven months, which is 476 pence per share. The share price increased to the peek after the company reported the pleasant increased first half profit. However, in this late summer, Cadbury’s European drinks business was hit by the rain and cold, forcing the group to lower its expectations for profits, the disappointing figures led to a fall in Cadbury shares. (BBC NEWS, 24 September 2004) This can also be shown in the graph, which is the decrease in July and September. Cadbury’s 'cautiously optimistic' may lead to a rise in the stock, its profits for the first half of the year were up 2% and the company said it remains 'cautiously optimistic' about the full year figures. Cadbury Schweppes sounded a positive note for other parts of the business, stressing that its global confectionary business continued to trade well. (BBC NEWS, 24 September 2004) 52 WEEKS Volume Company Price Change High Low Yield % P/E 000s CadbSchw 472 12 -2 476 365 2.6 19.0 8,518 As shown in the table above, Cadbury’s yield is 2.6 percent, which is higher than Tesco. And its P/E ratio is 19.0, which shows the high demand, and is also higher than Tesco. Generally, the Cadbury’s stock in is an increasing trend, and investors would choose Cadbury, if they want to make more profit. (Graph 4, selected from http://uk.finance.yahoo.com/) In general, the stocks of 3 companies are shown in graph 4, which stands for 3 type of stocks—winner, mediocre and loser. The stock of Sainsbury is in a decreasing trend as its sales falls, and Cadbury and Tesco’s stock is increasing. The differences are that Tesco’s share rised slowly while its company grows gradually as a mediocre, and Cadbury’s share increased rapidly as the company made a good profit with its candy and non-alcoholic drinks during the previous 52 weeks. How to diversify your share portfolio – unit trusts and investment trusts explained. There are mainly two ways to diversify investor’s share portfolio, which are unit trust and investment trust. Framlington Unit Management Limited is a company that both issue unit trust and investment trust. The difference will be shown in the following by using Framlington plc as an example. ...