Share Analysis of Thorntons Plc

Topics: Dividend yield, Stock market, Dividend Pages: 7 (2004 words) Published: December 11, 2011
Part 2

The chocolate industry in UK
Britain really is a nation of chocolate lovers. Among the whole world, UK has the seventh highest consumption of chocolate. A British eats an average 17.49lbs of chocolate per year (The World Atlas of Chocolate, 2011). Switzerland takes the top spot. In Britain, an estimated 660,900 tones of chocolate are eaten per year which is an average of 11kg per person. The UK chocolate industry is worth £3.6billion and sales of chocolate just keep growing and growing. The chocolate industry is a fast growing industry in UK, and the competition among the main brands is getting more and fiercer. For the investors, it is important to know the market share and the share price information of a company. These information of Thontons PLC will be detailed in the following sector.

The market share of Thorntons PLC among other chocolate brands in UK The figure below shows the market share condition of Throntons PLC among other chocolate brands in UK in a comparison of year 2010 and 2011 (Thorntons PLC, 2011). It indicates Thorntons is one of the leading chocolate brands and its market share is significantly growing in both boxed and inlaid boxed chocolate market. Thornton's has grown its sales across Total Boxed Chocolates in the last year from £70m to £82m (+17%) and continues to be the leading branded inlaid boxed chocolate supplier with sales of £68m (+16%).From this aspect, Thorntons PLC is a great brand with a good reputation and it is a smart choice for the investors. [pic] [pic]

Figure2.1 The market share of Thorntons among other chocolate brands in UK

Share price
To the investors, the best guide to the value of a company is its share price. Many different factors influence the share price of a company. Some factors such as interest rates, growth or recession in the economy and exchange rates do not have directive relationship with the company but are more to do with general sentiments about investing and the economy. Other factors such as the management quality can also affect the share price. When the company is not doing well for a period of time, the chief executives may lose credibility and may step down their positions. With the appointment of the new executives, the market will awaits the delivery of improved result and therefore the share price will rise. This is one of the reasons why the share price of Thorntons PLC enjoyed a honeymoon right after the retiring of the previously chief executive in July, 2010.

To measure the share price of a company, the method which is the most widely used is to compare the share price of the company with FTSE 100(‘footsie’). This is the index of share price from Financial Times among hundreds of large companies, based on their market capitalization. The chart below (Yahoo Finance, 2011) is a comparison between the share price of Thorntons PLC and FTSE 100 for the last five years to 27 Jun, 2011. [pic]

Figure2.2 Share price comparison between Thorntons PLC and FTSE 100

Based on what the chart illustrate, Thonrtons PLC was on a downhill path from 2007 although it got through a little recovering period from 2009 to 2010.

Accounting information
However, to find out what exactly affect the changing behavior of the share price, we apply our eyes on the most important figures—the profit earned by the company, the dividends paid out by the company, the net asset (or balance sheet )value of the company, cash flow generated by the company (Robert, 2004).

1 The profit earned by company
For the shareholders, they really care about the profit earned by the company for the recent financial year. To be more specific, they are interested about the amount of profit after interest, exceptional items, taxation and all other expenses which is straight related to the label ‘net income’. The net income statement is shown in figure below (Financial Times, 2011). Part of this amount of funds are paid as dividends to the share holders, the rest is...
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