By Chris Becker
Earnings reports started up again yesterday and are now accelerating with over 100 companies on the All Ords reporting this week.
Full valuations, including position signals, portfolio allocations and Risk Scores for this week will be posted in the next edition of Macro Investor in the “Stocktake” section on Monday.
Here’s Thursday’s wrap up, with some big hitters in the mix:
AMP Ltd – (AMP) the diversified financials (superannuation, insurance, funds management) group delivered a 11% rise in first half profit, with the results including its purchase of the AXA Aust/NZ units. Underlying profit was up 7% whilst the interim dividend declared at 12.5 cents was lower than the 14 cents previously.
The stock gapped up almost 5% on the day, climbing out of a bear market:
The consensus price target is just above current price at $4.52, with 5 Buys, 6 Holds and 2 Sells. FARM considered the stock “Investment Grade” quality before the earnings release, with a “Buy” position signal.
Wesfarmers Ltd – (WES) another diversified giant, and owner of Coles, WES reported a very solid FY net income at $2.13 billion, right on estimates, with sales surprising on the upside. This translated into a higher earnings per share print at $1.84 and a much higher dividend per share at 95c on expectations of only 80 c per share.
The stock soared on the release, building on a recent rally, up almost 4% on the day:
The consensus price target is still well above the share price at $34.40, with 8 Buys, 4 Holds and 2 Sells. FARM considered the stock “Investment grade” quality before the earnings release, with a moderately high Risk Score and “Buy” position signal.
Platinum Asset Management Ltd – (PTM) the global equities fund manager announced a near 16% drop in FY profit, mainly due to a 13.5% drop in management fees as revenue and funds under management (FUM) declined. The earnings per share was 22.5 c vs 26.3 c last year, with the result announced after the close, the stock was up beforehand, but has been in decline for some time:
The consensus price target is below the current share price at $3.77, with not much conviction – 2 Buys, 1 Holds and 5 Sells. FARM considered the stock “Investment Grade” quality before the earnings release, with a moderate to high Risk Score.
Adelaide Brighton Ltd – (ABC) the the construction materials and concrete company posted first half results and gave full year guidance yesterday. Although revenue was higher, sales were slightly lower than expected, which translated into a 1H net profit of $67.5 million on expectations of $70 million. The company announced a carbon tax impact of $5 million in the first 12 months and an interim dividend of 7.5 cents per share:
The stock dropped over 10% on the result, having been in a sideways holding pattern on the weekly price chart:
Most analysts have a wait and see attitude with the stock, with their consensus price target at $3.24, with 5 Buys, 10 Holds and no Sells. FARM considered the stock “Investment Grade” quality but slightly overvalued before the earnings release, with a “Hold” recommendation.
Brambles Ltd – (BXB) the global pallet and container services group beat FY net income estimates reporting a $576 million profit vs $540 million expected, although sales were bang on target. Earnings per share as a result were materially higher than expected at 38.6 cents vs 36.2 cents, although the final dividend at 13 cents was less than expected.
The stock had a wide ranging day, but eventually closed up slightly, having rebounded in previous weeks:
The consensus price target considerably higher than the current price at $7.20, with 7 Buys, 1 Holds and 1 Sell. FARM considered the stock “Core” quality before the earnings release, with a moderate Risk Score and “Buy Half” position signal.
ASX Ltd (ASX) the near-monopoly equities and derivatives market company group missed estimates when it reported FY net income yesterday at $339 million, mainly due to lower transactions and raisings. The final dividend was also lower than expected at 85.1 cents per share, but equates to a 8.2% fully franked dividend yield.
The stock dropped slightly on the result, remaining in its long term sideways holding pattern on the weekly price chart:
The consensus price target just above $31 doesnt give much room with both Citigroup and JPMorgan cutting ASX to Neutral, citing risks on low volumes, with only 3 Buys, 8 Holds and 5 Sells. FARM considered the stock “Investment Grade” quality, slightly overvalued, but with a “Buy” position signal before the earnings release.
Invocare Ltd (IVC) the listed funeral home and crematorium operator announced a 40% increase in first half net income, up to $20.3 million, with revenue increasing 24% year on year. The dividend was increased to 15 c higher than the estimated 13.5 cents per share.
The stock was up 3%, with the weekly price chart showing a very strong bull market in the stock:
The consensus price target been broken at $8.78 per share, with most analysts neutral with only 2 Buys, 8 Holds and 1 Sell. FARM considered the stock “Investment Grade” quality and at FY13 estimate of value, but had a “Buy” position signal before the earnings release.
iiNet Ltd (IIN) the emerging internet telecommunications company announced an 11% rise in net profit for the FY, with revenues up 19% and a final dividend declared at 8 cents per share, for a 5.6% fully franked yield.
The stock was up slightly on the day, with the weekly price chart showing the stock gaining upwards momentum:
The consensus price target is near the current share price at $3.64, but analysts remain bullish with 10 Buys, 2 Holds and 2 Sells. FARM considered the stock “Core” quality before the earnings release with a “Buy” position signal an acceptable Risk Score. The previous valuation in full is available here.
Alumina Ltd (AWC) the alumina producer declared a first half loss as commodity prices weighed on the group’s profitability. The loss at $14.6million was less than expected, but compares to a nearly $70 million profit a year ago. No interim dividend was declared.
The stock was down slightly on the day, with the weekly price chart showing the near 70% decline in the share price, as it follows aluminum prices (marked in red):
The consensus price target is still quite high at $1.00 per share – but with little conviction, with 1 Buys, 5 Holds and 6 Sells. FARM considered the stock “Avoid” quality and an “Avoid” position signal with a very high Risk Score.
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.
You can follow Chris on Twitter.
Disclaimer: The content on this blog should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation, no matter how much it seems to make sense, to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The authors have no position in any company or advertiser reference unless explicitly specified. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult someone who claims to have a qualification before making any investment decisions.