Leading shares lifted by hopes of acceleration of European bond buyingComments from the European Central Bank that it would boost its bond buying programme during May and June to avoid the summer lull sent the euro lower and boosted stock markets.The FTSE 100 finished up 26.23 points or 0.38% at 6995.10, with European markets also higher, especially the export-led German Dax, up 2.23%. Jasper Lawler, market analyst at CMC Markets UK, said:It’s likely not a coincidence that the ECB is upping the ante on its bond-buying following a major bond-market sell-off especially with Greece’s debt negotiations going to the wire.We could see a reduction in both companies’ adjusted debt/EBITDA ratios by about 0.2 times if the rouble remains at its current level for the rest of the year. Although this is a modest improvement and part of the benefits might be absorbed during the year, it removes some of the pressure on their ratings, which are weakly positioned within their current levels.The early signs of gradual underlying improvement in many of CCH’s markets, €44m of self-help in 2015, and an abating foreign exchange headwind have provided some recent support to the stock. However, the shares now trade on a 2015 PE of 24.6 times . With questions on the sustainability of the pick-up in growth, we believe the risk/reward is still evenly balanced.While 2015 prelims were towards the top end of the guidance range and free cash flow generation was very strong, the main news [was] the £338m acquisition of the Butagaz LPG business in France, which will be significantly earnings per share accretive.Importantly, this also means DCC can continue on its M&A strategy for the foreseeable future with the acquisition establishing a strong platform in continental Europe and reflecting DCC’s ambition to grow the business further. This was confirmed in a call we had with the chief executive earlier today, who said there will be more opportunities in the next few years.Improved trends continue into the first quarter: sales were flat, a fourth consecutive quarter of sequential improvement. Profits have been maintained, after increased investment in marketing. Categories are improving a bit and Premier Foods continues to take share. The pension deficit has shrunk, again. We expect the 2016 consensus to hold. Worries?: pricing is set to be brutal and there are tougher comps to come. But the foundations continue to firm. Continue reading...
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