Tuesday tips round-up: GlaxoSmithKline, Cranswick,SDL

Last month, GlaxoSmithKline (GSK) announced a review of its European operations as sales fell 5 per cent in the third quarter, to 6.53bn pounds, a decline which could lead to significant job cuts. The drugs group said continued pressure on drug prices in austerity-hit Europe, together with lower demand for vaccines, had hit sales. The company's growing business in emerging markets and its large consumer healthcare operation are both doing well, offsetting negative sales growth. In its third quarter results, published on October 31st, GSK announced core earnings per share of 26.5p and a dividend of 18p, to be paid on January 3rd. GSK is trading on an estimated price to earnings ratio - a measure of profit per share - of 11.8 times this year compared with AstraZeneca on 7.6 times. Despite the premium valuation, GSK remains the choice over Astra because of its focus on consumer healthcare. It is also likely to have more stable earnings and therefore a more secure dividend. GSK is yielding a prospective 5.5 per cent this year, rising to 5.8 per cent next year. Hold, says the Telegraph's Questor team. There is every sign that pork will get more expensive still next year, but this time Cranswick is ready, writes the Times' Tempus column this morning. The above as the European Union is bringing in tougher welfare standards for Contintental farmers, which may force many to stop producing. Cranwsick, one of the three biggest pork processors in this country was being guarded yesterday about how successful it had been in passing that cost inflation on to the supermarkets, but the interim figures talked of "ongoing constructive pricing discussions", which was taken well by the market, with the shares jumping 10% to 812½p. The halfway performance was considerably better than last time, when Cranswick was squeezed between farmers passing on higher feed prices and those supermarkets. Furthermore, Vion, one of the other big pork suppliers in the UK, is to withdraw from the market, so Cranswick should pick up some of its business. As well, the company now has a license to export directly to China. On almost 11 times' earnings, "the shares look up with events," Tempus concludes.Mark Lancaster, founder and now chief executive again of SDL, yesterday eased back market expectations for a second time this autumn. That came alongside a wide-ranging review of the business he founded in 1992. The combined result, in his own words, is that he is as certain as he can be that all the bad news is out there, Tempus writes. An earlier warning in October had suggested that revenues on the technology side, which provides corporates with the ability to manage their websites and monitor social media, remained low. Not coincidentally, one of the things which his review flagged up is that the technology side was taking too optimistic a view of prospects for the year, which will lead to a shortfall of between £1m to £2m in profits. In addition, he is beefing up sales and marketing of the business and this will mean an additional £3m to £4m of spending this year. That comes on top of a more conservative view regarding revenue recognition from a handful of big contracts being carried out by the language services division. The shares sell on a little more than 13 times' earnings for this year and next, which looks attractive, assuming all the bad news is out in the open, Tempus says. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB Cranswick Glaxosmithkline