Tuesday newspaper share tips: Inmarsat, Mitie

Markets appear to have punished Inmarsat´s management for providing excessively ambitious financial guidance; however, the share price drop also seems overdone, The Times´s Tempus said.

The shares have come down precipitously from the approximately 1,150p at which they were changing hands at the start of the year.

A fortnight ago, the satellite operator warned of challenging headwinds in its markets but said it expected revenues to grow by 2% this year.

Analysts at Morgan Stanley suggested that might be too ambitious.

Previously, a poor trading update from rival Eutelsat seemed to cast doubts on Inmarsat´s take on recent events.

The worry is that weakness in the global maritime market and in oil and gas are leading to a glut in the satellite market.

Making matters worse, another´s rival´s announcement that it had won a contract with British Airways led some to speculate, wrongly, that Inmarsat had lost out.

"On the assumption that the worst is past and the market is taking too pessimistic a view, that looks like a good entry point for a highly speculative buy," Tempus said.

Mitie is a highly-cash generative business and the stock is trading at a discount to its sector, but market negativity surrounding the outlook for its margins is unlikely to lift soon, The Times´s Tempus said.

The outsourcing company has insisted it can keep its margings at between 5% and 6% but faces challenges on several fronts.

In particular, its healthcare business will be back in profits soon but there was a time when it was called on to be the engine for growth.

A falling pipeline of new work is also a concern, possibly as the uncertainty around the referendum weighs on activity.

Nonetheless, margins in facilities management - which makes up the bulk of its business - was a sufficiently robust 6.3%.

Furthermore, once those uncertainties disappear the order book should return to growth.

The shares also offer an attractive forward divdiend of 4.2% and the shares are on 11 times earnings, which looks low for the sector.

Unfortunately, Tempus concluded, "I do not see those market concerns shifting soon. Avoid."