WOKE BUT NOT BROKE, AND THE DIRECTORS ARE PILING IN....
20th July 2020
This FTSE 100 company was one of many to announce a dividend cancellation and the withdrawal of earnings guidance in May 2020, shortly after the 'covid correction' hit the market. This resulted in a further steep fall in the share price. However, just a few weeks later, the chief executive bought over £2 million worth of shares. This was followed by share purchases by other directors.
Earnings have been stagnant for the past few years, and the debt level is high. However, the net cash generated is around £2 billion per annum, and the enterprise value (market capitalisation plus debt) is a multiple of about 15 times that figure. Not cheap, but sufficient to finance this debt and also ensure that it can resume dividends as promised in 2022 (which would equate to a dividend yield of 6% at the current share price).
The annual report certainly seems to be orientated at ESG investors with several pages devoted to sustainability, employee welfare, stakeholder interests etc. ESG is the acronym for 'Environmental, Social and Governance' and these funds are the hottest new trend in 2020 to date.
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