Tuesday newspaper share tips: William Hill in for a rough ride

The Telegraph’s Questor thinks William Hill has a tough year ahead with a number of challenges looming, rating the company at ‘sell’.

In what the column described as “merger mania”, it noted that Paddy Power and Betfair were weeks away from merging, while Ladbrokes and Coral were awaiting approval from the Competition and Markets Authority.

Sportingbet’s parent company GVC also made a bid for Bwin.Party which was accepted in September.

However, Questor said that William Hill had missed out, with a deal for 888 falling through, leaving the company to take on its merged rivals on its own.

The gaming company also faced tax issues, after the government increased machine gaming duty while starting to tax online earnings.

“Changes in the tax regime have seen costs in the retail business increase by 55pc over the past six years, against a 15pc rise in revenue,” it said.

Questor believed the only way to increase earnings growth was through a combination with one of its peers, as well as strengthening its online business.

“That said, 16 times earnings for a company with a challenging year ahead looks expensive.”

Over in The Times, Tempus thought Wolseley’s long-term prospects were good enough to rate the company at ‘buy long term’, following the announcement that its chief executive will retire.

Ian Meakins will retire on 31 August and be replaced by chief financial officer John Martin.

Tempus said Meakins had turned a number of aspects of the company around.

“During his seven years in office, Mr Meakins has returned £2.1bn to shareholders,” it said.

“He has exited about 30 underperforming businesses, including Bathstore and bits of the company in the Czech Republic, Italy and Scandinavia and France.”

The column also noted that he added to the company’s Ferguson operation which now has a commanding position in its core area.

Back in the UK, Tempus said the decline in the housing repair and maintenance market reported across the sector was just temporary.

“One participant in that market tells me that such spending is deferrable and people were still not confident enough to increase borrowings to pay for new kitchens and the like.”

While trading has slowed back home and in the US industrial sector due to oil prices, Tempus believed it was a good time to undertake a long-term investment in the company.