The diluted EPS mearsures the quality of a company’s earnings per share if all convertible securities are exercised. William Hill’s EPS is 44.3 pence and therefore lower than Ladbrokes which is 54.0 pence. The earnings yield of Ladbrokes is by 8.48% higher than William Hill’s. The dividend yield measures the rate of return which investors get. William Hill’s dividend yield is slightly higher (by 0.8%) than Ladbrokes.The PE ratio is higher which shows that there is more confidence in William Hill. If the PE ratio is higher this means that the market thinks that the company’s future is good. Shares are in demand therefore the price of shares will be higher.The dividend cover shows the number of times the ordinary dividend could be paid out of current earning.The dividend cover of William Hill is lower than Ladbrokes. This means that William Hill has a more generous dividend policy which is good for short term investment.
PE ratio is higher which means there is more confidence in William Hill The dividend cover is lower than ladbrokes this means that w h has a more generous 2. Shareprices
William Hills has a higher shareprice than Ladbrokes. The share prices of both companies were highly volatile between March 2008 and October 2008, reflecting market conditions and the effects of the ongoing 'credit crunch'. The share prices reached their lowest points for the year in November and December 2008.
WH did not have as strong a year in financial terms in 2007 as it did in 2006. Compared with Ladbrokes, and based on PE ratio and dividend yield, WH appears to be performing better overall. In the economic downturn and in the absence of available credit to refinance exiting both companies may be vulnerable due to their high gearing ratios
4.Suggested course of action
•Raise money through disposals or new share issuance
•Use the proceeds to pay off debt which matures in 2010