By Chris Becker
Earnings continued yesterday and through to today, with four major companies reporting results, News Ltd (NWS), Telstra (TLS), Tabcorp (TAH) and BWP Trust (BWP).
News Ltd (NWS), owner of The Australian and Business Spectator reported a net quarterly loss of $1.55 billion, or 64 cents a share, mainly on writedowns in Australian publishing businesses. Underlying earnings were up 13%, but operating income was down some 50%.
Consensus is still in favour of the company, with 4 buys, 3 holds and zero sells with an average price target of $23.74, as the stock closed down over 3% to just below $22 yesterday after a stunning rise this year. Growth in forecast earnings is still strong, moving to $2 a share for FY13, but you have to ask the question if the trend is against NWS and traditional media?
BWP Trust (BWP) which holds most of the big-box Wesfarmers-owned Bunnings stores around the country announced a 14% fall in FY12 profit to just under $70 million, slightly above estimates. This equates to 13.4 earnings per unit compared to estimates of 13 cents even. The final distribution has been increased to 8 cents per unit, for a 6.88% dividend yield.
The competition with Woolworth’s owned Masters stores was slated as reason behind the fall in net profit as BWP spent nearly $150 million buying new warehouses and improving existing stores.
Consensus analysts are forecasting a slight rise in earnings for next year, but with no conviction on accumulation with 0 buys, 7 holds and 1 sell. The stock was steady yesterday, having been in a steady uptrend since bottoming in October last year:
Telstra (TLS) the country’s largest telecommunications company, and with the continued roll out of the NBN, now making a transition to a customer service company, declared a FY net profit of $3.4 billion, under expectations of $3.5 billion. The final dividend was unchanged at 14c unchanged now since 2005.
Guidance for next year was muted at only single digit EBITDA (earnings before interest, depreciation and amortisation), as this year’s growth was only 0.8% in comparison. Sales were also flat.
Credit Suisse have downgraded TLS to neutral, with analysts giving 3 buys, 11 holds and 2 sells. The stock gapped down over 2% yesterday and another 2.5% today, having been in a soliduptrend since The Future Fund stopped selling in August last year:
Tabcorp (TAH) posted a net profit of $340 million or some 36% below last years figure, mainly due to a revenue drop in the demerger of its casino business. Earnings were up across the board, except a slip in the Keno business, with a 10% rise in wagering and a steady uptrend in online betting. But estimates of future earnings in wagering under its new licencing regime were much lower than anticipated, as three major brokers (Credit Suisse, UBS and Citigroup) downgraded the stock.
Tabcorp announced a final dividend of 11c per share, for a full year of 24c per share or just over 10% dividend yield. This yield has jumped appreciably as the share price tanked yesterday, falling 3% and then almost 9% in today’s trade.
With the downgrades, there are now only 3 buys, 7 holds and 3 sells with an average price target of $3.12 per share.
Full valuations and analysis of these and all results for this week will be posted in the next edition of Macro Investor in the “Stocktake” section.
Chris Becker is an investment strategist at Macro Investor, Australia’s leading independent investment newsletter covering stocks, trades, property and fixed interest. Each week Macro Investor publishes tables on the top ten most undervalued and overvalued stocks on the ASX. A free 21-day trial is available at the site.
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The author owns Cochlear (COH) shares for his family superannuation fund, and the Macro Investor model portfolios have positions in some of the stocks mentioned above.