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Are Insiders Buying CosmoSteel Holdings Limited (SGX:B9S) Stock?
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It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares inCosmoSteel Holdings Limited(SGX:B9S).
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia Universitystudyfound that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Check out our latest analysis for CosmoSteel Holdings
Over the last year, we can see that the biggest insider purchase was by Director of Logistics & Operations and Executive Director Tong Hai Ong for S$126k worth of shares, at about S$0.072 per share. So it's clear an insider wanted to buy, at around the current price, which is S$0.087. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider bought shares at close to current prices. Tong Hai Ong was the only individual insider to buy shares in the last twelve months.
Tong Hai Ong bought 6.1m shares over the last 12 months at an average price of S$0.068. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
CosmoSteel Holdings is not the only stock insiders are buying. So take a peek at thisfreelist of growing companies with insider buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 31% of CosmoSteel Holdings shares, worth about S$8.0m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Insiders likely see value in CosmoSteel Holdings shares, given these transactions (along with notable insider ownership of the company).I like to dive deeperinto how a company has performed in the past. You can findhistoric revenue and earnings in thisdetailed graph.
Of courseCosmoSteel Holdings may not be the best stock to buy. So you may wish to see thisfreecollection of high quality companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Where Will Mastercard Be in 5 Years?
While discussingMastercard Inc(NYSE: MA)and close rivalVisa Inc(NYSE: V)on a recentepisodeof theInvest Like the Bestpodcast, investing legendChuck Akregushed, "There's not a word in the English language superlative enough to talk about their operating margins or return on capital." It's hard to deny Akre's point. Over the past ten years, Mastercard has appreciated 1,590%, compared to theS&P 500index's 230%. Over the past five years, the tally stands at 260% for Mastercard, 50% for the S&P -- and the payment network's growth shows no sign of slowing down. Year to date, Mastercard has rallied 40% to the market's 17%.
So what's Mastercard's secret sauce? What makes the company so special that investing legends discuss it in hushed tones and cause its stock price to rocket past the S&P 500 for more than a decade running? Let's take a closer look at Mastercard's business model to see what's driving its amazing returns, and what the next five years might hold for it.
While Mastercard only collects a fraction of a percentage as a fee, this quickly compounds across Mastercard's millions of cards and the transactions facilitated with them. Image source: Getty Images.
When consumers make purchases using Mastercard products (whether via a plastic card or digital platform), Mastercard collects a small percentage of the transaction as a fee. While merchants will ultimately miss out on about 2.5% to 3.5% of the total transaction amount, much of that missing total goes to the card issuers and the merchants' banks for their roles in the transaction. Smaller amounts go to the payment processing service (the provider of the hardware and software that allows merchants to accept cards at the point-of-sale) and the payment network (e.g. Mastercard).
Thus Mastercard only collects a fraction of a percentage as a fee -- but this quickly compounds across Mastercard's millions of cards and the transactions facilitated with them. In Mastercard's 2019 first quarter, the company's 2.54 billion cards were used to make 19.2 billion transactions worth almost $1.5 trillion. Small fees quickly add up when we're talking about these kinds of numbers!
The beauty of Mastercard's (and Visa's) business model is that, once the underlying infrastructure is in place, there is little additional cost for Mastercard to accept more payments. In other words, as Mastercard scales, increased transactions quickly add to the bottom line.
As card and digital payments grow the use of cash and personal checks decreases, a trend which could be called the "war on cash." Severalcatalystsare driving this war on cash, directly leading to higher use of the Mastercard network, includinge-commerce,mobile payments, and more acceptance of card and digital payment at physical points-of-sale.
Most of us intuitively understand that using cash or checks for online purchases is, at best, much more inefficient and cumbersome than card or digital payments. As e-commerce increasingly takes market share from brick-and-mortar retail, it provides a strong tailwind for Mastercard. As Visa CFO Vasant Prabhu explained the benefits of this trend:
E-commerce is growing 5-times as fast as face-to-face transactions. And in an e-commerce transaction, the propensity to use a Visa card is twice as high as a face-to-face transaction. So something growing 5-times as fast where your propensity to be used is twice what it might have been. That's phenomenal.
While Prabhu was talking about Visa, the same benefits also apply to Mastercard.
Mobile payments provide another catalyst to Mastercard. Nearly all popular digital wallet platforms in North America and Europe, includingPayPal Holdings'(NASDAQ: PYPL)core platform andVenmoandSquare Inc's(NYSE: SQ)Cash App, use the payment network rails provided by Mastercard and Visa to move money. (Important note: The same dynamics for Mastercard and Visa do not exist for many popular digital wallet platforms in Asia, such as Alipay, PayTM, and WeChat Pay.) Square's Cash App had more than 15 million monthly active users at the end of 2018, and PayPal reported 277 million active user accounts in its 2019 first quarter, more than 40 million of which were Venmo accounts. The popularity of these platforms for making purchases or sending friends money only increases the chance that Mastercard's rails are used for a transaction.
Finally, more merchants than ever before are able to accept cards as payments. Square made accepting card payments as easy as plugging a small dongle into a smartphone in the U.S., whileiZettle, since acquired by PayPal, did the same in Europe. Meanwhile,QR codes, the black-and-white matrix images that can be scanned by smartphones, have been heavily adopted by merchants in emerging markets since they can be used without expensive hardware or a landline internet connection.
These catalysts have consistently driven Mastercard's top- and bottom-line growth. In Q1, revenue rose to $3.89 billion, a 13% year-over-year increase, while adjusted earnings per share (EPS) grew to $1.78, a 24% increase year-over-year.
So where will Mastercard be in five years? While my crystal ball is broken, I don't foresee too much happening to displace Mastercard's vital role in the payments ecosystem over the next few years. The company'snetwork effect, which makes its platform more valuable the more users it has, makes it exceedingly difficult for a disruptive upstart or competitor to take its place.
Of course, due to its envy-inducing margins, there will always be those that try. Investors should definitely keep an eye on big banks and tech giants experimenting with new technology, such asFacebook Inc's(NASDAQ: FB)efforts withLibra. That being said, I would be very surprised if the next five years did not see Mastercard trouncing the S&P 500 again.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors.Matthew Cochraneowns shares of Facebook, Mastercard, PayPal Holdings, and Square. The Motley Fool owns shares of and recommends Facebook, Mastercard, PayPal Holdings, Square, and Visa. The Motley Fool has adisclosure policy. |
You Might Like CosmoSteel Holdings Limited (SGX:B9S) But Do You Like Its Debt?
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CosmoSteel Holdings Limited (SGX:B9S) is a small-cap stock with a market capitalization of S$26m. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Given that B9S is not presently profitable, it’s vital to understand the current state of its operations and pathway to profitability. The following basic checks can help you get a picture of the company's balance sheet strength. However, potential investors would need to take a closer look, and I recommend youdig deeper yourself into B9S here.
B9S has sustained its debt level by about S$30m over the last 12 months which accounts for long term debt. At this stable level of debt, B9S currently has S$8.5m remaining in cash and short-term investments to keep the business going. We note it produced negative cash flow over the last twelve months. For this article’s sake, I won’t be looking at this today, but you can assess some of B9S’soperating efficiency ratios such as ROA here.
Looking at B9S’s S$33m in current liabilities, it seems that the business has been able to meet these obligations given the level of current assets of S$86m, with a current ratio of 2.64x. The current ratio is calculated by dividing current assets by current liabilities. Generally, for Energy Services companies, this is a reasonable ratio as there's enough of a cash buffer without holding too much capital in low return investments.
B9S is a relatively highly levered company with a debt-to-equity of 40%. This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. Though, since B9S is presently loss-making, sustainability of its current state of operations becomes a concern. Maintaining a high level of debt, while revenues are still below costs, can be dangerous as liquidity tends to dry up in unexpected downturns.
Although B9S’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. Keep in mind I haven't considered other factors such as how B9S has been performing in the past. I suggest you continue to research CosmoSteel Holdings to get a better picture of the small-cap by looking at:
1. Historical Performance: What has B9S's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Is This Really Another Worrisome Sign for Harley-Davidson?
Harley-Davidson(NYSE: HOG)is cruising back into the securitization market for the first time in three years, with a collateral pool possibly worth as much as $658 million.
Because the asset-backed securities feature high ratings from Moody's Investor Services and Fitch Ratings, and the loans being securitized have high FICO scores, it looks as if the motorcycle maker is dealing a hand from strength that should find a ready market.
When riders are buying Harleys, they're extending the payments out as far as possible to afford them. Image source: Harley-Davidson.
Securitizationis the process of bundlingindividual assets together into a group and then selling partial interests in the entire pool of assets. One that many people are familiar with is mortgages. Harley-Davidson is bundling together the loans or leases that buyers have taken out on its motorcycles and it is selling them to investors for an upfront payment instead of collecting the monthly note amount itself over the life of the loan or lease.
That gives Harley an opportunity to move some debt off its balance sheet and open up liquidity. However, these are loans with long original loan terms, and the bike company's financial arm has seen its delinquency rates and loss rates start to rise as the market for new motorcycles remains depressed and used bike prices are soft.
Although this seems to be a net positive for Harley-Davidson, the underlying trends it highlights suggests it's still facing difficult times.
According to a pre-sale report from Moody's, the pools of securities have loans with an average balance of over $15,800, a weighted average borrower FICO scores of 757, and an average APR of 6.64%. The total value of the loans is well above the $302 million securitization Harley did the last time it wasin the securitization marketin 2016, and the FICO scores are higher too. There has, however, been a slight increase in the average length of the original loan terms, from 70 months to 71 months, with less than 2% of the loans having under four years remaining.
The problem is that a six-year loan is a very long time for a motorcycle, because it indicates the buyers can't readily come up with a down payment to lower the principal. Instead, they're extending the terms to reduce their monthly payments. It results in paying much more for the motorcycle over the repayment period, and it also means the buyer owes a lot more than the bike is worth for an extended period of time.
Loans in the securitization pool from 61 months to 72 months account for 36% of the total, while 73 to 84 months --seven years!-- make up 28%. So even supposedly well-qualified buyers are extending payments well out into the future.
And because used motorcycle prices continue to be soft, selling the bike becomes more difficult. Any economic downturn will make it hard to maintain the payments the buyer already really couldn't afford to make in the first place, and also difficult to unload.
Moody's notes that annualized net losses of 1.77% were higher than they were in the recent past, and Harley says first-quarter losses rose to 2.22%, as its 30-day delinquency rate rose to 3.73% from 3.31% a year ago. Total past-due receivables, however, fell year over year in the first quarter. Harley expects the number of delinquencies to rise as it targets more subprime customers.
Because of the higher rate of prime borrowers in this securitization, though, Moody's anticipates cumulative net losses from the deal of just 1.5% for the deal, while Fitch pegs it at 1.6%.
Harley-Davidson's motorcycles are expensive, and the bike maker has been loath to cut prices in response to falling sales. It doesn't want to impair the premium associated with the brand, so price is more important than volume. While it has offered some promotional discounts occasionally, it has been a targeted affair and not at all broad-based like its rivals.
That has largely meant Harley's profit margins have remained intact, but sales have fallen forfour consecutive years.Last year, sales tumbled by double-digit rates. It's made more difficult by the flood of lower-priced used bikes that compete with new ones. Although Harley told analysts during its first-quarter earnings conference call that prices of used Harleys in its dealer network rose for the seventh consecutive quarter, they're still exceptionally low when compared with the cost of a new motorcycle.
Even though it's building out smaller bikes that will presumably carry lower price tags, they're being built first for foreign markets where it's going to have a difficult time breaking the chokehold existing manufacturers have on share in those countries.
Harley-Davidson has some $5 billion in finance receivables, meaning its return to the securitization market after the long hiatus won't really change much for the bike maker. Unfortunately, the broader motorcycle market isn't changing either, and that's a worrisome situation for the bike maker.
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Rich Dupreyhas no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has adisclosure policy. |
What Investors Should Know About CosmoSteel Holdings Limited's (SGX:B9S) Financial Strength
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Investors are always looking for growth in small-cap stocks like CosmoSteel Holdings Limited (SGX:B9S), with a market cap of S$26m. However, an important fact which most ignore is: how financially healthy is the business? Since B9S is loss-making right now, it’s vital to understand the current state of its operations and pathway to profitability. We'll look at some basic checks that can form a snapshot the company’s financial strength. Nevertheless, these checks don't give you a full picture, so I recommend youdig deeper yourself into B9S here.
Over the past year, B9S has maintained its debt levels at around S$30m – this includes long-term debt. At this current level of debt, the current cash and short-term investment levels stands at S$8.5m to keep the business going. Moving on, operating cash flow was negative over the last twelve months. For this article’s sake, I won’t be looking at this today, but you can assess some of B9S’soperating efficiency ratios such as ROA here.
At the current liabilities level of S$33m, the company has been able to meet these commitments with a current assets level of S$86m, leading to a 2.64x current account ratio. The current ratio is calculated by dividing current assets by current liabilities. For Energy Services companies, this ratio is within a sensible range as there's enough of a cash buffer without holding too much capital in low return investments.
With a debt-to-equity ratio of 40%, B9S can be considered as an above-average leveraged company. This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. However, since B9S is presently loss-making, sustainability of its current state of operations becomes a concern. Running high debt, while not yet making money, can be risky in unexpected downturns as liquidity may dry up, making it hard to operate.
Although B9S’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. Keep in mind I haven't considered other factors such as how B9S has been performing in the past. I recommend you continue to research CosmoSteel Holdings to get a more holistic view of the small-cap by looking at:
1. Historical Performance: What has B9S's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Apple buys self-driving car startup Drive.ai
By Stephen Nellis
June 25 (Reuters) - Apple Inc on Tuesday confirmed that it has acquired self-driving shuttle firm Drive.ai.
Technology news website The Information reported earlier this month https://www.theinformation.com/articles/apple-looks-to-acquire-struggling-self-driving-car-startup-drive-ai that the iPhone maker was considering acquiring the firm as a move to bring aboard some of its engineering talent to boost Apple's own self-driving efforts.
One of hundreds of startups pursuing autonomous vehicles, Drive.ai had been running a small fleet of test shuttles in Texas, The Information reported. But the startup told California regulators that it plans to lay off 90 people in a permanent closure. The San Francisco Chronicle earlier reported https://www.sfchronicle.com/business/article/Drive-ai-a-self-driving-car-startup-once-worth-14047625.php the closure.
In Silicon Valley, it is common for larger companies to acquire struggling startups primarily to hire their engineers, a move known in the industry as an "acqui-hire."
Apple is vying against rivals such as Alphabet Inc's Waymo to develop self-driving vehicles. In the past year, Apple has revamped its efforts, bringing former Tesla Inc engineering chief Doug Field to oversee the operation, which includes more than 5,000 workers.
Apple is also working on key components such as sensors in addition to holding talks with potential suppliers. (Reporting by Stephen Nellis; Editing by Sandra Maler) |
What Are Analysts Saying About Bajaj Auto Limited's (NSE:BAJAJ-AUTO) Future?
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The latest earnings announcement Bajaj Auto Limited (NSE:BAJAJ-AUTO) released in May 2019 revealed that the business benefited from a robust tailwind, eventuating to a double-digit earnings growth of 17%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Bajaj Auto's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
See our latest analysis for Bajaj Auto
Analysts' outlook for next year seems pessimistic, with earnings reducing by -0.3%. But in the following year, there is a complete contrast in performance, with generating double digit 7.1% compared to today’s level and continues to increase to ₹63b in 2022.
While it is useful to understand the growth each year relative to today’s figure, it may be more valuable gauging the rate at which the business is moving every year, on average. The pro of this technique is that we can get a better picture of the direction of Bajaj Auto's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 6.7%. This means, we can anticipate Bajaj Auto will grow its earnings by 6.7% every year for the next few years.
For Bajaj Auto, I've put together three important aspects you should further examine:
1. Financial Health: Does it have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Valuation: What is BAJAJ-AUTO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether BAJAJ-AUTO is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BAJAJ-AUTO? Exploreour interactive list of stocks with large growth potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
GE Aviation Keeps Confounding the Bears
General Electric(NYSE: GE)has been one of the most hotly debated battleground stocks over the past year or so. Bulls think that the struggling industrial conglomerate will eventually turn itself around and believe the stock's 76% plunge from over $30 at the beginning of 2017 to less than $10 by the end of 2018 was overdone. Bears disagree, seeing GE as a fundamentally broken company that is burdened by way too much debt.
The valuation of the GE Aviation business is one of the key sticking points. Many analysts think GE Aviation could be worth as much as $100 billion. With GE's market cap currently sitting near $90 billion, a high valuation for GE Aviation would almost singlehandedly kill the bear case.
Sure enough, notable GE bear Stephen Tusa recently argued that the aviation unit may be worth as little as $30 billion to $40 billion. However, this valuation fundamentally underestimates GE Aviation's long-term growth trajectory.
Sharp revenue and earnings declines in GE's power business and a series of divestitures have made GE Aviation the company's largest segment by revenue and its main source of profit. In 2018, the segmentposted a $6.5 billion operating profit(up 20% year over year) on $30.6 billion of revenue (up 13% year over year). All of GE's other industrial segments combined posted a paltry operating profit of $4.3 billion on $85.1 billion of revenue.
GE Aviation has become GE's largest and most profitable business unit. Image source: General Electric.
In its 2019 guidance, management projected that GE Aviation will deliver high-single-digit revenue growth this year. Free cash flow will be roughly flat at around $4.2 billion and segment margin will decline to roughly 20% from 21.2% a year earlier, due to a less favorable mix. Segment margin and free cash flow trends should start to improve again beginning in 2020.
At last week's Paris Air Show, GE and its CFM joint venture won a stunning $55 billion of orders, confirming the aviation unit's strong growth trajectory. This included deals with IndiGo and AirAsia valued atmore than $20 billion eachat list price.
In his recent critique of the GE Aviation business, Tusa noted that GE Aviation gets nearly all of its profit from aftermarket services rather than engine sales. Furthermore, the CF6 and CF34 engines, which are nearing the end of their production runs, represent a substantial proportion of GE Aviation's services revenue. Thus, Tusa sees slower profit growth ahead for the business.
However, GE has many engine programs, and while some are declining, others are just starting to ramp up. Total engine shop visits -- the main driver of services revenue -- are set to rise from around 5,500 this year to 8,000 a decade from now, a roughly 45% increase. This growth is being driven by an uptick in aircraft production that began near the beginning of this decade.
Strong demand for narrow-body jets is driving growth at GE's CFM joint venture. Image source: Airbus.
It's important to note that engine shop visits come at fairly predictable intervals. Airlines may stop buying new jets and reduce aircraft utilization during periods of economic weakness, but they must continue to maintain the engines. As a result, this forecast is probably quite accurate.
GE Aviation is also on pace for tremendous growth in its military business, thanks to some key contract wins. The company recently increased its growth forecast for this market, projecting that revenue will double to $8.3 billion by 2025.
As noted above, GE Aviation produced $4.2 billion of free cash flow last year, including taxes and most corporate overhead costs. Even if the business didn't grow at all over the long term, it would likely be worth more than $40 billion just based on its current cash flow.
Yet GE Aviation is in position to post strong cash flow growth beyond 2020. Right now, its CFM joint venture is producing the new LEAP family of engines at a loss, but GE expects the program to reach breakeven in 2021. The cash profits from that program will improve steadily thereafter.
GE is also beginning the transition from its GE90 engine (which powers theBoeing777) to the next-generation GE9X, which will power the 777X. That transition is another reason free cash flow isn't expected to grow much in 2019 and 2020. However, as output ramps up over the next few years, production costs should decline, reversing the current cash flow headwind.
With strong growth expected in its commercial services and military businesses and engine production likely to turn cash positive, GE Aviation's cash flow is set to surge over the next decade. Considering that growth will likely continue into the 2030s and beyond, $100 billion seems like an entirely reasonable estimate of the segment's value. That makes GE stock look like a bargain right now, despite the difficulties in some of its other businesses.
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Adam Levine-Weinbergowns shares of General Electric. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has adisclosure policy. |
With EPS Growth And More, Bukit Sembawang Estates (SGX:B61) Is Interesting
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Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. And in their study titledWho Falls Prey to the Wolf of Wall Street?'Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.
In contrast to all that, I prefer to spend time on companies likeBukit Sembawang Estates(SGX:B61), which has not only revenues, but also profits. While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
See our latest analysis for Bukit Sembawang Estates
Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Like the last firework on New Year's Eve accelerating into the sky, Bukit Sembawang Estates's EPS shot from S$0.21 to S$0.39, over the last year. Year on year growth of 83% is certainly a sight to behold.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While Bukit Sembawang Estates did well to grow revenue over the last year, EBIT margins were dampened at the same time. So it seems the future my hold further growth, especially if EBIT margins can stabilize.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
While profitability drives the upside, prudent investors alwayscheck the balance sheet, too.
I always like to check up on CEO compensation, because I think that reasonable pay levels, around or below the median, can be a sign that shareholder interests are well considered. For companies with market capitalizations between S$541m and S$2.2b, like Bukit Sembawang Estates, the median CEO pay is around S$551k.
Bukit Sembawang Estates offered total compensation worth S$450k to its CEO in the year to March 2018. That comes in below the average for similar sized companies, and seems pretty reasonable to me. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.
Bukit Sembawang Estates's earnings per share have taken off like a rocket aimed right at the moon. Such fast EPS growth makes me wonder if the business has hit an inflection point (and I mean the good kind.) At the same time the reasonable CEO compensation reflects well on the board of directors. So Bukit Sembawang Estates looks like it could be a good quality growth stock, at first glance. That's worth watching. Now, you could try to make up your mind on Bukit Sembawang Estates by focusing on just these factors,oryou couldalsoconsider how its price-to-earnings ratio compares to other companies in its industry.
You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here isa list of companies with insider buying in the last three months.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Apple rescues autonomous car start-up from the jaws of death, boosting its own troubled self-driving project
Apple has bought a driverless car start-up in a sign that its long-running but secretive self-driving vehicle plans remain active.
The tech company has bought Drive.ai, a company founded by former Stanford University students, that had been developing self-driving software.
Apple is believed to be bringing several of the start-up’s engineers on board, although notices filed in California suggest a significant number of staff will be laid off.
Drive.ai had been conducting trials of its technology in Texas, and was known for its bright orange vans with exterior screens that communicated to pedestrians what the vehicle was doing.
It had raised around $77m (£61m) but was believed to be looking for a buyer, and Apple is likely to have purchased it for significantly less than that.
Local media in San Francisco had reportedthat Drive.ai was shutting down after it told California state officials that it would be permanently closing and laying off 90 employees.
Apple has pursued cars and self-driving software for years but its plans have shifted multiple times with little sign that the company is close to showing the technology to the public. At one time, it is believed the company was developing its own car under the codename Project Titan.The plan was supposedly scrapped, with chief executive Tim Cook later saying that Apple was working on “autonomous systems”.
"We sort of see it as the mother of all AI projects. "It’s probably one of the most difficult AI projects actually to work on,” he said in 2017.
The division has been through multiple rounds of layoffs in recent years as its priorities have shifted. Earlier this year, it hired Tesla’s head of electric powertrains Michael Schwekutsch and last year re-hired Doug Field, who had worked at Apple before joining Tesla as its chief vehicle engineer.
An Apple spokesman confirmed the deal but did not say how much it had paid. |
Hedge Funds Have Never Been More Bullish On Hill International Inc (HIL)
Insider Monkey has processed numerous 13F filings of hedge funds and successful investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find write-ups about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Hill International Inc (NYSE:HIL) based on that data.
Hedge fund interest inHill International Inc (NYSE:HIL)shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare HIL to other stocks including Turtle Beach Corp (NASDAQ:HEAR), Ekso Bionics Holdings, Inc. (NASDAQ:EKSO), and Ultralife Corp. (NASDAQ:ULBI) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_733253" align="aligncenter" width="473"]
Arnaud Ajdler Engine Capital[/caption]
We're going to review the fresh hedge fund action encompassing Hill International Inc (NYSE:HIL).
Heading into the second quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HIL over the last 15 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds,Engine Capitalheld the most valuable stake in Hill International Inc (NYSE:HIL), which was worth $16.2 million at the end of the first quarter. On the second spot was Ancora Advisors which amassed $10.3 million worth of shares. Moreover, Bulldog Investors, Rutabaga Capital Management, and Tudor Investment Corp were also bullish on Hill International Inc (NYSE:HIL), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Hill International Inc (NYSE:HIL) has witnessed bearish sentiment from hedge fund managers, it's easy to see that there were a few hedge funds that decided to sell off their full holdings heading into Q3. Interestingly, Jeremy Carton and Gilbert Li'sAlta Fundamental Adviserscut the biggest investment of all the hedgies followed by Insider Monkey, worth close to $0.6 million in stock, and Karim Abbadi and Edward McBride's Centiva Capital was right behind this move, as the fund cut about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Hill International Inc (NYSE:HIL) but similarly valued. We will take a look at Turtle Beach Corp (NASDAQ:HEAR), Ekso Bionics Holdings, Inc. (NASDAQ:EKSO), Ultralife Corp. (NASDAQ:ULBI), and MVC Capital, Inc. (NYSE:MVC). All of these stocks' market caps are closest to HIL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HEAR,12,21169,-1 EKSO,7,52278,5 ULBI,7,5883,3 MVC,8,47295,0 Average,8.5,31656,1.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $39 million in HIL's case. Turtle Beach Corp (NASDAQ:HEAR) is the most popular stock in this table. On the other hand Ekso Bionics Holdings, Inc. (NASDAQ:EKSO) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Hill International Inc (NYSE:HIL) is more popular among hedge funds. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately HIL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HIL were disappointed as the stock returned -3.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Did Hedge Funds Drop The Ball On DHI Group Inc. (DHX) ?
Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
IsDHI Group Inc. (NYSE:DHX)an outstanding investment right now? The best stock pickers are becoming hopeful. The number of bullish hedge fund bets increased by 1 lately. Our calculations also showed that dhx isn't among the30 most popular stocks among hedge funds.DHXwas in 13 hedge funds' portfolios at the end of March. There were 12 hedge funds in our database with DHX positions at the end of the previous quarter.
In the eyes of most shareholders, hedge funds are assumed to be slow, old financial tools of years past. While there are greater than 8000 funds trading at the moment, Our researchers choose to focus on the crème de la crème of this club, about 750 funds. It is estimated that this group of investors control the majority of all hedge funds' total capital, and by keeping track of their best picks, Insider Monkey has identified several investment strategies that have historically outrun Mr. Market. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in ourlatest quarterly updateand they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
We're going to review the recent hedge fund action surrounding DHI Group Inc. (NYSE:DHX).
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in DHX a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically,Nantahala Capital Managementwas the largest shareholder of DHI Group Inc. (NYSE:DHX), with a stake worth $11.7 million reported as of the end of March. Trailing Nantahala Capital Management was Archon Capital Management, which amassed a stake valued at $7.9 million. Renaissance Technologies, D E Shaw, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key hedge funds have jumped into DHI Group Inc. (NYSE:DHX) headfirst.ExodusPoint Capital, managed by Michael Gelband, established the most outsized position in DHI Group Inc. (NYSE:DHX). ExodusPoint Capital had $0.1 million invested in the company at the end of the quarter. Michael Platt and William Reeves'sBlueCrest Capital Mgmt.also initiated a $0.1 million position during the quarter. The only other fund with a brand new DHX position is Matthew Hulsizer'sPEAK6 Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as DHI Group Inc. (NYSE:DHX) but similarly valued. We will take a look at Airgain, Inc. (NASDAQ:AIRG), Enzo Biochem, Inc. (NYSE:ENZ), CB Financial Services, Inc. (NASDAQ:CBFV), and Recro Pharma Inc (NASDAQ:REPH). This group of stocks' market valuations resemble DHX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AIRG,9,5452,5 ENZ,6,23375,-1 CBFV,2,1615,0 REPH,11,34989,0 Average,7,16358,1 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $33 million in DHX's case. Recro Pharma Inc (NASDAQ:REPH) is the most popular stock in this table. On the other hand CB Financial Services, Inc. (NASDAQ:CBFV) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks DHI Group Inc. (NYSE:DHX) is more popular among hedge funds. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on DHX as the stock returned 72.8% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published atInsider Monkey.
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With EPS Growth And More, Bukit Sembawang Estates (SGX:B61) Is Interesting
Want to participate in ashort research study? Help shape the future of investing tools and you could win a $250 gift card!
Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies likeBukit Sembawang Estates(SGX:B61). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
View our latest analysis for Bukit Sembawang Estates
Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Like a firecracker arcing through the night sky, Bukit Sembawang Estates's EPS shot from S$0.21 to S$0.39, over the last year. Year on year growth of 83% is certainly a sight to behold.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. On the one hand, Bukit Sembawang Estates's EBIT margins fell over the last year, but on the other hand, revenue grew. So it seems the future my hold further growth, especially if EBIT margins can stabilize.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
While profitability drives the upside, prudent investors alwayscheck the balance sheet, too.
As a general rule, I think it worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. For companies with market capitalizations between S$541m and S$2.2b, like Bukit Sembawang Estates, the median CEO pay is around S$551k.
Bukit Sembawang Estates offered total compensation worth S$450k to its CEO in the year to March 2018. That comes in below the average for similar sized companies, and seems pretty reasonable to me. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. I'd also argue reasonable pay levels attest to good decision making more generally.
Bukit Sembawang Estates's earnings per share growth has been so hot recently that thinking about it is making me blush. Such fast EPS growth makes me wonder if the business has hit an inflection point (and I mean the good kind.) Meanwhile, the very reasonable CEO pay reassures me a little, since it points to an absence profligacy. So Bukit Sembawang Estates looks like it could be a good quality growth stock, at first glance. That's worth watching. Now, you could try to make up your mind on Bukit Sembawang Estates by focusing on just these factors,oryou couldalsoconsider how its price-to-earnings ratio compares to other companies in its industry.
Of course, you can do well (sometimes) buying stocks thatare notgrowing earnings anddo nothave insiders buying shares. But as a growth investor I always like to check out companies thatdohave those features. You can accessa free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Here’s What Hedge Funds Think About Capital Senior Living Corporation (CSU)
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31 holdings, data that is available nowhere else. Should you consider Capital Senior Living Corporation (NYSE:CSU) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Capital Senior Living Corporation (NYSE:CSU)was in 13 hedge funds' portfolios at the end of March. CSU has seen an increase in hedge fund sentiment recently. There were 12 hedge funds in our database with CSU holdings at the end of the previous quarter. Our calculations also showed that csu isn't among the30 most popular stocks among hedge funds.
If you'd ask most stock holders, hedge funds are assumed to be underperforming, outdated financial tools of years past. While there are more than 8000 funds with their doors open today, We look at the leaders of this club, about 750 funds. These hedge fund managers shepherd most of the hedge fund industry's total capital, and by observing their best investments, Insider Monkey has spotted numerous investment strategies that have historically beaten the market. Insider Monkey's flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in ourlatest quarterly updateand they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let's review the recent hedge fund action regarding Capital Senior Living Corporation (NYSE:CSU).
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in CSU a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds,Arbiter Partners Capital Managementheld the most valuable stake in Capital Senior Living Corporation (NYSE:CSU), which was worth $18 million at the end of the first quarter. On the second spot was Cove Street Capital which amassed $12.5 million worth of shares. Moreover, Coliseum Capital, Renaissance Technologies, and Levin Capital Strategies were also bullish on Capital Senior Living Corporation (NYSE:CSU), allocating a large percentage of their portfolios to this stock.
Now, specific money managers have been driving this bullishness.Weld Capital Management, managed by Minhua Zhang, initiated the most outsized position in Capital Senior Living Corporation (NYSE:CSU). Weld Capital Management had $0.1 million invested in the company at the end of the quarter. Matthew Hulsizer'sPEAK6 Capital Managementalso initiated a $0 million position during the quarter. The only other fund with a new position in the stock is Paul Marshall and Ian Wace'sMarshall Wace LLP.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Capital Senior Living Corporation (NYSE:CSU) but similarly valued. These stocks are Correvio Pharma Corp. (NASDAQ:CORV), Steel Connect, Inc. (NASDAQ:STCN), Matinas Biopharma Holdings, Inc. (NYSE:MTNB), and BioSig Technologies, Inc. (NASDAQ:BSGM). All of these stocks' market caps are closest to CSU's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CORV,9,22097,2 STCN,5,42130,0 MTNB,7,13682,5 BSGM,1,862,0 Average,5.5,19693,1.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $43 million in CSU's case. Correvio Pharma Corp. (NASDAQ:CORV) is the most popular stock in this table. On the other hand BioSig Technologies, Inc. (NASDAQ:BSGM) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Capital Senior Living Corporation (NYSE:CSU) is more popular among hedge funds. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on CSU as the stock returned 10.8% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About Servicesource International Inc (SREV)
Insider Monkey finished processing more than 738 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2019. What do these smart investors think about Servicesource International Inc (NASDAQ:SREV)?
IsServicesource International Inc (NASDAQ:SREV)the right pick for your portfolio? Investors who are in the know are turning less bullish. The number of bullish hedge fund positions retreated by 2 in recent months. Our calculations also showed that srev isn't among the30 most popular stocks among hedge funds.
Today there are many formulas shareholders have at their disposal to value their holdings. Two of the most useful formulas are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top hedge fund managers can beat their index-focused peers by a very impressive amount (see the details here).
Let's take a gander at the fresh hedge fund action regarding Servicesource International Inc (NASDAQ:SREV).
Heading into the second quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SREV over the last 15 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds,Cannell Capitalheld the most valuable stake in Servicesource International Inc (NASDAQ:SREV), which was worth $5.8 million at the end of the first quarter. On the second spot was Headlands Capital which amassed $5.1 million worth of shares. Moreover, Renaissance Technologies, Prescott Group Capital Management, and D E Shaw were also bullish on Servicesource International Inc (NASDAQ:SREV), allocating a large percentage of their portfolios to this stock.
Since Servicesource International Inc (NASDAQ:SREV) has witnessed declining sentiment from the smart money, it's easy to see that there was a specific group of hedge funds who sold off their positions entirely by the end of the third quarter. Interestingly, Ken Griffin'sCitadel Investment Groupsaid goodbye to the biggest position of the "upper crust" of funds followed by Insider Monkey, worth an estimated $0.1 million in stock. Cliff Asness's fund,AQR Capital Management, also cut its stock, about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks similar to Servicesource International Inc (NASDAQ:SREV). We will take a look at Universal Technical Institute, Inc. (NYSE:UTI), Verona Pharma plc (NASDAQ:VRNA), Miragen Therapeutics, Inc. (NASDAQ:MGEN), and vTv Therapeutics Inc (NASDAQ:VTVT). This group of stocks' market values are closest to SREV's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UTI,8,24069,1 VRNA,5,18626,1 MGEN,5,6086,-2 VTVT,3,555,1 Average,5.25,12334,0.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $22 million in SREV's case. Universal Technical Institute, Inc. (NYSE:UTI) is the most popular stock in this table. On the other hand vTv Therapeutics Inc (NASDAQ:VTVT) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Servicesource International Inc (NASDAQ:SREV) is more popular among hedge funds. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on SREV as the stock returned 6.5% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published atInsider Monkey.
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Hedge Funds Have Never Been More Bullish On America Movil SAB de CV (AMX)
Before we spend days researching a stock idea we like to take a look at how hedge funds and billionaire investors recently traded that stock. The S&P 500 Index ETF (SPY) lost 2.6% in the first two months of the second quarter. Ten out of 11 industry groups in the S&P 500 Index lost value in May. The average return of a randomly picked stock in the index was even worse (-3.6%). This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 20 most popular S&P 500 stocks among hedge funds not only generated positive returns but also outperformed the index by about 3 percentage points through May 30th. In this article, we will take a look at what hedge funds think about America Movil SAB de CV (NYSE:AMX).
IsAmerica Movil SAB de CV (NYSE:AMX)the right investment to pursue these days? Prominent investors are in a bullish mood. The number of long hedge fund positions went up by 2 lately. Our calculations also showed that amx isn't among the30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_745225" align="aligncenter" width="473"]
Noam Gottesman, GLG Partners[/caption]
We're going to analyze the latest hedge fund action encompassing America Movil SAB de CV (NYSE:AMX).
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in AMX a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in America Movil SAB de CV (NYSE:AMX) was held byFisher Asset Management, which reported holding $169.7 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $18.6 million position. Other investors bullish on the company included GLG Partners, Millennium Management, and Citadel Investment Group.
Now, key hedge funds were breaking ground themselves.Islet Management, managed by Joseph Samuels, established the most valuable position in America Movil SAB de CV (NYSE:AMX). Islet Management had $2.2 million invested in the company at the end of the quarter. Mike Vranos'sEllingtonalso made a $0.5 million investment in the stock during the quarter. The following funds were also among the new AMX investors: Dmitry Balyasny'sBalyasny Asset Managementand Michael Gelband'sExodusPoint Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as America Movil SAB de CV (NYSE:AMX) but similarly valued. We will take a look at Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Illinois Tool Works Inc. (NYSE:ITW), UBS Group AG (NYSE:UBS), and Biogen Inc. (NASDAQ:BIIB). All of these stocks' market caps resemble AMX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VRTX,45,2285930,6 ITW,27,315022,-1 UBS,11,750775,0 BIIB,49,2936721,-8 Average,33,1572112,-0.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1572 million. That figure was $234 million in AMX's case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand UBS Group AG (NYSE:UBS) is the least popular one with only 11 bullish hedge fund positions. America Movil SAB de CV (NYSE:AMX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on AMX, though not to the same extent, as the stock returned 4.5% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About J Alexander’s Holdings Inc (JAX)
Is J Alexander's Holdings Inc (NYSE:JAX) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
J Alexander's Holdings Inc (NYSE:JAX)was in 14 hedge funds' portfolios at the end of March. JAX investors should be aware of an increase in hedge fund sentiment recently. There were 13 hedge funds in our database with JAX positions at the end of the previous quarter. Our calculations also showed that JAX isn't among the30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's review the recent hedge fund action surrounding J Alexander's Holdings Inc (NYSE:JAX).
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in JAX a year ago. With the smart money's capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically,Ancora Advisorswas the largest shareholder of J Alexander's Holdings Inc (NYSE:JAX), with a stake worth $12.3 million reported as of the end of March. Trailing Ancora Advisors was Marathon Partners, which amassed a stake valued at $9.6 million. Renaissance Technologies, Moab Capital Partners, and Birch Grove Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, specific money managers were breaking ground themselves.Bailard Inc, managed by Thomas Bailard, initiated the most outsized position in J Alexander's Holdings Inc (NYSE:JAX). Bailard Inc had $0.2 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle'sSpringbok Capitalalso made a $0 million investment in the stock during the quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as J Alexander's Holdings Inc (NYSE:JAX) but similarly valued. We will take a look at Colony Bankcorp Inc (NASDAQ:CBAN), StoneMor Partners L.P. (NYSE:STON), Inspired Entertainment, Inc. (NASDAQ:INSE), and AstroNova, Inc. (NASDAQ:ALOT). This group of stocks' market valuations are closest to JAX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBAN,4,17747,0 STON,4,46579,0 INSE,8,33693,0 ALOT,8,22280,1 Average,6,30075,0.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $32 million in JAX's case. Inspired Entertainment, Inc. (NASDAQ:INSE) is the most popular stock in this table. On the other hand Colony Bankcorp Inc (NASDAQ:CBAN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks J Alexander's Holdings Inc (NYSE:JAX) is more popular among hedge funds. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on JAX as the stock returned 9.3% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About Basic Energy Services, Inc (BAS)
The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May as this time China pivoted and Trump put more pressure on China by increasing tariffs. Hedge funds' top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 18.7% through May 30th, vs. a gain of 12.1% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards Basic Energy Services, Inc (NYSE:BAS), and what that likely means for the prospects of the company and its stock.
IsBasic Energy Services, Inc (NYSE:BAS)a buy right now? The best stock pickers are taking an optimistic view. The number of long hedge fund positions increased by 2 lately. Our calculations also showed that BAS isn't among the30 most popular stocks among hedge funds.
If you'd ask most traders, hedge funds are seen as slow, outdated investment vehicles of years past. While there are greater than 8000 funds trading at present, We choose to focus on the upper echelon of this group, about 750 funds. Most estimates calculate that this group of people administer most of all hedge funds' total asset base, and by paying attention to their first-class picks, Insider Monkey has unearthed a few investment strategies that have historically outpaced the market. Insider Monkey's flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in ourlatest quarterly updateand they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let's review the latest hedge fund action surrounding Basic Energy Services, Inc (NYSE:BAS).
At Q1's end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in BAS a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Basic Energy Services, Inc (NYSE:BAS) was held bySilver Point Capital, which reported holding $12.5 million worth of stock at the end of March. It was followed by Prescott Group Capital Management with a $6.1 million position. Other investors bullish on the company included Contrarian Capital, Renaissance Technologies, and D E Shaw.
As one would reasonably expect, some big names have been driving this bullishness.GeoSphere Capital Management, managed by Arvind Sanger, assembled the largest position in Basic Energy Services, Inc (NYSE:BAS). GeoSphere Capital Management had $0.7 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle'sSpringbok Capitalalso made a $0.5 million investment in the stock during the quarter. The only other fund with a new position in the stock is Mike Vranos'sEllington.
Let's go over hedge fund activity in other stocks similar to Basic Energy Services, Inc (NYSE:BAS). These stocks are Zafgen Inc (NASDAQ:ZFGN), NantHealth, Inc. (NASDAQ:NH), DURECT Corporation (NASDAQ:DRRX), and RADCOM Ltd. (NASDAQ:RDCM). This group of stocks' market valuations match BAS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZFGN,14,34330,-6 NH,3,906,-1 DRRX,4,1974,-2 RDCM,4,13183,0 Average,6.25,12598,-2.25 [/table]
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As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $30 million in BAS's case. Zafgen Inc (NASDAQ:ZFGN) is the most popular stock in this table. On the other hand NantHealth, Inc. (NASDAQ:NH) is the least popular one with only 3 bullish hedge fund positions. Basic Energy Services, Inc (NYSE:BAS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately BAS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BAS were disappointed as the stock returned -39.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Is Zafgen Inc (ZFGN) A Good Stock To Buy?
We can judge whether Zafgen Inc (NASDAQ:ZFGN) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Zafgen Inc (NASDAQ:ZFGN)was in 14 hedge funds' portfolios at the end of March. ZFGN investors should pay attention to a decrease in hedge fund interest lately. There were 20 hedge funds in our database with ZFGN positions at the end of the previous quarter. Our calculations also showed that ZFGN isn't among the30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a look at the new hedge fund action encompassing Zafgen Inc (NASDAQ:ZFGN).
At Q1's end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from the fourth quarter of 2018. By comparison, 14 hedge funds held shares or bullish call options in ZFGN a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically,Great Point Partnerswas the largest shareholder of Zafgen Inc (NASDAQ:ZFGN), with a stake worth $8.5 million reported as of the end of March. Trailing Great Point Partners was Armistice Capital, which amassed a stake valued at $5.8 million. Farallon Capital, 683 Capital Partners, and Mangrove Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Because Zafgen Inc (NASDAQ:ZFGN) has witnessed a decline in interest from the aggregate hedge fund industry, it's safe to say that there was a specific group of hedgies who were dropping their positions entirely last quarter. At the top of the heap, Ken Greenberg and David Kim'sGhost Tree Capitaldropped the biggest stake of all the hedgies followed by Insider Monkey, totaling about $3.7 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund said goodbye to about $2.7 million worth. These moves are important to note, as aggregate hedge fund interest fell by 6 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Zafgen Inc (NASDAQ:ZFGN). We will take a look at NantHealth, Inc. (NASDAQ:NH), DURECT Corporation (NASDAQ:DRRX), RADCOM Ltd. (NASDAQ:RDCM), and EMCORE Corporation (NASDAQ:EMKR). This group of stocks' market caps are similar to ZFGN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NH,3,906,-1 DRRX,4,1974,-2 RDCM,4,13183,0 EMKR,14,27286,6 Average,6.25,10837,0.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $34 million in ZFGN's case. EMCORE Corporation (NASDAQ:EMKR) is the most popular stock in this table. On the other hand NantHealth, Inc. (NASDAQ:NH) is the least popular one with only 3 bullish hedge fund positions. Zafgen Inc (NASDAQ:ZFGN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ZFGN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ZFGN were disappointed as the stock returned -48.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About EMCORE Corporation (EMKR)
Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by more than 6 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of EMCORE Corporation (NASDAQ:EMKR).
EMCORE Corporation (NASDAQ:EMKR)investors should be aware of an increase in enthusiasm from smart money of late.EMKRwas in 14 hedge funds' portfolios at the end of the first quarter of 2019. There were 8 hedge funds in our database with EMKR positions at the end of the previous quarter. Our calculations also showed that EMKR isn't among the30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to take a glance at the fresh hedge fund action encompassing EMCORE Corporation (NASDAQ:EMKR).
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 75% from the fourth quarter of 2018. By comparison, 11 hedge funds held shares or bullish call options in EMKR a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in EMCORE Corporation (NASDAQ:EMKR) was held byBecker Drapkin Management, which reported holding $9.1 million worth of stock at the end of March. It was followed by Ariel Investments with a $5.6 million position. Other investors bullish on the company included Royce & Associates, Renaissance Technologies, and P.A.W. CAPITAL PARTNERS.
Consequently, some big names have jumped into EMCORE Corporation (NASDAQ:EMKR) headfirst.VIEX Capital Advisors, managed by Eric Singer, assembled the most outsized position in EMCORE Corporation (NASDAQ:EMKR). VIEX Capital Advisors had $0.7 million invested in the company at the end of the quarter. D. E. Shaw'sD E Shawalso initiated a $0.3 million position during the quarter. The following funds were also among the new EMKR investors: Ken Griffin'sCitadel Investment Group, Thomas E. Claugus'sGMT Capital, and Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capital.
Let's check out hedge fund activity in other stocks similar to EMCORE Corporation (NASDAQ:EMKR). We will take a look at Alta Mesa Resources, Inc. (NASDAQ:AMR), PFSweb, Inc. (NASDAQ:PFSW), Volt Information Sciences, Inc. (NYSE:VISI), and Coda Octopus Group, Inc. (NASDAQ:CODA). All of these stocks' market caps resemble EMKR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMR,16,19132,-3 PFSW,5,9561,-1 VISI,5,5573,2 CODA,3,826,2 Average,7.25,8773,0 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $27 million in EMKR's case. Alta Mesa Resources, Inc. (NASDAQ:AMR) is the most popular stock in this table. On the other hand Coda Octopus Group, Inc. (NASDAQ:CODA) is the least popular one with only 3 bullish hedge fund positions. EMCORE Corporation (NASDAQ:EMKR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately EMKR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EMKR were disappointed as the stock returned -7.1% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Here is What Hedge Funds Think About AGNC Investment Corp. (AGNC)
Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter. Trends reversed 180 degrees during the first quarter amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the first quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards AGNC Investment Corp. (NASDAQ:AGNC).
IsAGNC Investment Corp. (NASDAQ:AGNC)undervalued? Hedge funds are taking a bearish view. The number of long hedge fund bets retreated by 6 recently. Our calculations also showed that AGNC isn't among the30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a gander at the new hedge fund action regarding AGNC Investment Corp. (NASDAQ:AGNC).
At Q1's end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the previous quarter. On the other hand, there were a total of 6 hedge funds with a bullish position in AGNC a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in AGNC Investment Corp. (NASDAQ:AGNC) was held byRenaissance Technologies, which reported holding $114.8 million worth of stock at the end of March. It was followed by Two Sigma Advisors with a $73.1 million position. Other investors bullish on the company included Alyeska Investment Group, Millennium Management, and Citadel Investment Group.
Because AGNC Investment Corp. (NASDAQ:AGNC) has witnessed falling interest from the smart money, we can see that there is a sect of fund managers that decided to sell off their positions entirely by the end of the third quarter. It's worth mentioning that Paul Marshall and Ian Wace'sMarshall Wace LLPcut the biggest position of the "upper crust" of funds tracked by Insider Monkey, worth about $8.8 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund said goodbye to about $8.7 million worth. These transactions are important to note, as total hedge fund interest fell by 6 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks similar to AGNC Investment Corp. (NASDAQ:AGNC). We will take a look at Targa Resources Corp (NYSE:TRGP), UGI Corp (NYSE:UGI), Avery Dennison Corporation (NYSE:AVY), and FactSet Research Systems Inc. (NYSE:FDS). This group of stocks' market values are similar to AGNC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRGP,23,334534,-12 UGI,20,441954,-4 AVY,23,314167,-5 FDS,18,250889,-2 Average,21,335386,-5.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $335 million. That figure was $233 million in AGNC's case. Targa Resources Corp (NYSE:TRGP) is the most popular stock in this table. On the other hand FactSet Research Systems Inc. (NYSE:FDS) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks AGNC Investment Corp. (NASDAQ:AGNC) is even less popular than FDS. Hedge funds dodged a bullet by taking a bearish stance towards AGNC. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately AGNC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AGNC investors were disappointed as the stock returned -4.1% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published atInsider Monkey.
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Did Hedge Funds Drop The Ball On MarketAxess Holdings Inc. (MKTX) ?
"Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn't by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today's darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn't attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal," said Vilas Fund in itsQ1 investor letter. We aren't sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards MarketAxess Holdings Inc. (NASDAQ:MKTX).
IsMarketAxess Holdings Inc. (NASDAQ:MKTX)an outstanding investment today? Hedge funds are getting less bullish. The number of bullish hedge fund positions shrunk by 2 recently. Our calculations also showed that MKTX isn't among the30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We're going to review the recent hedge fund action surrounding MarketAxess Holdings Inc. (NASDAQ:MKTX).
Heading into the second quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the fourth quarter of 2018. By comparison, 10 hedge funds held shares or bullish call options in MKTX a year ago. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically,Renaissance Technologieswas the largest shareholder of MarketAxess Holdings Inc. (NASDAQ:MKTX), with a stake worth $120.9 million reported as of the end of March. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $44.7 million. Royce & Associates, AQR Capital Management, and PEAK6 Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that MarketAxess Holdings Inc. (NASDAQ:MKTX) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there was a specific group of money managers who sold off their entire stakes heading into Q3. At the top of the heap, Dmitry Balyasny'sBalyasny Asset Managementdumped the biggest stake of all the hedgies followed by Insider Monkey, worth an estimated $14 million in stock. Marcelo Desio's fund,Lucha Capital Management, also dumped its stock, about $5.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q3.
Let's now review hedge fund activity in other stocks similar to MarketAxess Holdings Inc. (NASDAQ:MKTX). These stocks are Arconic Inc. (NYSE:ARNC), EQT Midstream Partners LP (NYSE:EQM), PVH Corp (NYSE:PVH), and Zendesk Inc (NYSE:ZEN). This group of stocks' market valuations match MKTX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARNC,34,2519979,-12 EQM,8,65494,0 PVH,31,1298477,-4 ZEN,53,2095311,0 Average,31.5,1494815,-4 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 31.5 hedge funds with bullish positions and the average amount invested in these stocks was $1495 million. That figure was $218 million in MKTX's case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand EQT Midstream Partners LP (NYSE:EQM) is the least popular one with only 8 bullish hedge fund positions. MarketAxess Holdings Inc. (NASDAQ:MKTX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on MKTX as the stock returned 34.9% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About BeiGene, Ltd. (BGNE)
World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Hedge fund interest inBeiGene, Ltd. (NASDAQ:BGNE)shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare BGNE to other stocks including Steel Dynamics, Inc. (NASDAQ:STLD), Tyler Technologies, Inc. (NYSE:TYL), and Kimco Realty Corp (NYSE:KIM) to get a better sense of its popularity.
According to most shareholders, hedge funds are seen as underperforming, outdated investment tools of yesteryear. While there are greater than 8000 funds trading today, Our experts choose to focus on the moguls of this club, approximately 750 funds. It is estimated that this group of investors preside over the majority of all hedge funds' total asset base, and by paying attention to their inimitable equity investments, Insider Monkey has brought to light a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in ourlatest quarterly updateand they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
We're going to take a look at the fresh hedge fund action regarding BeiGene, Ltd. (NASDAQ:BGNE).
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in BGNE a year ago. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds,Baker Bros. Advisorsheld the most valuable stake in BeiGene, Ltd. (NASDAQ:BGNE), which was worth $1578.7 million at the end of the first quarter. On the second spot was Hillhouse Capital Management which amassed $136.5 million worth of shares. Moreover, OrbiMed Advisors, Rock Springs Capital Management, and Polar Capital were also bullish on BeiGene, Ltd. (NASDAQ:BGNE), allocating a large percentage of their portfolios to this stock.
Because BeiGene, Ltd. (NASDAQ:BGNE) has witnessed falling interest from the aggregate hedge fund industry, it's easy to see that there were a few hedge funds who sold off their positions entirely heading into Q3. Intriguingly, David Kowitz and Sheldon Kasowitz'sIndus Capitalcut the biggest position of the 700 funds tracked by Insider Monkey, totaling close to $19.4 million in stock. D. E. Shaw's fund,D E Shaw, also dropped its stock, about $0.7 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as BeiGene, Ltd. (NASDAQ:BGNE) but similarly valued. We will take a look at Steel Dynamics, Inc. (NASDAQ:STLD), Tyler Technologies, Inc. (NYSE:TYL), Kimco Realty Corp (NYSE:KIM), and Omega Healthcare Investors Inc (NYSE:OHI). All of these stocks' market caps match BGNE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STLD,27,405696,-3 TYL,31,697752,7 KIM,11,71725,-5 OHI,13,242355,2 Average,20.5,354382,0.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $1823 million in BGNE's case. Tyler Technologies, Inc. (NYSE:TYL) is the most popular stock in this table. On the other hand Kimco Realty Corp (NYSE:KIM) is the least popular one with only 11 bullish hedge fund positions. BeiGene, Ltd. (NASDAQ:BGNE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately BGNE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BGNE investors were disappointed as the stock returned -9.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Here’s What Hedge Funds Think About Intrepid Potash, Inc. (IPI)
The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don't follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That's why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Intrepid Potash, Inc. (NYSE:IPI) from the perspective of those elite funds.
IsIntrepid Potash, Inc. (NYSE:IPI)worth your attention right now? Prominent investors are in a bearish mood. The number of long hedge fund bets retreated by 3 recently. Our calculations also showed that IPI isn't among the30 most popular stocks among hedge funds.
To the average investor there are numerous gauges investors use to grade stocks. Two of the most useful gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outclass their index-focused peers by a very impressive amount (see the details here).
[caption id="attachment_746893" align="aligncenter" width="473"]
Paul Marshall of Marshall Wace[/caption]
Let's view the key hedge fund action surrounding Intrepid Potash, Inc. (NYSE:IPI).
At Q1's end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in IPI a year ago. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds,Royce & Associatesheld the most valuable stake in Intrepid Potash, Inc. (NYSE:IPI), which was worth $9 million at the end of the first quarter. On the second spot was Millennium Management which amassed $6.2 million worth of shares. Moreover, Prescott Group Capital Management, Marshall Wace LLP, and Citadel Investment Group were also bullish on Intrepid Potash, Inc. (NYSE:IPI), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Intrepid Potash, Inc. (NYSE:IPI) has experienced declining sentiment from hedge fund managers, it's easy to see that there lies a certain "tier" of hedge funds who sold off their entire stakes last quarter. At the top of the heap, Benjamin A. Smith'sLaurion Capital Managementsaid goodbye to the largest stake of all the hedgies followed by Insider Monkey, valued at close to $0.8 million in stock. Daniel Arbess's fund,Perella Weinberg Partners, also dumped its stock, about $0.6 million worth. These moves are interesting, as total hedge fund interest was cut by 3 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Intrepid Potash, Inc. (NYSE:IPI) but similarly valued. These stocks are Mesoblast Limited (NASDAQ:MESO), Crawford & Company (NYSE:CRD), Peoples Utah Bancorp (NASDAQ:PUB), and Mechel PAO (NYSE:MTL). This group of stocks' market values are closest to IPI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MESO,1,663,0 CRD,9,30505,3 PUB,5,13672,2 MTL,3,1214,-1 Average,4.5,11514,1 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $34 million in IPI's case. Crawford & Company (NYSE:CRD) is the most popular stock in this table. On the other hand Mesoblast Limited (NASDAQ:MESO) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Intrepid Potash, Inc. (NYSE:IPI) is more popular among hedge funds. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately IPI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on IPI were disappointed as the stock returned -13.2% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Should We Be Delighted With Balkrishna Industries Limited's (NSE:BALKRISIND) ROE Of 17%?
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One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. We'll use ROE to examine Balkrishna Industries Limited (NSE:BALKRISIND), by way of a worked example.
Over the last twelve monthsBalkrishna Industries has recorded a ROE of 17%. Another way to think of that is that for every ₹1 worth of equity in the company, it was able to earn ₹0.17.
See our latest analysis for Balkrishna Industries
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Balkrishna Industries:
17% = ₹7.7b ÷ ₹47b (Based on the trailing twelve months to March 2019.)
Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. It is all the money paid into the company from shareholders, plus any earnings retained. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
ROE measures a company's profitability against the profit it retains, and any outside investments. The 'return' is the yearly profit. The higher the ROE, the more profit the company is making. So, all else equal,investors should like a high ROE. Clearly, then, one can use ROE to compare different companies.
By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. Pleasingly, Balkrishna Industries has a superior ROE than the average (13%) company in the Auto Components industry.
That's clearly a positive. I usually take a closer look when a company has a better ROE than industry peers. For exampleyou might checkif insiders are buying shares.
Virtually all companies need money to invest in the business, to grow profits. That cash can come from issuing shares, retained earnings, or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
Balkrishna Industries has a debt to equity ratio of 0.19, which is far from excessive. The fact that it achieved a fairly good ROE with only modest debt suggests the business might be worth putting on your watchlist. Conservative use of debt to boost returns is usually a good move for shareholders, though it does leave the company more exposed to interest rate rises.
Return on equity is useful for comparing the quality of different businesses. In my book the highest quality companies have high return on equity, despite low debt. If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE.
But when a business is high quality, the market often bids it up to a price that reflects this. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. So you might want to take a peek at thisdata-rich interactive graph of forecasts for the company.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Here's What World Precision Machinery Limited's (SGX:B49) P/E Is Telling Us
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Today, we'll introduce the concept of the P/E ratio for those who are learning about investing. To keep it practical, we'll show how World Precision Machinery Limited's (SGX:B49) P/E ratio could help you assess the value on offer.World Precision Machinery has a P/E ratio of 41.86, based on the last twelve months. That corresponds to an earnings yield of approximately 2.4%.
View our latest analysis for World Precision Machinery
Theformula for P/Eis:
Price to Earnings Ratio = Share Price (in reporting currency) ÷ Earnings per Share (EPS)
Or for World Precision Machinery:
P/E of 41.86 = CN¥0.74(Note: this is the share price in the reporting currency, namely, CNY )÷ CN¥0.018 (Based on the trailing twelve months to March 2019.)
A higher P/E ratio means that buyers have to paya higher pricefor each SGD1 the company has earned over the last year. That isn't necessarily good or bad, but a high P/E implies relatively high expectations of what a company can achieve in the future.
If earnings fall then in the future the 'E' will be lower. That means even if the current P/E is low, it will increase over time if the share price stays flat. So while a stock may look cheap based on past earnings, it could be expensive based on future earnings.
World Precision Machinery saw earnings per share decrease by 69% last year. And over the longer term (5 years) earnings per share have decreased 42% annually. This might lead to muted expectations.
We can get an indication of market expectations by looking at the P/E ratio. As you can see below, World Precision Machinery has a much higher P/E than the average company (8.9) in the machinery industry.
That means that the market expects World Precision Machinery will outperform other companies in its industry. Clearly the market expects growth, but it isn't guaranteed. So investors should delve deeper. I like to checkif company insiders have been buying or selling.
The 'Price' in P/E reflects the market capitalization of the company. So it won't reflect the advantage of cash, or disadvantage of debt. The exact same company would hypothetically deserve a higher P/E ratio if it had a strong balance sheet, than if it had a weak one with lots of debt, because a cashed up company can spend on growth.
While growth expenditure doesn't always pay off, the point is that it is a good option to have; but one that the P/E ratio ignores.
World Precision Machinery's net debt is 7.8% of its market cap. It would probably trade on a higher P/E ratio if it had a lot of cash, but I doubt it is having a big impact.
World Precision Machinery trades on a P/E ratio of 41.9, which is multiples above the SG market average of 12.5. With a bit of debt, but a lack of recent growth, it's safe to say the market is expecting improved profit performance from the company, in the next few years.
When the market is wrong about a stock, it gives savvy investors an opportunity. If the reality for a company is better than it expects, you can make money by buying and holding for the long term. Although we don't have analyst forecasts, shareholders might want to examinethis detailed historical graphof earnings, revenue and cash flow.
But note:World Precision Machinery may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with strong recent earnings growth (and a P/E ratio below 20).
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
UPDATE 3-U.S. Special Counsel Mueller to testify before House panels on July 17 -statement
(Adds background)
WASHINGTON, June 25 (Reuters) - U.S. Special Counsel Robert Mueller, who issued a report in April on Russian meddling in the 2016 presidential election, will testify in open session before the House of Representatives Judiciary and Intelligence Committees on July 17, the panels' Democratic chairmen said on Tuesday.
Representative Jerrold Nadler, chairman of the judiciary panel, and Representative Adam Schiff, head of the intelligence panel, said in a joint statement that Mueller had agreed to testify after the two committees issued subpoenas on Tuesday.
A representative for Mueller did not immediately respond to a request for comment.
Mueller's 448-page report, released publicly in April, found Russia meddled in the 2016 presidential election and that Republican President Donald Trump's election campaign had multiple contacts with Russian officials.
But the report found insufficient evidence to establish a criminal conspiracy between the campaign and Moscow.
The report, which was partially redacted, also outlined instances in which Trump tried to interfere with Mueller's investigation, but declined to make a judgment on whether that amounted to obstruction of justice.
Mueller, in his first public comments since starting the two-year investigation, said on May 29 that his probe was never going to end with criminal charges against Trump and indicated it was up to Congress to decide whether he should be impeached.
"If we had confidence that the president clearly did not commit a crime, we would have said so," Mueller said. "We did not, however, make a determination as to whether the president did commit a crime."
Attorney General William Barr said there was insufficient evidence in Mueller's report to conclude that Trump obstructed justice.
'POLITICAL GAMESMANSHIP'
Trump says the report was a complete exoneration from what he called a witch hunt mounted by Democrats frustrated by his 2016 election victory.
But some Democrats have said the president should be removed from office through impeachment proceedings because of Mueller's findings.
"Americans have demanded to hear directly from the Special Counsel so they can understand what he and his team examined, uncovered, and determined about Russia's attack on our democracy, the Trump campaign's acceptance and use of that help, and President Trump and his associates' obstruction of the investigation into that attack," Nadler and Schiff said in their statement.
Representative Doug Collins, the top Republican on the House Judiciary Committee, said in a statement: "I hope the special counsel's testimony marks an end to the political gamesmanship that Judiciary Democrats have pursued at great cost to taxpayers."
Schiff told MSNBC in an interview: "We never felt it was sufficient to rely simply on a written report or a 10-minute statement without the ability to follow up with questions."
In his May 29 statement, Mueller said his office was formally closing its doors and he was now returning to life as a private citizen.
"Beyond what I've said here today and what is contained in our written work, I do not believe it is appropriate for me to speak further," he said, adding that he would not go beyond what was in his report in any future testimony to Congress.
Since the report's release, Democratic lawmakers have tried without success to get the Justice Department to release an unredacted version and underlying evidence.
Mueller's investigation ensnared dozens of people, including several top Trump advisers and a series of Russian nationals and companies.
Among them are his former campaign chairman, Paul Manafort, who is serving 7-1/2 years in prison for financial crimes and lobbying violations, and his former personal lawyer, Michael Cohen, who recently began a three-year sentence for campaign-finance violations and lying to Congress. (Reporting by Eric Beech; Writing by Mohammad Zargham; Editing by Peter Cooney) |
What Does Bal Pharma Limited's (NSE:BALPHARMA) P/E Ratio Tell You?
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The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). We'll apply a basic P/E ratio analysis to Bal Pharma Limited's (NSE:BALPHARMA), to help you decide if the stock is worth further research.Bal Pharma has a price to earnings ratio of 39.49, based on the last twelve months. That means that at current prices, buyers pay ₹39.49 for every ₹1 in trailing yearly profits.
Check out our latest analysis for Bal Pharma
Theformula for price to earningsis:
Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)
Or for Bal Pharma:
P/E of 39.49 = ₹54.1 ÷ ₹1.37 (Based on the year to March 2019.)
The higher the P/E ratio, the higher the price tag of a business, relative to its trailing earnings. That isn't a good or a bad thing on its own, but a high P/E means that buyers have a higher opinion of the business's prospects, relative to stocks with a lower P/E.
Probably the most important factor in determining what P/E a company trades on is the earnings growth. That's because companies that grow earnings per share quickly will rapidly increase the 'E' in the equation. And in that case, the P/E ratio itself will drop rather quickly. And as that P/E ratio drops, the company will look cheap, unless its share price increases.
Bal Pharma shrunk earnings per share by 30% over the last year. But EPS is up 7.9% over the last 3 years. And it has shrunk its earnings per share by 22% per year over the last five years. This growth rate might warrant a below average P/E ratio.
One good way to get a quick read on what market participants expect of a company is to look at its P/E ratio. The image below shows that Bal Pharma has a higher P/E than the average (17.6) P/E for companies in the pharmaceuticals industry.
Bal Pharma's P/E tells us that market participants think the company will perform better than its industry peers, going forward. The market is optimistic about the future, but that doesn't guarantee future growth. So further research is always essential. I often monitordirector buying and selling.
The 'Price' in P/E reflects the market capitalization of the company. Thus, the metric does not reflect cash or debt held by the company. Hypothetically, a company could reduce its future P/E ratio by spending its cash (or taking on debt) to achieve higher earnings.
Spending on growth might be good or bad a few years later, but the point is that the P/E ratio does not account for the option (or lack thereof).
Net debt totals a substantial 163% of Bal Pharma's market cap. This is a relatively high level of debt, so the stock probably deserves a relatively low P/E ratio. Keep that in mind when comparing it to other companies.
Bal Pharma has a P/E of 39.5. That's higher than the average in the IN market, which is 15.4. With significant debt and no EPS growth last year, shareholders are betting on an improvement in earnings from the company.
Investors should be looking to buy stocks that the market is wrong about. As value investor Benjamin Graham famously said, 'In the short run, the market is a voting machine but in the long run, it is a weighing machine.' We don't have analyst forecasts, but you might want to assessthis data-rich visualizationof earnings, revenue and cash flow.
You might be able to find a better buy than Bal Pharma. If you want a selection of possible winners, check out thisfreelist of interesting companies that trade on a P/E below 20 (but have proven they can grow earnings).
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Why We Like Balrampur Chini Mills Limited’s (NSE:BALRAMCHIN) 24% Return On Capital Employed
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Today we'll look at Balrampur Chini Mills Limited (NSE:BALRAMCHIN) and reflect on its potential as an investment. To be precise, we'll consider its Return On Capital Employed (ROCE), as that will inform our view of the quality of the business.
Firstly, we'll go over how we calculate ROCE. Then we'll compare its ROCE to similar companies. Last but not least, we'll look at what impact its current liabilities have on its ROCE.
ROCE measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Generally speaking a higher ROCE is better. In brief, it is a useful tool, but it is not without drawbacks. Author Edwin Whitingsaysto be careful when comparing the ROCE of different businesses, since 'No two businesses are exactly alike.'
The formula for calculating the return on capital employed is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
Or for Balrampur Chini Mills:
0.24 = ₹5.9b ÷ (₹47b - ₹22b) (Based on the trailing twelve months to March 2019.)
Therefore,Balrampur Chini Mills has an ROCE of 24%.
Check out our latest analysis for Balrampur Chini Mills
ROCE can be useful when making comparisons, such as between similar companies. Using our data, we find that Balrampur Chini Mills's ROCE is meaningfully better than the 12% average in the Food industry. We would consider this a positive, as it suggests it is using capital more effectively than other similar companies. Separate from Balrampur Chini Mills's performance relative to its industry, its ROCE in absolute terms looks satisfactory, and it may be worth researching in more depth.
In our analysis, Balrampur Chini Mills's ROCE appears to be 24%, compared to 3 years ago, when its ROCE was 16%. This makes us think the business might be improving.
Remember that this metric is backwards looking - it shows what has happened in the past, and does not accurately predict the future. Companies in cyclical industries can be difficult to understand using ROCE, as returns typically look high during boom times, and low during busts. ROCE is, after all, simply a snap shot of a single year. How cyclical is Balrampur Chini Mills? You can see for yourself by looking at thisfreegraph of past earnings, revenue and cash flow.
Short term (or current) liabilities, are things like supplier invoices, overdrafts, or tax bills that need to be paid within 12 months. Due to the way the ROCE equation works, having large bills due in the near term can make it look as though a company has less capital employed, and thus a higher ROCE than usual. To counter this, investors can check if a company has high current liabilities relative to total assets.
Balrampur Chini Mills has total assets of ₹47b and current liabilities of ₹22b. Therefore its current liabilities are equivalent to approximately 46% of its total assets. Balrampur Chini Mills has a middling amount of current liabilities, increasing its ROCE somewhat.
Balrampur Chini Mills's ROCE does look good, but the level of current liabilities also contribute to that. Balrampur Chini Mills looks strong on this analysis,but there are plenty of other companies that could be a good opportunity. Here is afree listof companies growing earnings rapidly.
If you are like me, then you willnotwant to miss thisfreelist of growing companies that insiders are buying.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Arnold Schwarzenegger pushes gas guzzlers as undercover car salesperson
Do itnow!
That's sleazy used car salesmanHoward Kleiner back in action, this time trying to get would-be electric car buyers hyped about gas-guzzling, fossil fuel-burning cars.
Except it's — surprise! — former California governor, body builder, and movie star Arnold Schwarzenegger with a fake mustache and wig. He's just pretending to be a salesman obsessed with muscle cars that burn tons of gas as part of a campaign to get more people informed about electric vehicles.
"We need to get off fossil fuels as quickly as we can," the governator said in a phone call this week.
The tongue-in-cheekvideois part ofEV coalition Veloz's"Kicking Gas" andElectric For All campaignto bring more electric cars to California and beyond. The organization works with automakers, utilities, government agencies, charging networks, and other transportation groups to raise awareness about electric vehicles.Read more...
More aboutArnold Schwarzenegger,Electric Vehicles,Tech, andTransportation |
Here's What Balrampur Chini Mills Limited's (NSE:BALRAMCHIN) P/E Ratio Is Telling Us
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This article is written for those who want to get better at using price to earnings ratios (P/E ratios). We'll apply a basic P/E ratio analysis to Balrampur Chini Mills Limited's (NSE:BALRAMCHIN), to help you decide if the stock is worth further research.Balrampur Chini Mills has a price to earnings ratio of 5.29, based on the last twelve months. That corresponds to an earnings yield of approximately 19%.
See our latest analysis for Balrampur Chini Mills
Theformula for P/Eis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Balrampur Chini Mills:
P/E of 5.29 = ₹133.4 ÷ ₹25.21 (Based on the trailing twelve months to March 2019.)
A higher P/E ratio means that buyers have to paya higher pricefor each ₹1 the company has earned over the last year. All else being equal, it's better to pay a low price -- but as Warren Buffett said, 'It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.'
Generally speaking the rate of earnings growth has a profound impact on a company's P/E multiple. When earnings grow, the 'E' increases, over time. That means unless the share price increases, the P/E will reduce in a few years. So while a stock may look expensive based on past earnings, it could be cheap based on future earnings.
In the last year, Balrampur Chini Mills grew EPS like Taylor Swift grew her fan base back in 2010; the 156% gain was both fast and well deserved. The sweetener is that the annual five year growth rate of 136% is also impressive. With that kind of growth rate we would generally expect a high P/E ratio.
One good way to get a quick read on what market participants expect of a company is to look at its P/E ratio. If you look at the image below, you can see Balrampur Chini Mills has a lower P/E than the average (17) in the food industry classification.
Balrampur Chini Mills's P/E tells us that market participants think it will not fare as well as its peers in the same industry. Since the market seems unimpressed with Balrampur Chini Mills, it's quite possible it could surprise on the upside. It is arguably worth checkingif insiders are buying shares, because that might imply they believe the stock is undervalued.
One drawback of using a P/E ratio is that it considers market capitalization, but not the balance sheet. That means it doesn't take debt or cash into account. Theoretically, a business can improve its earnings (and produce a lower P/E in the future) by investing in growth. That means taking on debt (or spending its cash).
While growth expenditure doesn't always pay off, the point is that it is a good option to have; but one that the P/E ratio ignores.
Net debt totals 50% of Balrampur Chini Mills's market cap. If you want to compare its P/E ratio to other companies, you should absolutely keep in mind it has significant borrowings.
Balrampur Chini Mills trades on a P/E ratio of 5.3, which is below the IN market average of 15.4. The company has a meaningful amount of debt on the balance sheet, but that should not eclipse the solid earnings growth. If the company can continue to grow earnings, then the current P/E may be unjustifiably low.
When the market is wrong about a stock, it gives savvy investors an opportunity. As value investor Benjamin Graham famously said, 'In the short run, the market is a voting machine but in the long run, it is a weighing machine.' Although we don't have analyst forecasts, you could get a better understanding of its growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
Of courseyou might be able to find a better stock than Balrampur Chini Mills. So you may wish to see thisfreecollection of other companies that have grown earnings strongly.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
What Makes Balrampur Chini Mills Limited (NSE:BALRAMCHIN) A Great Dividend Stock?
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Could Balrampur Chini Mills Limited (NSE:BALRAMCHIN) be an attractive dividend share to own for the long haul? Investors are often drawn to strong companies with the idea of reinvesting the dividends. Yet sometimes, investors buy a stock for its dividend and lose money because the share price falls by more than they earned in dividend payments.
While Balrampur Chini Mills's 1.9% dividend yield is not the highest, we think its lengthy payment history is quite interesting. The company also bought back stock equivalent to around 3.4% of market capitalisation this year. Before you buy any stock for its dividend however, you should always remember Warren Buffett's two rules: 1) Don't lose money, and 2) Remember rule #1. We'll run through some checks below to help with this.
Click the interactive chart for our full dividend analysis
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. So we need to form a view on if a company's dividend is sustainable, relative to its net profit after tax. In the last year, Balrampur Chini Mills paid out 9.9% of its profit as dividends. We'd say its dividends are thoroughly covered by earnings.
As Balrampur Chini Mills has a meaningful amount of debt, we need to check its balance sheet to see if the company might have debt risks. A rough way to check this is with these two simple ratios: a) net debt divided by EBITDA (earnings before interest, tax, depreciation and amortisation), and b) net interest cover. Net debt to EBITDA is a measure of a company's total debt. Net interest cover measures the ability to meet interest payments on debt. Essentially we check that a) a company does not have too much debt, and b) that it can afford to pay the interest. With net debt of 2.15 times its EBITDA, Balrampur Chini Mills's debt burden is within a normal range for most listed companies.
We calculated its interest cover by measuring its earnings before interest and tax (EBIT), and dividing this by the company's net interest expense. Balrampur Chini Mills has interest cover of more than 12 times its interest expense, which we think is quite strong.
Remember, you can always get a snapshot of Balrampur Chini Mills's latest financial position,by checking our visualisation of its financial health.
Before buying a stock for its income, we want to see if the dividends have been stable in the past, and if the company has a track record of maintaining its dividend. Balrampur Chini Mills has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of payments. This dividend has been unstable, which we define as having fallen by at least 20% one or more times over this time. During the past ten-year period, the first annual payment was ₹0.50 in 2009, compared to ₹2.50 last year. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. Balrampur Chini Mills's dividend payments have fluctuated, so it hasn't grown 17% every year, but the CAGR is a useful rule of thumb for approximating the historical growth.
It's not great to see that the payment has been cut in the past. We're generally more wary of companies that have cut their dividend before, as they tend to perform worse in an economic downturn.
With a relatively unstable dividend, it's even more important to evaluate if earnings per share (EPS) are growing - it's not worth taking the risk on a dividend getting cut, unless you might be rewarded with larger dividends in future. Strong earnings per share (EPS) growth might encourage our interest in the company despite fluctuating dividends, which is why it's great to see Balrampur Chini Mills has grown its earnings per share at 136% per annum over the past five years. The company is only paying out a fraction of its earnings as dividends, and in the past been able to use the retained earnings to grow its profits rapidly - an ideal combination.
When we look at a dividend stock, we need to form a judgement on whether the dividend will grow, if the company is able to maintain it in a wide range of economic circumstances, and if the dividend payout is sustainable. First, we like that the company's dividend payments appear well covered, although the retained capital also needs to be effectively reinvested. Next, earnings growth has been good, but unfortunately the dividend has been cut at least once in the past. All things considered, Balrampur Chini Mills looks like a strong prospect. At the right valuation, it could be something special.
Now, if you want to look closer, it would be worth checking out ourfreeresearch on Balrampur Chini Millsmanagement tenure, salary, and performance.
If you are a dividend investor, you might also want to look at ourcurated list of dividend stocks yielding above 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Introducing Balrampur Chini Mills (NSE:BALRAMCHIN), The Stock That Zoomed 101% In The Last Year
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Balrampur Chini Mills Limited(NSE:BALRAMCHIN) shareholders have seen the share price descend 15% over the month. But that doesn't detract from the splendid returns of the last year. We're very pleased to report the share price shot up 101% in that time. So we think most shareholders won't be too upset about the recent fall. More important, going forward, is how the business itself is going.
View our latest analysis for Balrampur Chini Mills
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the last year Balrampur Chini Mills grew its earnings per share (EPS) by 156%. This EPS growth is significantly higher than the 101% increase in the share price. Therefore, it seems the market isn't as excited about Balrampur Chini Mills as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 5.29.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into Balrampur Chini Mills's key metrics by checking this interactive graph of Balrampur Chini Mills'searnings, revenue and cash flow.
When looking at investment returns, it is important to consider the difference betweentotal shareholder return(TSR) andshare price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Balrampur Chini Mills, it has a TSR of 106% for the last year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted thetotalshareholder return.
We're pleased to report that Balrampur Chini Mills shareholders have received a total shareholder return of 106% over one year. And that does include the dividend. That's better than the annualised return of 12% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before forming an opinion on Balrampur Chini Mills you might want to consider these3 valuation metrics.
But note:Balrampur Chini Mills may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
NZ central bank stands pat, says lower rates may be needed over time
WELLINGTON, June 26 (Reuters) - The Reserve Bank of New Zealand (RBNZ) on Wednesday held the official cash rate (OCR) at a record low of 1.50%, but said lower rates may be needed over time to meet inflation and employment objectives in the face of rising global risks.
"Given the weaker global economic outlook and the risk of ongoing subdued domestic growth, a lower OCR may be needed over time to continue to meet our objectives," RBNZ's monetary policy committee said in a statement accompanying the rates decision.
The bank lowered its cash rate by 25 basis points at the last meeting in May, and all 15 economists polled by Reuters had predicted policymakers would stand pat at this week's meeting to assess conditions.
The New Zealand dollar rose 0.2% to $0.6646 after the decision was announced. (Reporting by Praveen Menon and Charlotte Greenfield; editing by Shri Navaratnam) |
Did Aurizon Holdings Limited (ASX:AZJ) Insiders Buy Up More Shares?
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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares inAurizon Holdings Limited(ASX:AZJ).
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard Universitystudyfound that 'insider purchases earn abnormal returns of more than 6% per year.'
Check out our latest analysis for Aurizon Holdings
Independent Non-Executive Director Michael Fraser made the biggest insider purchase in the last 12 months. That single transaction was for AU$146k worth of shares at a price of AU$4.86 each. That implies that an insider found the current price of AU$5.47 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the Aurizon Holdings insiders decided to buy shares at close to current prices.
In the last twelve months insiders paid AU$194k for 40000 shares purchased. In the last twelve months Aurizon Holdings insiders were buying shares, but not selling. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Aurizon Holdings is not the only stock that insiders are buying. For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
It's good to see that Aurizon Holdings insiders have made notable investments in the company's shares. Overall, two insiders shelled out AU$194k for shares in the company -- and none sold. This makes one think the business has some good points.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Our data suggests Aurizon Holdings insiders own 0.03% of the company, worth about AU$3.7m. We prefer to see high levels of insider ownership.
It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Aurizon Holdings insiders are reasonably well aligned, and optimistic for the future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check thisfreereport showing analyst forecasts for its future.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Should You Worry About Aurizon Holdings Limited's (ASX:AZJ) CEO Salary Level?
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Tony Harding became the CEO of Aurizon Holdings Limited (ASX:AZJ) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for Aurizon Holdings
Our data indicates that Aurizon Holdings Limited is worth AU$11b, and total annual CEO compensation is AU$4.1m. (This figure is for the year to June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$1.7m. We examined companies with market caps from AU$5.7b to AU$17b, and discovered that the median CEO total compensation of that group was AU$4.1m.
So Tony Harding receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at Aurizon Holdings has changed from year to year.
On average over the last three years, Aurizon Holdings Limited has grown earnings per share (EPS) by 51% each year (using a line of best fit). In the last year, its revenue is down -2.7%.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. Shareholders might be interested inthisfreevisualization of analyst forecasts.
Boasting a total shareholder return of 36% over three years, Aurizon Holdings Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
Tony Harding is paid around the same as most CEOs of similar size companies.
The company is growing earnings per share and total shareholder returns have been pleasing. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. If you think CEO compensation levels are interesting you will probably really likethis free visualization of insider trading at Aurizon Holdings.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
How Financially Strong Is VibroPower Corporation Limited (SGX:BJD)?
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Investors are always looking for growth in small-cap stocks like VibroPower Corporation Limited (SGX:BJD), with a market cap of S$4.0m. However, an important fact which most ignore is: how financially healthy is the business? Understanding the company's financial health becomes vital, since poor capital management may bring about bankruptcies, which occur at a higher rate for small-caps. The following basic checks can help you get a picture of the company's balance sheet strength. However, potential investors would need to take a closer look, and I recommend youdig deeper yourself into BJD here.
BJD's debt level has been constant at around S$8.5m over the previous year which accounts for long term debt. At this constant level of debt, BJD currently has S$1.6m remaining in cash and short-term investments to keep the business going. Moreover, BJD has produced S$845k in operating cash flow during the same period of time, leading to an operating cash to total debt ratio of 9.9%, signalling that BJD’s current level of operating cash is not high enough to cover debt.
At the current liabilities level of S$13m, it seems that the business has been able to meet these obligations given the level of current assets of S$24m, with a current ratio of 1.86x. The current ratio is the number you get when you divide current assets by current liabilities. For Electrical companies, this ratio is within a sensible range as there's enough of a cash buffer without holding too much capital in low return investments.
BJD is a relatively highly levered company with a debt-to-equity of 46%. This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. We can test if BJD’s debt levels are sustainable by measuring interest payments against earnings of a company. Ideally, earnings before interest and tax (EBIT) should cover net interest by at least three times. For BJD, the ratio of 3.27x suggests that interest is appropriately covered, which means that lenders may be willing to lend out more funding as BJD’s high interest coverage is seen as responsible and safe practice.
Although BJD’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised. Since there is also no concerns around BJD's liquidity needs, this may be its optimal capital structure for the time being. I admit this is a fairly basic analysis for BJD's financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research VibroPower to get a better picture of the small-cap by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for BJD’s future growth? Take a look at ourfree research report of analyst consensusfor BJD’s outlook.
2. Valuation: What is BJD worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether BJD is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
A Look At The Fair Value Of AEM Holdings Ltd (SGX:AWX)
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How far off is AEM Holdings Ltd (SGX:AWX) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by estimating the company's future cash flows and discounting them to their present value. I will be using the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple!
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. Anyone interested in learning a bit more about intrinsic value should have a read of theSimply Wall St analysis model.
View our latest analysis for AEM Holdings
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value:
[{"": "Levered FCF (SGD, Millions)", "2019": "SGD22.16", "2020": "SGD38.06", "2021": "SGD17.09", "2022": "SGD17.18", "2023": "SGD17.37", "2024": "SGD17.61", "2025": "SGD17.91", "2026": "SGD18.25", "2027": "SGD18.62", "2028": "SGD19.01"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x2", "2020": "Analyst x2", "2021": "Analyst x2", "2022": "Est @ 0.54%", "2023": "Est @ 1.07%", "2024": "Est @ 1.44%", "2025": "Est @ 1.7%", "2026": "Est @ 1.88%", "2027": "Est @ 2.01%", "2028": "Est @ 2.1%"}, {"": "Present Value (SGD, Millions) Discounted @ 9.23%", "2019": "SGD20.29", "2020": "SGD31.90", "2021": "SGD13.11", "2022": "SGD12.07", "2023": "SGD11.17", "2024": "SGD10.37", "2025": "SGD9.66", "2026": "SGD9.01", "2027": "SGD8.41", "2028": "SGD7.86"}]
Present Value of 10-year Cash Flow (PVCF)= SGD133.85m
"Est" = FCF growth rate estimated by Simply Wall St
We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 10-year government bond rate (2.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 9.2%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = S$19m × (1 + 2.3%) ÷ (9.2% – 2.3%) = S$281m
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= SGDS$281m ÷ ( 1 + 9.2%)10= SGD116.15m
The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is SGD250.00m. In the final step we divide the equity value by the number of shares outstanding.This results in an intrinsic value estimate of SGD0.93. Compared to the current share price of SGD1, the company appears around fair value at the time of writing. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind.
Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at AEM Holdings as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 9.2%, which is based on a levered beta of 1.162. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn’t be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For AEM Holdings, There are three further aspects you should look at:
1. Financial Health: Does AWX have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Future Earnings: How does AWX's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with ourfree analyst growth expectation chart.
3. Other High Quality Alternatives: Are there other high quality stocks you could be holding instead of AWX? Exploreour interactive list of high quality stocksto get an idea of what else is out there you may be missing!
PS. Simply Wall St updates its DCF calculation for every SG stock every day, so if you want to find the intrinsic value of any other stock justsearch here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
What Type Of Shareholder Owns AEM Holdings Ltd's (SGX:AWX)?
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A look at the shareholders of AEM Holdings Ltd (SGX:AWX) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Warren Buffett said that he likes 'a business with enduring competitive advantages that is run by able and owner-oriented people'. So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.
AEM Holdings is not a large company by global standards. It has a market capitalization of S$270m, which means it wouldn't have the attention of many institutional investors. In the chart below below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about AWX.
View our latest analysis for AEM Holdings
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that AEM Holdings does have institutional investors; and they hold 26% of the stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at AEM Holdings's earnings history, below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in AEM Holdings. There is some analyst coverage of the stock, but it could still become more well known, with time.
The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our most recent data indicates that insiders own a reasonable proportion of AEM Holdings Ltd. Insiders have a S$28m stake in this S$270m business. This may suggest that the founders still own a lot of shares. You canclick here to see if they have been buying or selling.
The general public -- mostly retail investors -- own 61% of AEM Holdings . With this size of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
I like to dive deeperinto how a company has performed in the past. You can accessthisinteractive graphof past earnings, revenue and cash flow, for free.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can checkthis free report showing analyst forecasts for its future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
How Important Was Sentiment In Driving AEM Holdings's (SGX:AWX) Fantastic 1100% Share Price Gain?
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! While AEM Holdings Ltd ( SGX:AWX ) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 15% in the last quarter. But that doesn't change the fact that the returns over the last three years have been spectacular. Indeed, the share price is up a whopping 1100% in that time. As long term investors the recent fall doesn't detract all that much from the longer term story. Only time will tell if there is still too much optimism currently reflected in the share price. We love happy stories like this one. The company should be really proud of that performance! See our latest analysis for AEM Holdings To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. During three years of share price growth, AEM Holdings achieved compound earnings per share growth of 66% per year. This EPS growth is lower than the 129% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did three years ago. That's not necessarily surprising considering the three-year track record of earnings growth. You can see below how EPS has changed over time (discover the exact values by clicking on the image). SGX:AWX Past and Future Earnings, June 26th 2019 We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on AEM Holdings's earnings, revenue and cash flow . What About Dividends? It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for AEM Holdings the TSR over the last 3 years was 1194%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence! A Different Perspective AEM Holdings shareholders are down 4.7% for the year (even including dividends), but the market itself is up 4.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 56% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of AEM Holdings by clicking this link. Story continues AEM Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SG exchanges. We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. View comments |
A Closer Look At AEM Holdings Ltd's (SGX:AWX) Impressive ROE
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One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. To keep the lesson grounded in practicality, we'll use ROE to better understand AEM Holdings Ltd (SGX:AWX).
AEM Holdings has a ROE of 33%, based on the last twelve months. Another way to think of that is that for every SGD1 worth of equity in the company, it was able to earn SGD0.33.
See our latest analysis for AEM Holdings
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for AEM Holdings:
33% = S$32m ÷ S$96m (Based on the trailing twelve months to March 2019.)
Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. It is all the money paid into the company from shareholders, plus any earnings retained. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the yearly profit. The higher the ROE, the more profit the company is making. So, all else equal,investors should like a high ROE. That means ROE can be used to compare two businesses.
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. Pleasingly, AEM Holdings has a superior ROE than the average (11%) company in the Semiconductor industry.
That's clearly a positive. I usually take a closer look when a company has a better ROE than industry peers. For exampleyou might checkif insiders are buying shares.
Virtually all companies need money to invest in the business, to grow profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
AEM Holdings has a debt to equity ratio of just 0.0008, which is very low. Its ROE is very impressive, and given only modest debt, this suggests the business is high quality. Judicious use of debt to improve returns can certainly be a good thing, although it does elevate risk slightly and reduce future optionality.
Return on equity is one way we can compare the business quality of different companies. A company that can achieve a high return on equity without debt could be considered a high quality business. All else being equal, a higher ROE is better.
But when a business is high quality, the market often bids it up to a price that reflects this. It is important to consider other factors, such as future profit growth -- and how much investment is required going forward. So you might want to check this FREEvisualization of analyst forecasts for the company.
Of courseAEM Holdings may not be the best stock to buy. So you may wish to see thisfreecollection of other companies that have high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
UPDATE 2-NZ central bank stands pat, flags more easing to combat risks to growth
* RBNZ holds rate at record low of 1.50%
* RBNZ says lower rates may be needed over time
* RBNZ warns of downside risks to employment and inflation outlook
* Markets expecting a cut at next meeting in August (Recasts, adds analyst comments, market pricing)
By Praveen Menon and Charlotte Greenfield
WELLINGTON, June 26 (Reuters) - New Zealand's central bank held interest rates steady on Wednesday but said further cuts to borrowing costs may be needed given growing economic risks at home and abroad.
The Reserve Bank of New Zealand (RBNZ) kept the official cash rate (OCR) at a record low of 1.50%, as expected, and in a strikingly dovish statement warned that a global slowdown is hurting the domestic economy amid intensifying trade risks.
"The global economic outlook has weakened, and downside risks related to trade activity have intensified," the RBNZ said.
"Given the downside risks around the employment and inflation outlook, a lower OCR may be needed," it said, having lowered the cash rate by 25 basis points at the last meeting in May.
The dovish statement mirrored a recent shift by global central banks to ease monetary policy to combat rising economic risks as a year-long Sino-U.S. tariff war dents trade, corporate profits and overall growth.
"Given the tone of this statement from the RBNZ, we remain of the view that the RBNZ will most likely cut the OCR in August," said Westpac Chief Economist Dominick Stephens.
"The repeated comment that a lower OCR may be needed is blunter than the language used in March, which was followed by a cut in May," he said.
Markets imply around a 63% chance of a reduction to 1.25% at the central bank's next meeting on August 7, and are wagering heavily on 1% by year end.
Minutes of the RBNZ review released along with the statement showed policymakers discussed whether to cut at the meeting and decided that more monetary easing was "likely to be necessary" over time.
Last week both the U.S. Federal Reserve and the European Central Bank reversed course and opened the door to new stimulus, while the Reserve Bank of Australia (RBA) has said it's likely to ease again to follow up from its cut earlier this month.
The New Zealand dollar was largely unchanged, rising just 0.2% to $0.6646 after the rates decision.
GLOBAL RISKS
In its statement the RBNZ said it expected inflation to rise to the 2 percent mid-point of its target range, and employment to remain near its maximum sustainable level, but didn't give a time frame.
Sino-U.S. trade tensions as well as softening domestic housing and immigration growth have put pressure on New Zealand's economy.
A slowdown in China, New Zealand's biggest export market, is a key concern for policymakers, just as it is for many other nations whose economic fortunes are closely linked to the Asian giant.
Dairy exports, particularly to China, helped push New Zealand's exports higher in May.
"The weaker global economy is affecting New Zealand through a range of trade, financial, and confidence channels," the central bank said.
It said the softer house prices and subdued business sentiment continue to dampen domestic spending.
Indeed, while gross domestic product growth figures released last week topped expectations, the broad picture highlighted a soft underbelly.
The Treasury department last month cut its GDP growth forecast to 2.1% for the 12-months ending June 30, from the 2.9% expansion predicted in December.
"Upside risks to inflation and employment are becoming few and far between," ANZ analysts said in a note to clients, tipping rate cuts in August and November. (Reporting by Praveen Menon and Charlotte Greenfield; Editing by Shri Navaratnam) |
Is GYP Properties Limited's (SGX:AWS) Balance Sheet Strong Enough To Weather A Storm?
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Investors are always looking for growth in small-cap stocks like GYP Properties Limited (SGX:AWS), with a market cap of S$37m. However, an important fact which most ignore is: how financially healthy is the business? Evaluating financial health as part of your investment thesis is vital, since poor capital management may bring about bankruptcies, which occur at a higher rate for small-caps. The following basic checks can help you get a picture of the company's balance sheet strength. However, this is not a comprehensive overview, so I recommend youdig deeper yourself into AWS here.
AWS's debt levels surged from S$76m to S$87m over the last 12 months – this includes long-term debt. With this rise in debt, AWS currently has S$2.5m remaining in cash and short-term investments to keep the business going. Its negative operating cash flow means calculating cash-to-debt wouldn't be useful. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can take a look at some of AWS’soperating efficiency ratios such as ROA here.
Looking at AWS’s S$22m in current liabilities, the company has been able to meet these commitments with a current assets level of S$81m, leading to a 3.67x current account ratio. The current ratio is calculated by dividing current assets by current liabilities. However, many consider a ratio above 3x to be high, although this is not necessarily a bad thing.
Since total debt levels exceed equity, AWS is a highly leveraged company. This is somewhat unusual for small-caps companies, since lenders are often hesitant to provide attractive interest rates to less-established businesses. No matter how high the company’s debt, if it can easily cover the interest payments, it’s considered to be efficient with its use of excess leverage. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In AWS's case, the ratio of 1.23x suggests that interest is not strongly covered, which means that debtors may be less inclined to loan the company more money, reducing its headroom for growth through debt.
Although AWS’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. Keep in mind I haven't considered other factors such as how AWS has been performing in the past. You should continue to research GYP Properties to get a more holistic view of the small-cap by looking at:
1. Historical Performance: What has AWS's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
“Greatest mistake ever”: Bill Gates on his biggest career regret
Billionaire and Microsoft co-founder, Bill Gates, has made many a good career moves in his lifetime.
In 1975, Gates dropped out of his sophomore year at Harvard to launch Microsoft with his mate, Paul Allen.
He never believed in weekends or vacations, and this dedication was the driving force behind Microsoft’s now-$1 trillion valuation.
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But, during a recent interview, Gates revealed his all-time greatest mistake: “So the greatest mistake ever is whatever mismanagement I engaged in that caused Microsoft not to be what Android is.”
Gates said Android’s standing as the non-Apple phone platform was a “natural thing” for Microsoft to become.
“It really is winner take all,” he said.
“If you’re there with half as many apps or 90 percent as many apps, you’re on your way to complete doom.”
“There’s room for exactly one non-Apple operating system and what’s that worth? $400 billion that would be transferred from company G to company M,” he said.
While Microsoft had the early standing with Windows Mobile in 2000, it failed to keep up in the smartphone era, losing out to Apple, who debuted the iPhone in 2007, and Google, who debuted the Android platform one year later.
In another interview earlier this week, Gates blamed the antitrust trial (the result of lawsuits filed by the US Department of Justice, 20 states, and the District of Columbia, accusing Microsoft of illegal, anti-competitive and exclusionary practices) for the lack of movement in developing mobile software.
"We were distracted during our antitrust trial. We didn't assign the best people to do the work,” Gates said.
“So it's the biggest mistake I made in terms of something that was clearly within our skillset. We were clearly the company that should have achieved that — and we didn't,” he said.
But, while he regretted those mistakes, he said Microsoft’s Windows and Office assets were still very strong.
“We are a leading company,” he said.
“If we had gotten that one right, we would be the leading company, but oh well.”
Gates, who revealed he uses an Android phone, stepped down as Microsoft’s CEO in 2000, and stepped down as its chief software architect in July 2008.
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The Latest: Saudi Arabia says it shot down Yemen drone
DUBAI, United Arab Emirates (AP) — The Latest on tensions between the U.S. and Iran and in the Persian Gulf (all times local): 6:30 a.m. Saudi Arabia says it has shot down a drone launched into the kingdom by Yemen's Iranian-allied Houthi rebels. Military spokesman Col. Turki al-Maliki announced the shootdown of the drone Tuesday night near the southern Saudi city of Khamis Mushait. Al-Maliki criticized the Houthis for targeting civilian areas with their bomb-laden drones. A Saudi-led coalition fighting the Houthis in Yemen since March 2015 has been criticized internationally for its airstrikes in Yemen killing civilians. The Houthi drone attacks have picked up amid tensions between Iran and the U.S. in the Persian Gulf as Tehran's nuclear deal with world powers unravels. A Yemen drone attack Sunday night on an airport in Abha, which has been struck repeatedly by the Houthis in recent days, killed one person and wounded seven. ___ 11 p.m. President Donald Trump says Iran still takes his threats seriously even after he decided against approving strikes in retaliation for Tehran's downing of a more than $100 million American surveillance drone over the Strait of Hormuz. Trump told reporters in the Oval Office that when the Iranians are ready to talk, they will contact him. Iran, however, warned earlier Tuesday that new U.S. sanctions targeting its supreme leader and other top officials meant "closing the doors of diplomacy" between Tehran and Washington amid the heightened tensions. Earlier in the day, Trump tweeted that an Iranian attack on any U.S. interest will be met with "great and overwhelming force ... overwhelming will mean obliteration." ___ 9:55 p.m. France's President Emmanuel Macron has spoken by phone with his Iranian counterpart in what his office says is an effort to avoid a "dangerous escalation" of tensions in the Persian Gulf. The French leader spoke on Tuesday with Iranian President Hassan Rouhani, but his office didn't provide details of the conversation. Story continues Macron will be joining other world leaders at the G20 summit in Osaka, Japan, which starts Friday. High on the list will be discussing Iran's unraveling nuclear deal and the buildup of U.S. forces in the region. Macron said on Monday that he'll meet with President Donald Trump at the summit. France has said U.S. calls for building a coalition to counter Iran are "disturbing," as European powers are trying to save the deal. ___ 7:30 p.m. U.S. Secretary of State Mike Pompeo says the U.S. is hopeful that a peace agreement to bring an end to 17 years of war in Afghanistan can be reached before Sept. 1. Pompeo was in the Afghan capital of Kabul on Tuesday to meet the country's leaders. The war there is America's longest running. "I hope we have a peace deal before Sept. 1 that's certainly our mission set," Pompeo told reporters in Kabul on Tuesday before leaving for Delhi. Pompeo is on a tour of the Middle East and Asia in an effort to build a broad, global coalition to pressure Iran that includes Asian and European countries. Pompeo's visit to Afghanistan comes just days before the next round of U.S. talks with the Taliban in Doha, where they maintain a political office. ___ 7:15 p.m. President Donald Trump says an Iranian attack on any American interest will be met with "great and overwhelming force" and in some areas, "overwhelming will mean obliteration." Trump issued the threat in a tweet Tuesday. It came after Iranian President Hassan Rouhani said the White House is "afflicted by mental retardation." Trump called that a "very ignorant and insulting statement." The latest verbal volleys between Tehran and Washington followed the U.S. decision on Monday to levy financial sanctions Iran's supreme leader and his associates. Rouhani said in a televised address that the decision meant the "certain failure" of the White House pressure campaign against Iran. Trump says Iranian leaders spend their money on supporting militant groups and don't care about the Iranian people who are suffering under economic sanctions. ___ 6:15 p.m. France's top diplomat has warned Iran that breaking the 2015 nuclear deal is a "grave error," and the "wrong answer" to pressure from the United States. Foreign minister Jean-Yves Le Drian also called the U.S. initiative to build a global coalition to counter Iran "disturbing." He said European diplomats are working to avoid further escalation of the tensions between the U.S. and Iran. France, Germany, the United Kingdom and other European countries are trying to save the 2015 nuclear deal, which the U.S. pulled out of. Iran has said it will break out of the deal's limit on its stockpiles of low-enriched uranium by Thursday, following the re-imposition of heavy U.S. sanctions. ___ 4:35 p.m. France has reiterated its call for de-escalation and dialogue between the U.S. and Iran, as world leaders prepare for the Group of 20 summit. Government spokeswoman Sibeth Ndiaye said French diplomats had several high-level contacts in the past weeks with Iranian and American officials looking for ways to ease the tensions. France's President Emmanuel Macron will meet with President Donald Trump at the G20 summit in Japan that starts Friday. So far, France hasn't commented on U.S. Secretary of State Mike Pompeo's meetings with Gulf Arab allies about building a global coalition to counter Iran. ___ 3:25 p.m. U.S. National Security Adviser John Bolton says "the United States would very much like to get rid of foreign forces from Syria," an apparent reference to Iranian troops there. Bolton's comments Tuesday at a press conference in Jerusalem came after his Russian counterpart urged the United States and Israel to show "restraint" toward Iran. The high-profile trilateral security summit focused on Iranian involvement in conflicts across the region, particularly in neighboring Syria. Differences between the sides quickly emerged. Israel has long called for Iranian forces to be removed from its northern front and Bolton says the Iranian forces are "a problem in Syria." The Russian envoy, Nikolai Patrushev, responded by saying that Iran had fought against terrorists on Syria's soil and was "stabilizing the situation" there. The summit comes amid escalating tensions between the U.S. and Iran in the Persian Gulf. ___ 3:10 p.m. Russia's national security adviser says Russian intelligence has determined that Iran shot down an American drone last week over Iranian airspace. Nikolai Patrushev's assessment contradicts U.S. claims that the aircraft was downed in international airspace over the Strait of Hormuz. Patrushev spoke to reporters after a three-way meeting with his Russian and Israeli counterparts in Jerusalem. He said Iran has not briefed Russia about the incident but that the Russian Defense Ministry has concluded the drone had entered Iranian airspace. He says: "We have not seen any proof otherwise." President Donald Trump called off a planned U.S. reprisal in response to the shoot-down just minutes before it was to take place but has imposed new sanctions on Iran. ___ 2:55 p.m. U.S. National Security Adviser John Bolton says "all options remain on the table" if Iran exceeds the uranium enrichment limit under the 2015 deal. Bolton spoke at a press conference after a high-profile trilateral security summit in Jerusalem on Tuesday. He was responding to a question about whether a military strike was still an option if Iran crosses the 300-kilogram stockpile threshold outlined in the atomic accord. Bolton says it would be "a very serious mistake for Iran to ignore those limits." Iran says it will possess over 300 kilograms of low-enriched uranium by Thursday, in violation of the deal. Europe separately faces a July 7 deadline imposed by Tehran to offer a better deal or Iran will begin enriching its uranium closer to weapons-grade levels. Bolton, a longtime Iran hawk, says it "should give up their pursuit of deliverable nuclear weapons." ___ 3 p.m. Russia's national security adviser has rebuffed U.S. and Israeli attempts to isolate Iran and is urging both countries to show "restraint" toward the Islamic Republic. Nikolai Patrushev spoke at a three-way meeting Tuesday with his Israeli and American counterparts in Jerusalem. He says attempts to present Iran "as the main threat to regional security" or to equate it to international terrorist groups are "not acceptable." He added that "Iran is contributing a lot to fighting terrorists on the Syrian soil and stabilizing the situation there." Israel's prime minister, Benjamin Netanyahu, earlier called for the three countries to agree on expelling foreign forces from neighboring Syria. He says Israel will not allow Iran to establish a permanent military presence there. Patrushev called on Israel and the U.S. to encourage a political settlement in Syria. ___ 11:50 a.m. Iran's president is mocking President Donald Trump, going so far as to say that the White House is "afflicted by mental retardation." The comments by Hassan Rouhani came after the Trump administration sanctioned Supreme Leader Ayatollah Ali Khamenei on Monday. Rouhani said the decision meant the "certain failure" of the White House's efforts. He also criticized U.S. officials for wanting to sanction Iran's Foreign Minister Mohammad Javad Zarif. Rouhani spoke live in a televised address on Tuesday. ___ 11:35 a.m. Iran's president says the new U.S. sanctions targeting the Islamic Republic's supreme leader and others are "outrageous and idiotic." The comments by Hassan Rouhani come a day after the Trump administration sanctioned Supreme Leader Ayatollah Ali Khamenei and his associates. Rouhani says the decision meant the "certain failure" of the White House's efforts. He spoke in a live television address on Tuesday. Rouhani also criticized U.S. officials for wanting to sanction Iran's Foreign Minister Mohammad Javad Zarif. An exasperated Rouhani said: "You sanction the foreign minister simultaneously with a request for talks?" ___ 11:10 a.m. Israeli Prime Minister Benjamin Netanyahu says Israel, the United States and Russia have a common objective to remove Iranian forces from Syria. Netanyahu says that doing so will "create a more stable Middle East." He spoke at a meeting of the three countries' national security advisers on Tuesday. Iran and Russia have played a key role in backing Syrian President Bashar Assad and helping him overcome rebel forces in his country's civil war. Netanyahu has long warned that Iran now looks to leverage that influence into establishing a military foothold along Israel's northern front. The three-way summit in Jerusalem with the American and Russian officials was expected to focus on Iranian involvement in conflicts across the region, particularly in neighboring Syria. It comes amid escalating tensions between the U.S. and Iran in the Persian Gulf. ___ 10:45 a.m. U.S. National Security Adviser John Bolton says President Donald Trump is open to real negotiations and "all that Iran needs to do is walk through that open door" Bolton spoke at a high-profile trilateral security summit in Jerusalem on Tuesday. He says American envoys are surging across the region in hopes of finding a path out of escalating tensions between the U.S. and Iran but that the silence of the Islamic Republic has been "deafening." Bolton says: "There is simply no evidence that Iran has made the strategic decision to renounce nuclear weapons." His comments alongside his Israeli and Russian counterparts come after Iran slammed the Trump administration over new U.S. sanctions targeting its supreme leader. Iran's Foreign Ministry says the measures spell a "permanent closure" to diplomacy between the U.S and Iran. ___ 9:15 a.m. Iran's Foreign Ministry spokesman says the new U.S. sanctions targeting the Islamic Republic's supreme leader and other top officials mean the "permanent closure" of diplomacy between Tehran and Washington. That's according to a report carried by the state-run IRNA news agency on Tuesday, quoting the spokesman, Abbas Mousavi. Mousavi says the "fruitless sanction on Iran's leadership and the chief of Iranian diplomacy mean the permanent closure of the road of diplomacy with the frustrated U.S. administration." Trump enacted new sanctions Monday targeting Iran's Supreme Leader Ayatollah Ali Khamenei. U.S. officials also say they plan sanctions against Iranian Foreign Minister Mohammad Javad Zarif. This comes amid heightened tensions between Iran and the U.S. over its unraveling nuclear deal and as Iran last week shot down a U.S. military surveillance drone. |
Motor vehicle head resigns over fatal crash that killed 7
CONCORD, N.H. (AP) — The head of the Massachusetts motor vehicle division has resigned after her agency failed to terminate the commercial driving license of a man whose collision with a group of motorcyclists on a rural New Hampshire road left seven bikers dead. Volodymyr Zhukovskyy, 23, pleaded not guilty Tuesday to seven counts of negligent homicide. Massachusetts Department of Transportation Secretary and CEO Stephanie Pollack said in a statement that the state Registry of Motor Vehicles failed to act on information provided by the Connecticut Department of Motor Vehicles about a drunken driving arrest involving Zhukovskyy. Pollack said the arrest should have cost him his commercial driving license. As a result, she accepted the resignation of Erin Deveney. Manny Ribeiro, who survived the crash, said the resignation was just one of many revelations about the driver that indicated the crash could have been prevented. But Ribeiro said it also felt "like someone was running around from the problem." "We just get to quit and walk away and that's it," Ribeiro said. "Story over. See you later until the next time it happens and then the next person steps down. This is what happens every single time." Connecticut prosecutors said Zhukovskyy was arrested May 11 in a Walmart parking lot in East Windsor after failing a sobriety test. Zhukovskyy's lawyer in that case, John O'Brien, said he denies being intoxicated and will fight the charge. Zhukovskyy, a driver for a transport company who has a history of traffic arrests, was ordered Tuesday to remain in preventive detention, with a judge saying his driving record poses a potential danger to the public and himself. The plea was entered by Zhukovskyy's attorney Melissa Davis in Coos County Court in Lancaster, New Hampshire. Zhukovskyy remains behind bars there. Davis didn't immediately return calls seeking comment. The Dodge pickup Zhukovskyy was driving was towing a flatbed trailer and collided with the motorcycles in Randolph early Friday evening, investigators say. He was driving erratically and crossed the center line, according to criminal complaints released Tuesday. Story continues A survivor of the crash said the trailer wiped out most of the bikers behind him. Zhukovskyy was arrested Monday morning at his home in Massachusetts and handed over to New Hampshire authorities after a court appearance that day. Jury selection is scheduled to begin Nov. 8, with the trial running through December. Police in Texas told several media outlets that Zhukovskyy also crashed a tractor trailer in suburban Houston earlier this month. Zhukovskyy told police that he had been cut off, causing him to lose control of the truck. He was not charged. Zhukovskyy was also arrested on a drunken driving charge in 2013 in Westfield, Massachusetts, state records show. He was placed on probation for one year and had his license suspended for 210 days, The Westfield News reported. Zhukovskyy's father, who goes by the same name, told the Boston Herald that his son is a Ukrainian national and has permanent resident status in the U.S. The younger Zhukovskyy's court file includes a letter dated Sunday from a deportation officer from Immigration and Customs Enforcement requesting details on his 2017 heroin and cocaine convictions. Records from the Federal Motor Carrier Safety Administration indicate that the company Zhukovskyy was driving for at the time of the motorcycle crash, Westfield Transport, has been cited for various violations in the past two years, MassLive.com reported. Phones rang unanswered at the company. The owner has previously said he was cooperating with the investigation. The crash victims were members or supporters of the Marine JarHeads, a New England motorcycle club that includes Marines and their spouses and ranged in age from 42 to 62. Four were from New Hampshire, two from Massachusetts and one from Rhode Island. Ribeiro said he just remembers an "explosion" and the trailer from the truck wiping out most of the bikers behind him. The crash would not have been so deadly, he said, if not for the trailer. After the crash, Ribeiro recalled seeing Zhukovskyy "screaming and running around" in the road before authorities arrived and took him away. The dead were identified as Michael Ferazzi, 62, of Contoocook, New Hampshire; Albert Mazza Jr., 59, of Lee, New Hampshire; Desma Oakes, 42, of Concord, New Hampshire; Aaron Perry, 45, of Farmington, New Hampshire; Daniel Pereira, 58, of Riverside, Rhode Island; and Jo-Ann and Edward Corr, both 58, of Lakeville, Massachusetts. The first three funerals are schedule to be held on Friday with services for Ferazzi in Massachusetts, Pereira in Rhode Island and Oakes in New Hampshire. |
Is GYP Properties Limited (SGX:AWS) A Financially Sound Company?
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While small-cap stocks, such as GYP Properties Limited (SGX:AWS) with its market cap of S$37m, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. Evaluating financial health as part of your investment thesis is essential, as mismanagement of capital can lead to bankruptcies, which occur at a higher rate for small-caps. The following basic checks can help you get a picture of the company's balance sheet strength. Nevertheless, this is not a comprehensive overview, so I recommend youdig deeper yourself into AWS here.
Over the past year, AWS has ramped up its debt from S$76m to S$87m – this includes long-term debt. With this rise in debt, the current cash and short-term investment levels stands at S$2.5m to keep the business going. Its negative operating cash flow means calculating cash-to-debt wouldn't be useful. For this article’s sake, I won’t be looking at this today, but you can take a look at some of AWS’soperating efficiency ratios such as ROA here.
Looking at AWS’s S$22m in current liabilities, it appears that the company has been able to meet these commitments with a current assets level of S$81m, leading to a 3.67x current account ratio. The current ratio is calculated by dividing current assets by current liabilities. Having said that, many consider a ratio above 3x to be high, although this is not necessarily a bad thing.
With total debt exceeding equity, AWS is considered a highly levered company. This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. We can check to see whether AWS is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In AWS's, case, the ratio of 1.23x suggests that interest is not strongly covered, which means that lenders may be more reluctant to lend out more funding as AWS’s low interest coverage already puts the company at higher risk of default.
Although AWS’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. Keep in mind I haven't considered other factors such as how AWS has been performing in the past. I recommend you continue to research GYP Properties to get a more holistic view of the small-cap by looking at:
1. Historical Performance: What has AWS's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Xingda International Holdings Limited (HKG:1899) Has Attractive Fundamentals
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Xingda International Holdings Limited (HKG:1899) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of 1899, it is a notable dividend-paying company that has been able to sustain great financial health over the past. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, read the fullreport on Xingda International Holdings here.
1899 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that 1899 manages its cash and cost levels well, which is a crucial insight into the health of the company. 1899's has produced operating cash levels of 0.66x total debt over the past year, which implies that 1899's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
1899’s reputation for being one of the best dividend payers in the market is supported by the fact that it has been steadily growing its dividend payments over the past ten years and currently is one of the top yielding companies on the markets, at 7.1%.
For Xingda International Holdings, I've compiled three important factors you should further examine:
1. Future Outlook: What are well-informed industry analysts predicting for 1899’s future growth? Take a look at ourfree research report of analyst consensusfor 1899’s outlook.
2. Historical Performance: What has 1899's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of 1899? Exploreour interactive list of stocks with large potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Long Island Pizzeria Owner Who Died in Dominican Republic Suffered Respiratory & Heart Failure
The cause of death for the latest American tourist who died while spending time in the Dominican Republic has been confirmed. Vittorio Caruso , the 56-year-old pizzeria owner from Glen Cove, New York, died from respiratory and heart failure on June 17 following a series of ongoing health problems, CNN reports . A preliminary autopsy report cited by the Dominican Republic’s Attorney General’s Office showed that Caruso had suffered from hypertension, heart disease and pulmonary disease for years, according to CNN. New and previous heart attacks were also detected in the autopsy. Additionally, the preliminary report indicated that Caruso was a smoker and drank alcohol, according to CNN. (PEOPLE could not immediately reach Dominican authorities for comment.) Caruso’s relatives told News 12 Long Island that he died last Monday. According to his sister-in-law, Lisa Maria Caruso, they received a phone call saying that Vittorio was sick. Minutes later, they got another call informing them that he had died. “When my brother-in-law left for the Dominican Republic, we fully expected him to return home happy and rested. Instead, he will be returning in a body bag,” Lisa Maria told the local outlet in an emailed statement . Vittorio Caruso | Facebook RELATED: Long Island Pizzeria Owner, 56, Died in the Dominican Republic ‘After Drinking Something’ The U.S. State Department confirmed Caruso’s death to Fox News on Friday. A spokesperson for the U.S. State Department also confirmed to PEOPLE that a U.S. citizen had died in June in the Dominican Republic. Lisa Maria told Fox News that Caruso had gone into “respiratory distress after drinking something.” His older brother Frank Caruso noted to the New York Post that Vittorio was “very healthy” when he left for vacation. “He went to the doctor before he left, and he had no problems,” Frank said. “I spoke to the doctor. He called me when he found out he died, and he said he did not see anything wrong before he left.” Story continues • Want to keep up with the latest crime coverage? Click here to get breaking crime news, ongoing trial coverage and details of intriguing unsolved cases in the True Crime Newsletter. In the days since his death, Caruso’s partner Yomaira Ramirez de Jesus has been speaking with prosecutors about the Long Island native, who prosecutors said had been living at the Boca Chica Resort in Santo Domingo for several years. On June 11, Ramirez de Jesus said Caruso started coughing and experiencing shortness of breath, but was treated by a doctor and released, CNN reports . Nearly a week later, his partner said Caruso called again — this time complaining of respiratory distress and chest pain. Prosecutors said he received at-home medical attention, but was later transferred to the Santo Domingo hospital. It was there that he suffered cardiorespiratory arrest and died, according to CNN. Dominican prosecutors also noted that his body showed no signs of internal or external trauma. According to the U.S. State Department, at least nine American tourists have died since the summer of 2018 after falling ill in the country — and dozens more have gotten sick . Americans who have died in the Dominican Republic RELATED: Mysterious Dominican Republic Tourist Deaths: The Victims So Far The FBI is investigating at least six of the deaths . Some of them died in what appeared to be bizarre — and similar — circumstances. The agencies involved are not yet releasing further details about the investigations. According to the FBI, federal agents are on the island nation to investigate six cases: four from various Bahia Principe properties and two deaths at the Hard Rock Hotel & Casino. The bodies of Edward Nathaniel Holmes and his fiancée, Cynthia Ann Day, were discovered in their hotel room at the Grand Bahia Principe La Romana resort on May 30. Miranda Schaup-Werner, 41, collapsed on May 25 shortly after mixing a drink from the minibar in the Luxury Bahia Principe Bouganville. Pennsylvania native Yvette Monique Sport , 51, collapsed in 2018 at the Bahia Príncipe resort in Punta Cana. At the Hard Rock Hotel & Casino in Punta Cana, David Harrison, 45, died in July 2018, and Robert Bell Wallace, 67, died last April. RELATED: Army Vet, 41, Died Suddenly in Dominican Republic in Same Area as Other American Tourists Officials from the U.S. and the Dominican Republic say that despite the media scrutiny, the deaths do not represent a statistical outlier. “Speaking generally, we have not seen an uptick in the number of US citizen deaths reported to the Department,” a statement from the U.S. State Department read. “While the overwhelming majority travel without incident, we want to assure all Americans that we continue to work actively with the Dominican authorities at the very highest levels to ensure that U.S. citizens are safe and feel safe while in the Dominican Republic.” Carlos Suero, the Dominican Republic’s Ministry of Public Health spokesman, told Fox News, “It’s all a hysteria against the Dominican Republic , to hurt our tourism, this is a very competitive industry and we get millions of tourists, we are a popular destination.” |
Do Aktia Pankki Oyj's (HEL:AKTIA) Earnings Warrant Your Attention?
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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Peter Lynch said inOne Up On Wall Street, 'Long shots almost never pay off.'
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested inAktia Pankki Oyj(HEL:AKTIA). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
View our latest analysis for Aktia Pankki Oyj
Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So EPS growth can certainly encourage an investor to take note of a stock. Like a falcon taking flight, Aktia Pankki Oyj's EPS soared from €0.59 to €0.80, over the last year. That's a impressive gain of 34%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. I note that Aktia Pankki Oyj's revenuefrom operationswas lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Aktia Pankki Oyj reported flat revenue and EBIT margins over the last year. That's not a major concern but nor does it point to the long term growth we like to see.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
Fortunately, we've got access to analyst forecasts of Aktia Pankki Oyj'sfutureprofits. You can do your own forecasts without looking, or you cantake a peek at what the professionals are predicting.
I always like to check up on CEO compensation, because I think that reasonable pay levels, around or below the median, can be a sign that shareholder interests are well considered. I discovered that the median total compensation for the CEOs of companies like Aktia Pankki Oyj with market caps between €351m and €1.4b is about €617k.
The Aktia Pankki Oyj CEO received €330k in compensation for the year ending December 2018. That seems pretty reasonable, especially given its below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.
Given my belief that share price follows earnings per share you can easily imagine how I feel about Aktia Pankki Oyj's strong EPS growth. With swiftly growing earnings, it probably has its best days ahead, and the modest CEO pay suggests the company is careful with cash. So I'd venture it may well deserve a spot on your watchlist, or even a little further research. While we've looked at the quality of the earnings, we haven't yet done any work to value the stock. So if you like to buy cheap, you may want tocheck if Aktia Pankki Oyj is trading on a high P/E or a low P/E, relative to its industry.
You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here isa list of companies with insider buying in the last three months.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Estimating The Intrinsic Value Of Quest Holdings S.A. (ATH:QUEST)
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In this article we are going to estimate the intrinsic value of Quest Holdings S.A. (ATH:QUEST) by taking the expected future cash flows and discounting them to their present value. I will use the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple!
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in theSimply Wall St analysis model.
See our latest analysis for Quest Holdings
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To begin with, we have to get estimates of the next ten years of cash flows. Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company's last reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars:
[{"": "Levered FCF (\u20ac, Millions)", "2019": "\u20ac23.33", "2020": "\u20ac29.14", "2021": "\u20ac34.65", "2022": "\u20ac39.75", "2023": "\u20ac44.43", "2024": "\u20ac48.76", "2025": "\u20ac52.80", "2026": "\u20ac56.64", "2027": "\u20ac60.37", "2028": "\u20ac64.04"}, {"": "Growth Rate Estimate Source", "2019": "Est @ 33.46%", "2020": "Est @ 24.9%", "2021": "Est @ 18.91%", "2022": "Est @ 14.72%", "2023": "Est @ 11.78%", "2024": "Est @ 9.73%", "2025": "Est @ 8.29%", "2026": "Est @ 7.28%", "2027": "Est @ 6.58%", "2028": "Est @ 6.08%"}, {"": "Present Value (\u20ac, Millions) Discounted @ 23.39%", "2019": "\u20ac18.91", "2020": "\u20ac19.14", "2021": "\u20ac18.45", "2022": "\u20ac17.15", "2023": "\u20ac15.54", "2024": "\u20ac13.82", "2025": "\u20ac12.13", "2026": "\u20ac10.54", "2027": "\u20ac9.11", "2028": "\u20ac7.83"}]
Present Value of 10-year Cash Flow (PVCF)= €142.60m
"Est" = FCF growth rate estimated by Simply Wall St
After calculating the present value of future cash flows in the intial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 10-year government bond rate (4.9%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 23.4%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = €64m × (1 + 4.9%) ÷ (23.4% – 4.9%) = €364m
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= €€364m ÷ ( 1 + 23.4%)10= €44.51m
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is €187.11m. To get the intrinsic value per share, we divide this by the total number of shares outstanding.This results in an intrinsic value estimate of €15.71. Relative to the current share price of €18.8, the company appears around fair value at the time of writing. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Quest Holdings as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 23.4%, which is based on a levered beta of 1.231. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn’t be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Quest Holdings, I've put together three fundamental factors you should further research:
1. Financial Health: Does QUEST have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Other High Quality Alternatives: Are there other high quality stocks you could be holding instead of QUEST? Exploreour interactive list of high quality stocksto get an idea of what else is out there you may be missing!
PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ATH every day. If you want to find the calculation for other stocks justsearch here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Why Gati Limited's (NSE:GATI) High P/E Ratio Isn't Necessarily A Bad Thing
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This article is written for those who want to get better at using price to earnings ratios (P/E ratios). To keep it practical, we'll show how Gati Limited's (NSE:GATI) P/E ratio could help you assess the value on offer. Based on the last twelve months,Gati's P/E ratio is 38.76. In other words, at today's prices, investors are paying ₹38.76 for every ₹1 in prior year profit.
Check out our latest analysis for Gati
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Gati:
P/E of 38.76 = ₹65.5 ÷ ₹1.69 (Based on the trailing twelve months to March 2019.)
A higher P/E ratio means that buyers have to paya higher pricefor each ₹1 the company has earned over the last year. All else being equal, it's better to pay a low price -- but as Warren Buffett said, 'It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.'
If earnings fall then in the future the 'E' will be lower. Therefore, even if you pay a low multiple of earnings now, that multiple will become higher in the future. A higher P/E should indicate the stock is expensive relative to others -- and that may encourage shareholders to sell.
Gati's earnings per share fell by 49% in the last twelve months. And EPS is down 13% a year, over the last 5 years. This could justify a pessimistic P/E.
The P/E ratio indicates whether the market has higher or lower expectations of a company. You can see in the image below that the average P/E (22.8) for companies in the logistics industry is lower than Gati's P/E.
That means that the market expects Gati will outperform other companies in its industry. Clearly the market expects growth, but it isn't guaranteed. So investors should always consider the P/E ratio alongside other factors, such aswhether company directors have been buying shares.
One drawback of using a P/E ratio is that it considers market capitalization, but not the balance sheet. That means it doesn't take debt or cash into account. Theoretically, a business can improve its earnings (and produce a lower P/E in the future) by investing in growth. That means taking on debt (or spending its cash).
Such expenditure might be good or bad, in the long term, but the point here is that the balance sheet is not reflected by this ratio.
Net debt is 27% of Gati's market cap. You'd want to be aware of this fact, but it doesn't bother us.
Gati's P/E is 38.8 which is above average (15.4) in the IN market. With some debt but no EPS growth last year, the market has high expectations of future profits.
Investors should be looking to buy stocks that the market is wrong about. People often underestimate remarkable growth -- so investors can make money when fast growth is not fully appreciated. So thisfreevisualization of the analyst consensus on future earningscould help you make theright decisionabout whether to buy, sell, or hold.
You might be able to find a better buy than Gati. If you want a selection of possible winners, check out thisfreelist of interesting companies that trade on a P/E below 20 (but have proven they can grow earnings).
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
With 38% Earnings Growth, Did General Commercial & Industrial S.A. (ATH:GEBKA) Outperform The Industry?
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Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at General Commercial & Industrial S.A.'s (ATH:GEBKA) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Check out our latest analysis for General Commercial & Industrial
GEBKA's trailing twelve-month earnings (from 31 December 2018) of €964k has jumped 38% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 7.2%, indicating the rate at which GEBKA is growing has accelerated. What's the driver of this growth? Well, let’s take a look at if it is merely due to an industry uplift, or if General Commercial & Industrial has seen some company-specific growth.
In terms of returns from investment, General Commercial & Industrial has fallen short of achieving a 20% return on equity (ROE), recording 4.1% instead. Furthermore, its return on assets (ROA) of 3.4% is below the GR Trade Distributors industry of 6.0%, indicating General Commercial & Industrial's are utilized less efficiently. However, its return on capital (ROC), which also accounts for General Commercial & Industrial’s debt level, has increased over the past 3 years from 5.1% to 5.6%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 26% to 16% over the past 5 years.
Though General Commercial & Industrial's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research General Commercial & Industrial to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for GEBKA’s future growth? Take a look at ourfree research report of analyst consensusfor GEBKA’s outlook.
2. Financial Health: Are GEBKA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out ourfinancial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Did Business Growth Power Golden Deeps's (ASX:GED) Share Price Gain of 300%?
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The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But if you buy shares in a really great company, you canmorethan double your money. For example, theGolden Deeps Limited(ASX:GED) share price has soared 300% in the last three years. How nice for those who held the stock! It's also up 19% in about a month.
View our latest analysis for Golden Deeps
Golden Deeps hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, investors may be hoping that Golden Deeps finds some valuable resources, before it runs out of money.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Of course, if you time it right, high risk investments like this can really pay off, as Golden Deeps investors might know.
Our data indicates that Golden Deeps had AU$1,172,995 more in total liabilities than it had cash, when it last reported in December 2018. That makes it extremely high risk, in our view. So the fact that the stock is up 59% per year, over 3 years shows that high risks can lead to high rewards, sometimes. It's clear more than a few people believe in the potential. You can see in the image below, how Golden Deeps's cash levels have changed over time (click to see the values).
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Given that situation, many of the best investors like to check if insiders have been buying shares. It's usually a positive if they have, as it may indicate they see value in the stock. You canclick here to see if there are insiders buying.
Golden Deeps shareholders are down 16% for the year, but the market itself is up 12%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 24%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Most investors take the time to check the data on insider transactions. You canclick here to see if insiders have been buying or selling.
Of courseGolden Deeps may not be the best stock to buy. So you may wish to see thisfreecollection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
What Kind Of Shareholders Own Gas2Grid Limited (ASX:GGX)?
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The big shareholder groups in Gas2Grid Limited (ASX:GGX) have power over the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.'
With a market capitalization of AU$2.3m, Gas2Grid is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutional investors have not yet purchased shares. We can zoom in on the different ownership groups, to learn more about GGX.
See our latest analysis for Gas2Grid
We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.
There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to fund under management, so the institition does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Gas2Grid might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
Gas2Grid is not owned by hedge funds. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own a reasonable proportion of Gas2Grid Limited. Insiders have a AU$1.1m stake in this AU$2.3m business. It is great to see insiders so invested in the business. It might be worth checkingif those insiders have been buying recently.
The general public, with a 45% stake in the company, will not easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
It seems that Private Companies own 8.1%, of the GGX stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.
I always like to check for ahistory of revenue growth. You can too, by accessing this free chart ofhistoric revenue and earnings in thisdetailed graph.
Of coursethis may not be the best stock to buy. Therefore, you may wish to see ourfreecollection of interesting prospects boasting favorable financials.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Chelsea Handler says she's ready for love after years of therapy: 'I thought I would sound weak if I said that'
Therapy has given Chelsea Handler a new understanding of herself, her life and her relationships.
The comedian opened up about her personal growth during an appearance this week on "The Talk," speaking candidly about her longtime resistance to long-term romance.
"I have changed my mind about being open to relationships, because I thought I was tough for a really long time,," she said. "And what I learned through therapy is that being really tough is actually being vulnerable. And being able to admit that you want to be in a relationship, you know, and I thought I would sound weak if I said that."
Handler, 44, has never married, but she dated former Comcast CEO Ted Harbert for five years and has been linked to a number of famous faces. Now, she says, she'd like to try more seriously.
"And listen, I have a pretty good life, so I'm happy if I don't find a relationship, but I would love to find someone to love," she said.
Handler's shorter-term relationships were no stranger to headlines, and she's taken interest in people who work in many areas of the entertainment industry. She reportedly spent time with rock star Lenny Kravitz and celebrity chef Bobby Flay, and she dated 50 Cent for several months.
She said on "The Talk" that her work in therapy inspired much of the material of her upcoming stand-up tour and her memoir, "Life Will Be the Death of Me." |
Where GMM Pfaudler Limited (NSE:GMM) Stands In Terms Of Earnings Growth Against Its Industry
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Examining GMM Pfaudler Limited's (NSE:GMM) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess GMM's latest performance announced on 31 March 2019 and weight these figures against its longer term trend and industry movements.
Check out our latest analysis for GMM Pfaudler
GMM's trailing twelve-month earnings (from 31 March 2019) of ₹506m has jumped 19% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 23%, indicating the rate at which GMM is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, GMM Pfaudler has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 12% exceeds the IN Machinery industry of 7.7%, indicating GMM Pfaudler has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for GMM Pfaudler’s debt level, has increased over the past 3 years from 17% to 23%.
Though GMM Pfaudler's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research GMM Pfaudler to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for GMM’s future growth? Take a look at ourfree research report of analyst consensusfor GMM’s outlook.
2. Financial Health: Are GMM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out ourfinancial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Do Insiders Own Lots Of Shares In Gas2Grid Limited (ASX:GGX)?
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Every investor in Gas2Grid Limited (ASX:GGX) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.'
Gas2Grid is a smaller company with a market capitalization of AU$2.3m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions are not on the share registry. Let's delve deeper into each type of owner, to discover more about GGX.
Check out our latest analysis for Gas2Grid
We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.
There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Gas2Grid might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
Hedge funds don't have many shares in Gas2Grid. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our most recent data indicates that insiders own a reasonable proportion of Gas2Grid Limited. Insiders own AU$1.1m worth of shares in the AU$2.3m company. I would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You canclick here to see if those insiders have been buying or selling.
The general public, with a 45% stake in the company, will not easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
It seems that Private Companies own 8.1%, of the GGX stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.
Many find it usefulto take an in depth look at how a company has performed in the past. You can accessthisdetailed graphof past earnings, revenue and cash flow.
Of coursethis may not be the best stock to buy. So take a peek at thisfreefreelist of interesting companies.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Aerovironment Inc (AVAV) Q4 2019 Earnings Call Transcript
Image source: The Motley Fool.
Aerovironment Inc(NASDAQ: AVAV)Q4 2019 Earnings CallJun 25, 2019,4:30 p.m. ET
• Prepared Remarks
• Questions and Answers
• Call Participants
Steven A. Gitlin--Vice President of Investor Relations
Good afternoon, ladies and gentlemen, and welcome to AeroVironment's Fourth Quarter and Full Fiscal Year 2019 Earnings Call. This is Steven Gitlin, Vice President of Investor Relations for AeroVironment. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session after management's remarks. As a reminder, this conference is being recorded for replay purposes. Joining me today from AeroVironment are President and Chief Executive Officer, Mr. Wahid Nawabi; and Senior Vice President and Chief Financial Officer, Mrs. Teresa Covington.
Please note that on this call, certain information presented contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words such as believe, anticipate, expect, estimate, intend, project, plan or words or phrases with similar meaning. Forward-looking statements are based on current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control that may cause our business strategy or actual results to differ materially from the forward-looking statements.
For further information on these risks, we encourage you to review the risk factors discussed in AeroVironment's periodic reports on Form 10-K and Form 10-Q filed with the SEC and the Form 8-K filed today with the SEC, along with the associated earnings release and the Safe Harbor statement contained therein. The content of this conference call contains time-sensitive information that is accurate only as of today, June 25, 2019. The company undertakes no obligation to make any revision to any forward-looking statements contained in our remarks today or to update them to reflect the events or circumstances occurring after this conference call.
We will now begin with remarks from Wahid Nawabi. Wahid?
Wahid Nawabi--President and Chief Executive Officer
Thank you, Steve, and welcome to our fourth quarter and full fiscal year 2019 earnings conference call. On today's call, I will emphasize three key messages. First, our team delivered outstanding results in fiscal year 2019 across nearly every aspect of our business. Second, we achieved great progress in our growth initiatives. And third, we continue to successfully transform AeroVironment to achieve our long-term value creation objectives.
I will start by summarizing our outstanding fiscal year 2019 performance and discuss our key achievements during the fourth quarter and full fiscal year. Next, Teresa will provide a more detailed summary of financial performance in the year and I will discuss our goals for fiscal year 2020 before Teresa, Steve and I take your questions.
Now for our fiscal year 2019 financial highlights. Throughout the year, our team executed our plan effectively, delivering financial results across our business that met and exceeded our guidance. Fiscal year 2019 results are as follows. Revenue of $314.3 million increased 17% over last year and exceeded our guidance range. Gross profit of $128.4 million increased 19% while gross margin of 41% increased 80 basis points. Income from continuing operations of $33.8 million increased by 11%. We delivered outstanding results across our portfolio. Starting with HAPS revenue of $183.2 million increased 9%. Tactical missile systems revenue of $65.1 million, increased 3%.
HAPS revenue of $55.4 million increased 87% and other revenue mainly customer-funded R&D in our CUAS Group and CIS of $10.6 million increased 35%. International revenue including small UAS and HAPS represented 52% of total company revenue in the fiscal year, surpassing domestic revenue for the first time. Fully diluted earnings per share from continuing operations of $1.74 increased by $0.83, meeting the higher end of our guidance range. For the first time, we delivered balanced revenue across all four quarters of the fiscal year, enabling us to improve planning and execution to the benefit of our operations. One outcome of the year's balanced revenue is a fourth quarter year-over-year comparison that does not reflect our strong full year growth in performance as compared to fiscal year 2018.
I would like to highlight some of the drivers of fiscal year 2019 profitability. Fiscal year 2019 diluted earnings per share were particularly strong, primarily due to three factors. First, favorable product revenue mix. Second, a gain from a one-time litigation settlement, and third, a more favorable federal tax rate compared to the prior year as a result of changes to the federal corporate tax rate.
Entering fiscal year 2020, our visibility remains strong similar to last year, we enter fiscal year 2020 with $164.3 million in funded backlog plus other items that Teresa will describe shortly. (Technical Difficulty) continue delivering more balanced revenue throughout fiscal year 2020. Outstanding performance extended beyond our financial results and across our business. Our core defense business remains the small UAS leader around the globe. During the fiscal year, we announced contracts for the Portuguese Army, two additional undisclosed allied nations, as well as the German Navy totaling more than $40 million, 20 of our 45 plus international customers are in Europe, 10 are in the Middle East in Central Asia, and the remainder in Africa, Asia, Central America, South America and Oceania. We are truly building a global business.
In the United States market, we did not secure an award for the US Army SBS program in fiscal year 2019 nor did we secure a place among the initial candidates for the US Army SRR program conducted by the Defense Innovation Unit. We continue to engage with these customers and stand ready for ongoing opportunities as they arise. Our recently announced acquisition of Pulse Aerospace strengthens our family of small UAS meaningfully expanding our total addressable market and driving accretion over the long term. This acquisition offers further evidence that we're executing a disciplined capital allocation strategy deploying our balance sheet toward opportunities that drive high growth and value creation in target markets. This transaction does so by providing our customers with category-leading vertical takeoff and landing or VTOL UAS which complements our fixed-wing UAS very nicely.
VTOL systems can take off and land without human intervention, can hover in place for extended periods of time and maneuver in ways fixed-wing aircraft cannot. These unique maneuvering capabilities are particularly useful in confined areas. VTOL systems can also carry very heavy payloads relative to their weight. This flexibility along with multiple payload options provide attractive capabilities to customers and defense and commercial end markets. Recently, Pulse Aerospace won a more than $13 million indefinite delivery, indefinite quantity type contracts with an undisclosed defense customer for its Vapor unmanned VTOL systems. Since then, we have secured the first two delivery orders under this contract and we're working to deliver the solutions to our customers.
We are in a unique position to deliver our global UAS footprint and production capabilities, to create value with the innovative Vapor family of VTOL solutions. In our tactical missile systems business, switchblades remains the primary driver of customer demand. To highlight the growth opportunity, we see here, I would like to touch on one of the latest switchblade variance currently under development. This customer co-funded variant is larger than the original switchblades, has a longer flight duration, can cover greater distances, and carries a much larger warheads for the delivery of significant mission effects on targets. This variance will expand our addressable market significantly. We look forward to providing additional details on this exciting development, as we continue to make progress.
Moving to our HAPS business, during fiscal year 2019, we achieved a number of significant milestones in this potentially game-changing market opportunity. In April, we announced the roll-out of the first Hawk30 solar HAP System, after a design, development and assembly period of less than two years. This is an enormous accomplishment and reflects our deep expertise and knowledge of this groundbreaking technology. Hawk30's, 260 feet wingspan is equivalent to that of an A380 passenger aircraft, which is the largest passenger airplane in the world.
The top service of the Hawk30's wing is covered by advanced photovoltaic cells that generate electricity from solar energy. 10 highly efficient electric motors also designed by AeroVironment, will propel the Hawk30 to altitudes of about 65,000 feet. At this stratospheric altitude, Hawk30 is designed to operate for months without landing above the clouds, and all other commercial air traffic and can maintain its orbit over a designated area. This is particularly important, because unlike orbiting satellites and balloons, Hawk30 can maintain its position relative to the earth, delivering carrier grade connectivity to standard handsets and other connected IoT devices on the ground and in the air. The service area from a single Hawk30 is as wide as 120 miles, covering a very large geographic area.
In fiscal year 2019, we announced multiple increases to the value of the contract for AeroVironment's design and development of two Hawk30 aircrafts. The results in contract value increased to $126 million. This is a large increase from the initial contract value of $65 million, which we announced in January of 2018. We recognize this customer funded research and development work as revenue. Another way we intend to create value is through our partial ownership of the HAPSMobile Inc joint venture alongside SoftBank Corporation. We exercised a one-time option to increase our ownership from 5% to 10% in March of 2019 at the initial valuation. We invested another $4.6 million in May of 2019 to maintain our 10% ownership, bringing our total equity investment in this opportunity to about $15 million.
HAPSMobile subsequently raised approximately $125 million from SoftBank for investment into looms which deployed networks of lighter than air balloons drifting at high altitudes to deliver Internet connectivity to rural and remote communities. Since we did not participate in this last fundraising round for HAPSMobile, our ownership stake was diluted to approximately 5.5%. As future fundraising rounds take place, we will evaluate the investments required to maintain our ownership stake against other investment opportunities across our business. Another value creation opportunity we see here is the potential to be the exclusive manufacturer of solar HAPS systems for HAPSMobile as long as our quality, performance and cost for such work is competitive.
Prior to its anticipated 2023 commercial launch, HAPSMobile will require a number of production Hawk30 aircraft even as it has already announced its plans for a larger aircraft needs Hawk50. Before HAPSMobile's commercial launch, we expect that flight testing, demonstration and aircraft certification will have been completed and we plan to enter into production based on successfully achieving project milestones and objectives. We also possess exclusive rights to market the Hawk30 for non-commercial applications everywhere except in Japan. We will capitalize on our market leadership around the globe to deploy this game-changing technology to defense applications. HAPSMobile is another example of how we are deploying our balance sheet strategically to position us for long-term value creation.
Moving now to our Commercial Information Solutions business, we are gaining more knowledge and experience with our Quantix Data Collection Drone and AV DSS Analytic Solution. As I have stated previously, this business and the market it serves, continue to be in very early stages of adoption. As a result, the revenue impact to our business from this area is not material. We believe this continues to represent a large attractive long term market opportunity. The unique set of capabilities we have developed, will make their way into this market as it matures and is already informing other solutions we're developing for the defense markets.
We're monitoring this market closely for signs indicating an inflection and adoption. And in the meantime, our minimizing our investments to reflect slower adoption. This slower adoption also affects how we account for some of the investments we've made in this business. Specifically, we recorded an impairment charge of $4.4 million in the fourth quarter of fiscal year 2019, primarily for investments in our AV DSS cloud-based analytics solution and other fixed assets. We also wrote down $1.7 million of Quantix inventory in the same quarter.
We're transforming our business in multiple exciting ways. We reshaped our portfolio in May 2018 with the divestiture of our EES business. We are deploying our balance sheet strategically with our HAPS investments, our Pulse Aerospace acquisition in the first quarter of fiscal year 2020 and our continued pursuit of assets that can help us execute our strategy more quickly and more cost effectively. We continue to look at ways to partner with organizations in key areas to gain access to innovative technologies that can speed the delivery of our solutions.
We are expanding our footprint and access to pools of exceptional talent with new innovation centers in New England and the Midwest. And we're working with other prime contractors to generate demand through new platforms and programs. These include our teaming agreements with General Dynamics Land Systems to integrate small UAS and switchblade into the army's next-generation armored combat vehicle and the Marine Corps' armored reconnaissance vehicles. And with Kratos to integrate switchblades and other tube launched UAS into a new unmanned fighter jet capable of traveling long distances quickly to support missions against near peers. And we're building on our capabilities and artificial intelligence and autonomy to give our next generation unmanned systems, the ability to operate in denied aerospace, detect targets and make decisions without human input. We believe an operator's aloof (ph) would remain a requirement for any lethal capabilities. We have made tremendous progress in fiscal year 2019. And so far in the beginning of fiscal year 2020, I am incredibly proud of our team's accomplishments and their work to advance and diversify our portfolio.
Now I will turn the call over to Teresa to discuss fiscal year 2019 financials. Teresa?
Teresa Covington--Senior Vice President and Chief Financial Officer
Thank you, Wahid, and good afternoon everyone. AeroVironment's fiscal 2019 fourth quarter results are as follows. Revenue from continuing operations for the fourth quarter of fiscal 2019 was $87.9 million, a decrease of $25.7 million or 23% from the fourth quarter of fiscal 2018 revenue of $113.6 million. The decrease was due to a decrease in product deliveries of $25.4 million as well as a decrease in service revenue of $0.3 million. Fourth quarter fiscal 2019 revenue by major product lines/program is as follows. Small UAS was $52 million, TMS was $16 million, HAPS was $17.4 million and other was $2.5 million.
Gross margin from continuing operations for the fourth quarter of fiscal 2019 was $37 million or 42% of revenue compared to $50.6 million or 45% of revenue for the fourth quarter of fiscal 2018. The decrease in gross margin was primarily due to a decrease in product margin of $12.3 million and a decrease in service margin of $1.2 million. Gross margin as a percentage of revenue decreased from 45% to 42% primarily due to an increase in the proportion of service revenue to total revenue, unfavorable service revenue mix and higher CIS inventory reserves.
Looking at the rest of the income statement. SG&A expense from continuing operations for the fourth quarter of fiscal 2019 was $20.3 million or 23% of revenue compared to SG&A expense of $15.3 million or 13% of revenue for the fourth quarter of fiscal 2018. The increase in SG&A was primarily due to a CIS fixed asset impairment charge. The rate of adoption for our Quantix and AV DSS solution has been slower than we expected. In the fourth quarter, we lowered our future outlook for unit sales and as a result of the lower forecast, took an impairment charge of $4.4 million on Quantix and AV DSS fixed assets.
R&D expense from continuing operations for the fourth quarter of fiscal 2019 was $11.6 million or 13% of revenue compared to R&D expense of $7.4 million or 7% of revenue for the fourth quarter of fiscal 2018.
Income from continuing operations for the fourth quarter of fiscal 2019 was $5.1 million or 6% of revenue compared to $27.9 million for the fourth quarter of fiscal 2018. The decrease in income from operations was primarily due to a decrease in gross margins of $13.6 million, an increase in SG&A expense of $5 million and an increase in R&D expense of $4.2 million. Net other income for the fourth quarter of fiscal 2019 was $2.8 million compared to net other income of $0.9 million for the fourth quarter of fiscal 2018.
The increase in net other income was due to income from the transition services agreement with the buyer of the EES business and higher interest income on our investments. The effective income tax rate from continuing operations was minus 1% for the fourth quarter of fiscal 2019 compared to an effective income tax rate of 30.7% for the fourth quarter of fiscal 2018. The decrease in our effective tax rate for the fourth quarter of fiscal 2019 was due to the reduction in the fiscal 2019 federal statutory rate from 30.4% to 21% and lower pre-tax profits. Equity-method investment activity, net of tax for the fourth quarter of fiscal 2019 was a loss of $1.9 million or $0.08 per diluted share compared to a loss of $0.9 million net of tax for the fourth quarter of fiscal 2018. Net income from continuing operations attributable to AeroVironment for the fourth quarter of fiscal 2019 was $6.1 million or $0.26 per diluted share compared to a net income from continuing operations attributable to AeroVironment of $90 million or $0.79 per diluted share for the fourth quarter of fiscal 2018. The net loss from discontinued operations, net of tax for the fourth quarter of fiscal 2019 was $0.4 million compared to a loss from discontinued operations net of tax of $2.2 million for the fourth quarter of fiscal 2018.
Now moving through to our full-year fiscal 2019 results. Revenue for fiscal 2019 with $314.3 million, an increase of $45.9 million as compared to $268.4 million for fiscal 2018. The increase in revenue was due to an increase in service revenue of $25.5 million and an increase in product revenue of $20.4 million. The inception to date revenue for HAPSMobile is $77.5 million. The total value of all contracts with HAPSMobile is $133.4 million, which consist of $125.7 million to the design development agreement and $7.7 million for preliminary design and other related efforts. There is $55.9 million remaining on these contracts, which includes the portion that is currently unfunded.
Gross margin for fiscal 2019 was $128.4 million or 41% of revenue as compared to $107.7 million or 40% for fiscal 2018. The increase was due to an increase in product margins of $16.3 million and an increase in service margins of $4.4 million. Gross margin as a percentage of revenue, increased from 40% to 41% primarily due to a favorable product mix, partially offset by unfavorable service mix and an increase in CIS inventory reserve charges. SG&A expense for fiscal 2019 was $60.3 million or 19% of revenue compared to SG&A expense of $50.8 million or 19% of revenue for fiscal 2018.
The increase in SG&A was primarily due to a $4.4 million fixed asset impairment charge in our CIS business and expenses related to the transition services agreement from the buyer of the EES business. R&D expense for fiscal 2019 was $34.2 million or 11% of revenue compared to R&D expense of $26.4 million or 10% of revenue for fiscal 2018. Net other income for fiscal 2019 was $16.7 million compared to the prior-year net other income of $2.2 million. The net other income increase was primarily due to a litigation settlement, income earned under the transition services agreement from the buyer of the EES business and an increase in interest income.
The effective income tax rate from continuing operations was 9.2% for fiscal 2019, this compared to an effective income tax rate of 30% for fiscal 2018. The effective income tax rate for fiscal 2018 included the impact of the one-time deferred tax expense resulting from the remeasurement of our existing deferred tax assets and liabilities of $3.3 million. The decrease in the effective income tax rate was also due to the reduction in the fiscal 2019 federal statutory rate from 30.4% to 21%. Equity method investment activity, net of tax for fiscal 2019 was a loss of $3.9 million or $0.16 per diluted share compared to a loss of $1.3 million net of tax for fiscal 2018.
The increased loss was due to an increase in ownership in the HAPSMobile joint venture from 5% to 10% and higher investments made by the HAPSMobile joint venture. Net income from continuing operations attributable to AeroVironment for fiscal 2019 was $41.9 million or $1.74 per diluted share compared to $21.8 million or $0.91 per diluted share for fiscal 2018.
Net income from discontinued operations, net of tax for fiscal 2019 was $5.5 million or $0.23 per diluted share compared to a loss from discontinued operations, net of tax of $3.9 million for fiscal 2018 or a $0.16 loss per diluted share. Fiscal 2019 included an $8.5 million gain net of tax on the sale of the EES business. Our funded backlog as of April 30, 2019 was $164.3 million, a decrease of $100,000 from the fourth quarter of fiscal 2018 and an increase of $31.8 million or 24% from the third quarter of fiscal 2019 backlog of $132.5 million.
Turning to our balance sheet. Cash, cash equivalents and investments at the end of the fourth quarter fiscal 2019 totaled $332.6 million, an increase of $34.8 million from the end of fiscal 2018 cash, cash equivalents and investments of $297.8 million. Net accounts receivable, including unbilled receivables and retention at the end of the fourth quarter fiscal 2019 totaled $84.1 million. The unbilled receivables and retention balance was $53 million inclusive of $9 million of related party amount. Total days sales outstanding from continuing operations for the fourth quarter of fiscal year 2019 was approximately 87 days compared to 49 days for the fourth quarter of fiscal year 2018.
Net inventory at the end of the fourth quarter fiscal year 2019 was $54.1 million compared to $37.4 million at the end of the fourth quarter fiscal year 2018. Days and inventory outstanding for the fourth quarter of fiscal year 2019 was approximately 92 days compared to 63 days for the fourth quarter of fiscal year 2018. Accounts payable at the end of the fourth quarter fiscal year 2019 was $16 million compared to $21.3 million at the end of the fourth quarter of fiscal year 2018. Total days payable outstanding for the fourth quarter of fiscal year 2019 was approximately 24 days compared to 23 days for the fourth quarter of fiscal year 2018.
Turning to capital expenditures. In the fourth quarter of fiscal year 2019, we invested approximately $2.1 million in property improvements and capital equipment for continuing operations and recognized $2.1 million of depreciation and amortization expense.
Now an update to our fiscal 2020 visibility. As of today, we have fourth quarter ending backlog that we expect to execute in fiscal 2020, a $152 million. Q1 quarter-to-date bookings that we anticipate to execute in fiscal 2020 of $29 million. Unfunded backlog from incrementally funded contracts that we anticipate to recognize revenue during the balance of the year of $16 million. This adds up to $197 million or 55% of our fiscal year 2020 midpoint revenue guidance range. We anticipate a full year effective tax rate in the range of 11% to 12%.
Now I'd like to turn things back to Wahid.
Wahid Nawabi--President and Chief Executive Officer
Thanks, Teresa. We have now delivered double-digit top line growth for two years in a row. The large majority of government fiscal year 2019 appropriations totaling nearly $200 million for our solutions, are not reflected in our fiscal year-end funded backlog. These expected orders support our continued growth in fiscal year 2020. Government fiscal year 2020 appropriations for our solutions are slightly lower than in the previous year, but still very high compared to our historical trends. We expect tactical missile systems and small UAS to drive growth in fiscal year 2020. We expect the shift in revenue mix in our fiscal year 2020 that will result in lower gross margins than in fiscal year 2019.
Additionally, we do not anticipate another one-time gain similar to the litigation settlement we benefited from last year. We do however expect continued double-digit growth in revenue reflecting the large market adoption potential for our business to between $350 million and $370 million. This would mark the third consecutive year of double-digit strong revenue growth. Our 55% visibility into the midpoint of our revenue guidance range, is almost equal to last year's visibility at this time and the fiscal year. And as much higher then visibility at this point in prior years.
With lower gross margin and no expectation of litigation settlement gains, we expect GAAP diluted earnings per share for fiscal year 2020 of $1.35 to $1.55. This compares to our fiscal year 2019's GAAP diluted earnings per share of $1.74, which included $0.26 diluted earnings per share for the litigation settlement gain. Adding the acquisition-related expenses and amortization of intangibles associated with the Pulse Aerospace acquisition, adjusted non-GAAP diluted earnings per share equals $1.47 to $1.67. As a reminder, we expect the Pulse Aerospace acquisition to be accretive to earnings by the third full year of operations and increasingly thereafter. We expect internal research and development investments to total 11% of revenue this fiscal year. Similar to fiscal year 2019, we expect revenue distribution to be roughly balanced between our first and second half and within their associated quarters.
Last quarter, we communicated our expectations that unbilled receivables would decline in coming months. We expect an increase in TMS shipments that were already recognized as revenue under the ASC 606 accounting standard. This increase in shipments should result in a decline in unbilled receivables in the first half of this fiscal year.
Once again, today's main messages are: first, our team delivered outstanding results in fiscal year 2019 across nearly every aspect of our business. Second, we achieved great progress in our growth initiatives. And third, we continue to successfully transform our AeroVironment to achieve our long-term value creation objectives.
Thank you to all our AeroVironment team members, including our newest colleagues in New England and Lawrence, Kansas for your engagement and dedication to supporting our customers. Thank you to our customers for continuing to entrust us with providing you the capabilities to help you proceed with certainty. And thank you to our shareholders for your continued confidence.
Now Teresa, Steve and I will take your questions.
Steven A. Gitlin--Vice President of Investor Relations
Thank you, Wahid. We will now begin the question-and-answer session. Before we do. Just a couple of things. Number one, we realize that we've just given you a lot of information and we've done that on purpose, because at the end of the year, we want to make sure we have the opportunity to share as much as possible with you. We also realize that many of you do many of these calls on a multi-day basis, and we really realize how hard that can be, and many of you were probably multitasking while you do this. So we ask one thing, before we enter Q&A, let's everybody just take a breath, let's be present, and let's have a conversation. So, here's how it's going to work. (Operator Instructions) And we will start with Ken Herbert from Canaccord. Ken, welcome.
Ken Herbert--Canaccord Genuity -- Analyst
Hi, Steven. Good afternoon, Wahid and Teresa.
Steven A. Gitlin--Vice President of Investor Relations
Hello, there, Ken.
Teresa Covington--Senior Vice President and Chief Financial Officer
Hi, Ken.
Ken Herbert--Canaccord Genuity -- Analyst
Hi. I just wanted to first ask about HAPS and it sounds like from your commentary Wahid that the revenues you may recognize from HAPS in fiscal '20 could be flat to down slightly, if we look at what you did this year just considering some of the mix comments around strength in small UAS and TMS. And I'm just wondering if you could provide a little more granularity on expectations perhaps in particular and then within that, what we should be watching out for in terms of some of the important milestones and where you are with the flight test aircraft and anything else you can detail around progress on that program.
Wahid Nawabi--President and Chief Executive Officer
Sure. So your general conclusions are roughly accurate based on what we provided the comments. We expect the majority of the growth for the UAS growth to come from our small UAS and TMS business. As you know, our HAPS business is an exciting large opportunity for the long run. We're on the design, development and the demonstration phase of this, which we generated so far about $126 million worth of backlog of orders. And the revenue between fiscal year '19 and fiscal year '20 will be roughly the same. Obviously this is a customer-funded development work, which is primarily doing work to design and develop and demonstrate the aircraft.
Beyond that, as you know, we have publicly said that, we rolled out the first aircraft and obviously there is a lot more ground testing and flight testing to come later as part of this exercise. And then of course we are planning on eventually certifying the airplane and then getting into what I referred to as a business launch in production, which means producing decent volumes and scaling the business in the commercial market. We still believe this is a very large, significant large global opportunity for us. Our partners at SoftBank and we are very excited about this. That's why we have continued to increase the value of the contract and keep growing our business in this area and progressing our strategy. And of course, there is lots of other value creation opportunities as I outlined in my remarks on the call earlier and very exciting for us to pursue this in the long term.
Ken Herbert--Canaccord Genuity -- Analyst
Great. And if I could just one follow-up on that. I think you mentioned in your prepared remarks that a portion of the give or take $56 million remaining was not yet funded or was partially unfunded. Can you talk about maybe what percentage of that is, and is there any risk around timing of that getting funded obviously through the partnership?
Wahid Nawabi--President and Chief Executive Officer
Sure. So, I just provided that to make sure that we're very clear on specifics. Generally speaking, we're not expecting any surprises or issues there in my view, in our view, it's just natural -- nature of such a contract when you're working on a large complex program and long-term development effort that you have certain milestone as you complete that you release the next phase, the next phase and the next step in the milestone of the contract. So majority of that is really funded but there is some portion of it always that may be, or may not be unfunded in that regard. Other than that, we're very pleased with our progress so far, this is historic in my view that we've been able to deliver the first airplane in less than two years from the start of this effort. We and both our strategic partner are very convinced and committed about the performance characteristics of the airplane and its ability to compete in the marketplace for a multi-billion dollar global market and we look forward to updating you in the future.
Steven A. Gitlin--Vice President of Investor Relations
And our next question will come from Pete Skibitski at Alembic Global. Pete?
Pete Skibitski--Alembic Global -- Analyst
Yes, good afternoon guys. Thanks. Let me start with on the fiscal '20 guidance. Can you share with us how much Pulse is going to contribute to revenue in fiscal '20? And then you mentioned that small UAS and TMS will be the growth drivers in '20. Is TMS going to grow the most because it came in a little lighter than I thought for fiscal '19 so it seems like maybe there's still a lot of unappropriate funds out there for TMS?
Wahid Nawabi--President and Chief Executive Officer
Sure. So first, we're very pleased with the results that we delivered for fiscal year '19 with double-digit second consecutive year of growth on the top line and very solid performance in the bottom. Second, we're fortunate to have such a diversified portfolio of business and opportunities that allows us to lever different parts of our business, depending on the markets and the customer of situation and the timing of those orders. As I mentioned on my remarks, the Pulse Aerospace acquisition really is a technology and product acquisition. It's really less about a revenue multiple or our existing profitability multiple acquisition in terms of valuation. We are in -- it has basically are acquiring a whole family of vertical takeoff and landing systems that complements our small UAS very, very well. We have already secured a IDIQ contract to approximately over $13 million and the Pulse business. And since that acquisition, we have secured two of the task orders to that. The revenue for this business is going to be not significant for fiscal year and we do not break our revenue down to that level of product lines. Teresa outlined, we've break it down to by different product families, small UAS being one and the Pulse revenue will be reported under the small UAS category for us starting in fiscal '20 and beyond. So, essentially you can think of the Pulse product line as part of our small UAS tactic systems and features.
Pete Skibitski--Alembic Global -- Analyst
Okay. Sounds great. And then, on the TMS again, is TMS going to be your growth leader in fiscal '20?
Wahid Nawabi--President and Chief Executive Officer
Sure. So, as I said, absolutely both TMS and CUAS are both areas that is going to generate growth to increase our growth -- top line growth for the third consecutive year with double-digit numbers. We're very pleased with these guidance expectations, that we have out of our business. We feel very strongly about the position that we have in the market and the amount of demand that exist in our products, both domestically and internationally. It's very exciting to see that -- and across our portfolio there seems to be very strong demand across the globe for our types of solutions and products. And I'm very pleased with the results of our teams and execution in the last fiscal year and we're looking forward to update you in the fiscal '20 as we go forward.
Steven A. Gitlin--Vice President of Investor Relations
And our next question comes from Joe DeNardi at Stifel Nicolaus. Joe?
Joe DeNardi--Stifel Nicolaus -- Analyst
Hey, good afternoon. Steve, thanks for setting the tone for the call.
Steven A. Gitlin--Vice President of Investor Relations
Hi, Joe.
Joe DeNardi--Stifel Nicolaus -- Analyst
Hi. Just another one on HAPS, it seems like you guys have decent visibility now kind of over the next few years in terms of maybe the revenue profile as you transition from production to certification in flight testing. So can you just talk about should our expectation be that HAPS revenue is roughly flat for the next few years before larger scale production or are you expecting the kind of the ramp up in production to occur sooner than that?
Wahid Nawabi--President and Chief Executive Officer
Sure, Joe. So as I said, we are in a multi-phase pursuit of this very large multi-billion dollar global market opportunity. This is a very exciting capability that is uniquely compelling to us and both our strategic partner. We're really focused on this phase of the activity or efforts and the business plan, which is -- make two airplanes, design these airplanes and demonstrate the capability, which we intend to complete that within this phase of this project. Our partner SoftBank and we both feel very confident and pleased with our progress so far. And obviously this is not an easy task and an easy achievement, it's never been done before type of effort that you see.
And beyond this step, we expect to obviously ramp up, as I mentioned on my remarks, producing a few more airplanes because you need more airplanes for the testing and certification phase. During that time, we will be obviously assessing the business and assessing the prospects of the future with our partner and will inform you of the updates that we provide. As far as fiscal year '20 is concerned, we expect this business again to execute the strategy that we have, and very pleased with the top line growth that we're going to be delivering hopefully this year as well.
Joe DeNardi--Stifel Nicolaus -- Analyst
Okay. And then just on the acquired business, I mean, you guys have had plenty of cash for a while, I'm sure a number of opportunities to engage in a decent sized M&A like this and you haven't pulled the trigger really until now. The -- that you're being earnings accretive by year three isn't super compelling from where we stand. So can you talk about what's so attractive about it from your point of view? Thank you.
Wahid Nawabi--President and Chief Executive Officer
Sure, sure, of course, Joe, that's a great question. So I'm very excited and so is our team about the acquisition of Pulse product line in the assets. I really consider this a strategic product and technology acquisition, not necessarily an immediate or current revenue or profitability multiple acquisition. So that's number one. Number two, we are essentially getting a whole family of systems, Pulse Aerospace has multiple different products in the Vapor family of VTOL helicopters, they Vapor 15, 35, 55 and 65 with the whole integrated solution set. We believe that this is a naturally perfect tuck-in and expansion in addition to our existing world meeting small UAS family of systems, obviously, mostly the fixed-wing.
So our customers will benefit from this in terms of more mission-critical objectives being accomplished with the teaming of these two solutions and products. We can use our distribution channel globally with 45 plus countries around the world, to sell a lot more of this. And as you all know, developing a product internally will easily take at least a couple of years if not more than that to come to fruition. So in our view, this is a long-term strategic acquisition that strengthens our portfolio, delivers more value to our customers and certainly delivers a lot of value long term in terms of our shareholders interest as well. We're very excited about that and we're also expanding our talent base -- engineering talent base in the Midwest with opening that innovation center in Lawrence, Kansas. So all in all, we're very pleased with this acquisition. And we believe that this is going to deliver a lot of value long term for our shareholders.
Steven A. Gitlin--Vice President of Investor Relations
Our next question comes from Troy Jensen from Piper Jaffray. Troy?
Troy Jensen--Piper Jaffray -- Analyst
Hey, thanks, Steve. Congrats on the nice results, team.
Steven A. Gitlin--Vice President of Investor Relations
Thank you.
Wahid Nawabi--President and Chief Executive Officer
Thanks, Troy.
Troy Jensen--Piper Jaffray -- Analyst
So well how about for you furnished, I mean you've touched it on it a little bit in your prepared remarks, but it looks like US defense spending on UAV is going to have a down year, I guess, and do you really think that's true for AeroVironment? I know you guys have always talked about coming up with new variants of new products to sell to different US defense agencies. So just a more detailed thoughts on US defense on this?
Wahid Nawabi--President and Chief Executive Officer
Sure, of course. Sure, Troy. So first of all, the year-to-year comparison certainly is slightly down, not a significant amount down, but slightly down compared to fiscal '19. But we got to keep in mind that fiscal year '19 and '20 in comparison to our historical averages is far greater than several years before that are as far as I've been with the company. So, that's an important point to point out and I mentioned that in my remarks. Secondly, the demand drivers for our business across the board overall at a macro level is very strong. More and more of the future is unmanned systems and robotics we're very uniquely positioned as a technology solution provider at the intersection of these four future defining technologies obviously robotics and UAV is being one of them, sensors, software analytics and connectivity.
So this is all very positive and encouraging for our small UAS. And needless to say, this is just one of our portfolio of diversified growth initiatives, we have small UAS that's contributing to our financials, we have our TMS business, we have our HAPS business. So we're very fortunate to have a pretty diverse portfolio of products revenue and customer base globally that complements our business. And overall, I don't consider the DoD budget slight decline from '19 to '20 a negative at all. I consider that it's still a very positive relative to historical levels.
Troy Jensen--Piper Jaffray -- Analyst
Right, perfect. How about the couple of very three (ph) quick, just on the guidance here to get to the EPS, I think you said the tax guidance was at 11% and 12%, and I just want to make sure it's non-GAAP. And then, what should we assume for other income?
Teresa Covington--Senior Vice President and Chief Financial Officer
So, Troy, the tax rate that we have in is 11% to 12% for fiscal '20. And your other question was what about other income?
Troy Jensen--Piper Jaffray -- Analyst
Yes, other -- yes, other income which -- what does your EPS guidance assuming your model or what should we be modeling?
Teresa Covington--Senior Vice President and Chief Financial Officer
We didn't provide guidance per se on the other income. In fiscal '19 we had the one-time litigation settlement, we also had the transition services from the buyer of our EES business, the two drivers along with our interest income.
Troy Jensen--Piper Jaffray -- Analyst
Okay, perfect. I think I understand, right. Well, keep up the good luck and good luck in FY '20.
Wahid Nawabi--President and Chief Executive Officer
Thank you, Troy.
Steven A. Gitlin--Vice President of Investor Relations
(Operator Instructions) And our next question will come from Louie DiPalma with William Blair. Hello, Louie.
Louie DiPalma--William Blair -- Analyst
Good afternoon, Wahid, Teresa and Steve.
Wahid Nawabi--President and Chief Executive Officer
Good afternoon.
Teresa Covington--Senior Vice President and Chief Financial Officer
Good afternoon.
Steven A. Gitlin--Vice President of Investor Relations
Good afternoon.
Louie DiPalma--William Blair -- Analyst
What is your degree of confidence that you will win short range reconnaissance orders in the context of how there seems to be an incredibly large number of contenders and AeroVironment at least prior to the Pulse Aerospace acquisition historically have not specialized in VTOL systems?
Wahid Nawabi--President and Chief Executive Officer
Sure. So, Louie, first and foremost, we're fortunate to have a diversified portfolio of businesses and growth opportunities that allows us to deliver strong results year-after-year and have strong demand drivers across our businesses. Number two, in relates to -- in relationship to SRR, as I mentioned in my remarks, there was a very small down select small award by DIU which we were not selected on that. That does not mean that we're not engaged with our customer, we're actually very engaged with that customer, we've tracked that opportunity and engaged with the customer quite closely. And we stand ready to compete in the future and we'll obviously keep you updated on that.
In the same token, let's keep in mind that the overall DoD requirements and budget dollars for our types of solution, specifically in most cases calling out our product specifications are main driven is quite robust for fiscal year 2020. And so we feel -- we're very pleased with those demand drivers. We're very pleased with our fiscal '19 results. And fiscal '20, of course, will be the third consecutive year of double-digit top line growth and very healthy profitability in the bottom line. The fact that there is more competitors in the space is really not a new news to us at all. We've been competing in this space for a very long time, very successfully. We have a very high win rate. We obviously do not have a 100% market share, but it doesn't mean that we're not going to continue to compete and stand ready to win opportunities in the future.
Louie DiPalma--William Blair -- Analyst
Okay. And I may have missed this, but what was the year-over-year growth rate for the international small UAS for the quarter?
Teresa Covington--Senior Vice President and Chief Financial Officer
So, Louie, you're asking small UAS -- international small UAS quarter-to-quarter. So, in the fourth quarter we had $35.9 million of revenue versus $46.5 million in fiscal '18. On a full year basis, so we were at $107.7 million of small UAS international revenue versus $96.7 million in 2018. So it grew 11.5%.
Louie DiPalma--William Blair -- Analyst
Okay. And you guys have commented regarding this international small UAS that it still seems to be in the very early innings. And I think, last year you signed your largest order ever for the Puma in the Middle East. Are there any other data points that you could provide to give us some sense of the penetration for like international small UAS and how your Puma and Raven, stack up relative to the competitors internationally?
Wahid Nawabi--President and Chief Executive Officer
So, Louie, that's a great question. As I said in my remarks, we continue to grow our international footprint and small UAS very successfully and very well throughout this last several years. Our international business in terms of top line growth that you've seen has grown significantly but so has the number of customers and the geographies that we're expanding into. Secondly, is that I believe that our international markets are still five plus years, maybe five to 10 years in many cases, behind the adoption cycle of the US first generation systems.
And in majority of those countries, we have the ability and the opportunity to expand our portfolio and increase our share of that customers' overall spend and the DoD budgets. How large that is and how big could it be, time will tell, number one. Number two, overall, the demand drivers are very healthy. Also due to customer sensitivity and competitive reasons, I'm not in a position to be able to disclose specifics of our engagements with each customer. But as you saw from my remarks, our portfolio of customers, our diversification geographically, as well as our solution sets penetration within those customers are pretty strong and it speaks volumes to this -- the value proposition and the compelling capabilities of our solution that's helping our customers proceed with certainty.
Steven A. Gitlin--Vice President of Investor Relations
Next we have a follow-up question from Pete Skibitski at Alembic Global. Go ahead, Pete.
Pete Skibitski--Alembic Global -- Analyst
Yes, thanks guys. Wahid, can you talk a little bit about where the US Army (inaudible) UAVs with its air launched effects. And as I guess just kind of an SMT effort in your potential role there. And then how much are you guys spending on things like autonomy and AI? It seems like that's becoming more important at least domestically. I just wanted to get your thoughts on those two areas.
Wahid Nawabi--President and Chief Executive Officer
Sure, Pete. In terms of the US Army and the whole DoD's overall approach to UAS as I've said in several quarters and two plus years now, I believe that the overall macro trends in that space is very positive. More and more systems are going to become unmanned and robotic systems and solutions integrated with ground systems is also going to increase. And we're fortunate to be that intersection of those two, four feature technologies as I said, number one. Number two, we also have the ability to expand our market -- addressable market with new announcements and team-ins (ph) on existing platforms as I mentioned. So General Dynamics Land Systems and Kratos are two examples.
The specifics that you refer to is essentially a program that we're working with a potential program with Kratos Corporation where our solution is going to be essentially included as part of a larger unmanned supersonic or Hypersonic -- unmanned UAV that carries switchblade and other capabilities deep into the contested environments of an enemy and then it actually launches and delivers mission effects, that's really in the past have never been done before. These types of solutions and partnerships speaks to the potential opportunities in the space and the ability for our solutions to really deliver a lot more value to our customers' missions. And that's just one aspect of our macro demands and opportunities in our market. The other thing is also US Army and many other customers are coming up with new requirements for new types of systems and solutions, such as SBS and SRR and LRR and all that. And we're tracking all of those and we'll engage with them and we'll keep you updated.
Pete Skibitski--Alembic Global -- Analyst
Okay. Thank you.
Wahid Nawabi--President and Chief Executive Officer
You're welcome.
Steven A. Gitlin--Vice President of Investor Relations
Okay. And our last question will come from Joe DeNardi -- a follow-up question from Joe DeNardi of Stifel. Go ahead, Joe.
Joe DeNardi--Stifel Nicolaus -- Analyst
Yes, thanks. Wahid, can you just talk about what the customer is seeing around switchblade in terms of wanting to possibly deploy it more broadly across the force? Is that still a conversation? What are you hearing in terms of a competition, a formal competition for that program, what's the latest there?
Wahid Nawabi--President and Chief Executive Officer
Sure. So, we're very pleased with the progress we've been making on our tactical mission systems business, as you know, in terms of revenue growth and demand and value proposition to our customers. We continue to engage with our customer on the switchblade, the original switchblade, I refer to. Adoption in potential larger penetration and deployment within the Army and larger forces. That remains to be a discussion point, and an interest of our US Army customer and our customer in general. The timing of which is really unpredictable. I won't be able to give you any more visibility to that in that specific relationship.
However, I did mention in my remarks, a new variance, very exciting new variance, which is being co-funded by us and one of our customers that essentially is a larger version of our switchblade that goes further, has a longer endurance, covers more geography and carries a significantly larger warhead. This variance which work actively in the development phase right now, is significantly could increase the mission effects and the types of problems that our customers are trying to solve with our solution. We believe that our small UAS was a pioneer and capability in a small UAS and we believe the same thing and our tactical missile systems business in a similar way. So we are making very good progress on that development and we'll keep you updated as we have more updates on that front. Overall, you could see in the DoD budgets for government fiscal year '19 and '20, there's significant dollars for original switchblade and majority of which is not reflected in our backlog and visibility number so far.
I'd like to also point out, I'm sorry, Joe, Pete's earlier question. I did not get a chance to answer his second part of this question, Peter, which was about AI, what are we doing in that area. As I mentioned in my remarks, that's a really important point. We have and we continue to invest heavily in the AI category, otherwise said, previously, we're at the intersection of this four-feature defining technologies, very exciting and connectivity software analytics, AI, Artificial Intelligence is a very critical and component of our solutions even today, as well as in the future. We've got a lot of investments in that area, which we believe is going to further differentiate us from competition and enable our customers to do a lot more missions and deliver more value to them. And as we make progress, we will keep you updated.
Steven A. Gitlin--Vice President of Investor Relations
Joe, do you have a follow-up?
Joe DeNardi--Stifel Nicolaus -- Analyst
No, I don't. Thank you.
Steven A. Gitlin--Vice President of Investor Relations
Thanks very much for your time. So with that as we have no further questions, we thank you all for spending a good chunk of your afternoon or evening with us as the case may be. We appreciate your interest. An archived version of this call, all SEC filings and relevant company and industry news can be found on our website avinc.com. And of course, we look forward to speaking with you again the following next quarter's results. Good day.
Duration: 63 minutes
Steven A. Gitlin--Vice President of Investor Relations
Wahid Nawabi--President and Chief Executive Officer
Teresa Covington--Senior Vice President and Chief Financial Officer
Ken Herbert--Canaccord Genuity -- Analyst
Pete Skibitski--Alembic Global -- Analyst
Joe DeNardi--Stifel Nicolaus -- Analyst
Troy Jensen--Piper Jaffray -- Analyst
Louie DiPalma--William Blair -- Analyst
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Is Generation Development Group Limited (ASX:GDG) A Great Dividend Stock?
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Could Generation Development Group Limited (ASX:GDG) be an attractive dividend share to own for the long haul? Investors are often drawn to strong companies with the idea of reinvesting the dividends. If you are hoping to live on your dividends, it's important to be more stringent with your investments than the average punter. Regular readers know we like to apply the same approach to each dividend stock, and we hope you'll find our analysis useful.
A high yield and a long history of paying dividends is an appealing combination for Generation Development Group. It would not be a surprise to discover that many investors buy it for the dividends. There are a few simple ways to reduce the risks of buying Generation Development Group for its dividend, and we'll go through these below.
Click the interactive chart for our full dividend analysis
Dividends are usually paid out of company earnings. If a company is paying more than it earns, then the dividend might become unsustainable - hardly an ideal situation. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. Generation Development Group paid out 78% of its profit as dividends, over the trailing twelve month period. Paying out a majority of its earnings limits the amount that can be reinvested in the business. This may indicate a commitment to paying a dividend, or a dearth of investment opportunities.
We update our data on Generation Development Group every 24 hours, so you can always getour latest analysis of its financial health, here.
From the perspective of an income investor who wants to earn dividends for many years, there is not much point buying a stock if its dividend is regularly cut or is not reliable. Generation Development Group has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of payments. Its dividend payments have fallen by 20% or more on at least one occasion over the past ten years. During the past ten-year period, the first annual payment was AU$0.03 in 2009, compared to AU$0.02 last year. The dividend has shrunk at around 4.0% a year during that period. Generation Development Group's dividend has been cut sharply at least once, so it hasn't fallen by 4.0% every year, but this is a decent approximation of the long term change.
When a company's per-share dividend falls we question if this reflects poorly on either the business or management. Either way, we find it hard to get excited about a company with a declining dividend.
With a relatively unstable dividend, it's even more important to see if earnings per share (EPS) are growing. Why take the risk of a dividend getting cut, unless there's a good chance of bigger dividends in future? Strong earnings per share (EPS) growth might encourage our interest in the company despite fluctuating dividends, which is why it's great to see Generation Development Group has grown its earnings per share at 60% per annum over the past five years. The company pays out most of its earnings as dividends, although with such rapid EPS growth, its possible the dividend is better covered than it looks. Still, we'd be cautious about extrapolating high growth too far out into the future.
To summarise, shareholders should always check that Generation Development Group's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. Generation Development Group's payout ratio is within an average range for most market participants. Next, earnings growth has been good, but unfortunately the dividend has been cut at least once in the past. Generation Development Group might not be a bad business, but it doesn't show all of the characteristics we look for in a dividend stock.
Are management backing themselves to deliver performance? Check their shareholdings in Generation Development Group inour latest insider ownership analysis.
Looking for more high-yielding dividend ideas? Try ourcurated list of dividend stocks with a yield above 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Investors Who Bought HMT (NSE:HMT) Shares Five Years Ago Are Now Down 68%
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We think intelligent long term investing is the way to go. But that doesn't mean long term investors can avoid big losses. To wit, theHMT Limited(NSE:HMT) share price managed to fall 68% over five long years. We certainly feel for shareholders who bought near the top. And some of the more recent buyers are probably worried, too, with the stock falling 33% in the last year. The falls have accelerated recently, with the share price down 14% in the last three months.
Check out our latest analysis for HMT
Given that HMT didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over half a decade HMT reduced its trailing twelve month revenue by 3.9% for each year. That's not what investors generally want to see. The share price decline of 20% compound, over five years, is understandable given the company is losing money, and revenue is moving in the wrong direction. The chance of imminent investor enthusiasm for this stock seems slimmer than Louise Brooks. Ultimately, it may be worth watching - should revenue pick up, the share price might follow.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
If you are thinking of buying or selling HMT stock, you should check out thisFREEdetailed report on its balance sheet.
Investors in HMT had a tough year, with a total loss of 33%, against a market gain of about 2.9%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 20% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. You could get a better understanding of HMT's growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
If you are like me, then you willnotwant to miss thisfreelist of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
After fire, Philadelphia Energy Solutions to permanently shut oil refinery
By Jarrett Renshaw
PHILADELPHIA (Reuters) - Philadelphia Energy Solutions (PES) will seek to permanently shut its oil refinery in the city after a massive fire caused substantial damage to the complex, the company confirmed on Wednesday, a day after sources told Reuters about the plans.
"The recent fire at the refinery complex has made it impossible for us to continue operations. We are grateful that the fire resulted in only a few minor injuries," PES CEO Mark Smith said in a statement. "We are committed to an orderly process to safely wind down our operations."
Shutting the refinery, the largest and oldest on the U.S. East Coast, will cost hundreds of jobs and squeeze gasoline supplies in the busiest, most densely populated corridor of the United States. Smith, in his statement, said the company will "position the refinery complex for a sale and restart," though such a process would probably take years and face community opposition.
Workers at the complex were leaving the refinery on Wednesday, some escorted by security, others alone, carrying boxes with personal belongings to their cars, with several confirming they had been laid off. Employees have been instructed to immediately begin the process of mothballing units, sources familiar with the company's plans said.
"I was stunned (when) I found out," said Wayne Flood, a refinery worker who was let go Wednesday. He did not say what his job was before getting into his car.
About 100 non-union employees will be laid off immediately, with a "significant" number of the 700 union employees expected to lose their jobs in mid-July, the sources said.
"I’m extremely disappointed for the more than one thousand workers who will be immediately impacted by this closure, as well as other businesses that are dependent on the refinery operations," Philadelphia Mayor Jim Kenney said in a statement.
The 335,000 barrel-per-day (bpd) complex, in a densely populated area in the southern part of the city, erupted in flames early on Friday in a series of explosions that could be heard miles away.
"The impact of the closure will be a massive blow to the local economy," said Ryan O'Callaghan, head of the refinery's union, estimating that it would cost tens of thousands of jobs when contractors and other businesses that rely on the plant are included.
Other refineries have taken years to restart after suffering substantial damage to processing capabilities. A much smaller refinery in Superior, Wisconsin, closed last year due to a fire and is not expected to restart at full production until 2021.
The cause of the fire remained unknown, though city fire officials said it started in a butane vat around 4 a.m. EDT (0800 GMT). It destroyed a 30,000-bpd alkylation unit that uses hydrofluoric acid to process refined products. Had the acid caught fire, it could have resulted in a vapor cloud that can damage the skin, eyes and lungs of nearby residents.
The refinery had struggled financially for years, forced to slash worker benefits and scale back capital projects to save cash. After a period of prosperity built on bringing in discounted crude oil via rail from North Dakota, the refinery fell on hard times, even as then-owner Carlyle Group paid itself nearly $600 million in dividend-style distributions.
It went through a bankruptcy process last year to reduce debt, but cash on hand dwindled even after it emerged from bankruptcy last summer.
In January, PES dramatically scaled back a large maintenance project in the section where the explosion occurred last week, sources familiar with the plant's operations told Reuters
After bankruptcy, Credit Suisse Asset Management and Bardin Hill became the controlling owners, with former primary owners Carlyle Group and Sunoco Logistics, an Energy Transfer subsidiary, holding a minority stake.
The blaze was the second in two weeks at the complex, spurring the mayor to call for a task force to look into the cause and community outreach in the wake of the incidents. That task force will now be retooled to focus on helping the company transition the site of the refinery and supporting employees affected, Kenney said in his statement.
Investigators on the scene are dealing with unstable structures that need to be certified by engineers, slowing down the inquiry, city officials said. The investigation could ultimately take months or perhaps years, they said.
In addition, the company halted the restart of its gasoline-making unit at the other section of the refinery complex, the Point Breeze section, the sources said. That unit had been closed after a June 10 pump fire, where nobody was injured.
The state Department of Environmental Protection said on Tuesday it was concerned about the integrity of storage tanks on site.
U.S. gasoline futures rose as much as 5.4% on Wednesday to $1.9787 a gallon, the highest since May 23. The front month price was at $1.9704, up 5%, on Wednesday.
(Reporting by Jarrett Renshaw; additional reporting by Laila Kearney; editing by David Gaffen and Phil Berlowitz) |
Investors Who Bought HMT (NSE:HMT) Shares Five Years Ago Are Now Down 68%
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Statistically speaking, long term investing is a profitable endeavour. But unfortunately, some companies simply don't succeed. For example theHMT Limited(NSE:HMT) share price dropped 68% over five years. We certainly feel for shareholders who bought near the top. And some of the more recent buyers are probably worried, too, with the stock falling 33% in the last year. The falls have accelerated recently, with the share price down 14% in the last three months.
Check out our latest analysis for HMT
HMT isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over half a decade HMT reduced its trailing twelve month revenue by 3.9% for each year. That's not what investors generally want to see. The share price decline of 20% compound, over five years, is understandable given the company is losing money, and revenue is moving in the wrong direction. We don't think anyone is rushing to buy this stock. Ultimately, it may be worth watching - should revenue pick up, the share price might follow.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
Thisfreeinteractive report on HMT'sbalance sheet strengthis a great place to start, if you want to investigate the stock further.
While the broader market gained around 2.9% in the last year, HMT shareholders lost 33%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 20% per year over five years. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Shareholders might want to examinethis detailed historical graphof past earnings, revenue and cash flow.
For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Ekter SA (ATH:EKTER) Delivered A Weaker ROE Than Its Industry
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While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. To keep the lesson grounded in practicality, we'll use ROE to better understand Ekter SA (ATH:EKTER).
Over the last twelve monthsEkter has recorded a ROE of 2.6%. Another way to think of that is that for every €1 worth of equity in the company, it was able to earn €0.026.
See our latest analysis for Ekter
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Ekter:
2.6% = €532k ÷ €20m (Based on the trailing twelve months to December 2018.)
It's easy to understand the 'net profit' part of that equation, but 'shareholders' equity' requires further explanation. It is all the money paid into the company from shareholders, plus any earnings retained. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
ROE measures a company's profitability against the profit it retains, and any outside investments. The 'return' is the profit over the last twelve months. The higher the ROE, the more profit the company is making. So, all else equal,investors should like a high ROE. Clearly, then, one can use ROE to compare different companies.
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. If you look at the image below, you can see Ekter has a lower ROE than the average (14%) in the Construction industry classification.
That's not what we like to see. We prefer it when the ROE of a company is above the industry average, but it's not the be-all and end-all if it is lower. Still,shareholders might want to check if insiders have been selling.
Virtually all companies need money to invest in the business, to grow profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the use of debt will improve the returns, but will not change the equity. That will make the ROE look better than if no debt was used.
Ekter is free of net debt, which is a positive for shareholders. Without a doubt it has a fairly low ROE, but that isn't so bad when you consider it has no debt. At the end of the day, when a company has zero debt, it is in a better position to take future growth opportunities.
Return on equity is one way we can compare the business quality of different companies. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE.
But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. You can see how the company has grow in the past by looking at this FREEdetailed graphof past earnings, revenue and cash flow.
Of courseEkter may not be the best stock to buy. So you may wish to see thisfreecollection of other companies that have high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Why You Should Like Detection Technology Oyj’s (HEL:DETEC) ROCE
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Today we'll look at Detection Technology Oyj (HEL:DETEC) and reflect on its potential as an investment. To be precise, we'll consider its Return On Capital Employed (ROCE), as that will inform our view of the quality of the business.
First of all, we'll work out how to calculate ROCE. Then we'll compare its ROCE to similar companies. And finally, we'll look at how its current liabilities are impacting its ROCE.
ROCE measures the 'return' (pre-tax profit) a company generates from capital employed in its business. All else being equal, a better business will have a higher ROCE. In brief, it is a useful tool, but it is not without drawbacks. Author Edwin Whitingsaysto be careful when comparing the ROCE of different businesses, since 'No two businesses are exactly alike.'
Analysts use this formula to calculate return on capital employed:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
Or for Detection Technology Oyj:
0.36 = €19m ÷ (€71m - €20m) (Based on the trailing twelve months to December 2018.)
So,Detection Technology Oyj has an ROCE of 36%.
See our latest analysis for Detection Technology Oyj
ROCE can be useful when making comparisons, such as between similar companies. Detection Technology Oyj's ROCE appears to be substantially greater than the 21% average in the Electronic industry. I think that's good to see, since it implies the company is better than other companies at making the most of its capital. Setting aside the comparison to its industry for a moment, Detection Technology Oyj's ROCE in absolute terms currently looks quite high.
Our data shows that Detection Technology Oyj currently has an ROCE of 36%, compared to its ROCE of 16% 3 years ago. This makes us think about whether the company has been reinvesting shrewdly.
Remember that this metric is backwards looking - it shows what has happened in the past, and does not accurately predict the future. ROCE can be misleading for companies in cyclical industries, with returns looking impressive during the boom times, but very weak during the busts. This is because ROCE only looks at one year, instead of considering returns across a whole cycle. What happens in the future is pretty important for investors, so we have prepared afreereport on analyst forecasts for Detection Technology Oyj.
Short term (or current) liabilities, are things like supplier invoices, overdrafts, or tax bills that need to be paid within 12 months. Due to the way ROCE is calculated, a high level of current liabilities makes a company look as though it has less capital employed, and thus can (sometimes unfairly) boost the ROCE. To counteract this, we check if a company has high current liabilities, relative to its total assets.
Detection Technology Oyj has total assets of €71m and current liabilities of €20m. Therefore its current liabilities are equivalent to approximately 28% of its total assets. A minimal amount of current liabilities limits the impact on ROCE.
With low current liabilities and a high ROCE, Detection Technology Oyj could be worthy of further investigation. There might be better investments than Detection Technology Oyj out there,but you will have to work hard to find them. These promising businesses withrapidly growing earningsmight be right up your alley.
If you are like me, then you willnotwant to miss thisfreelist of growing companies that insiders are buying.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Juul loses home turf as San Francisco bans e-cigarette sales
By Chris Kirkham, Uday Sampath Kumar and Jane Lanhee Lee
(Reuters) - San Francisco will become the first major city in the United States to ban the sale of e-cigarettes as officials look to control the rapid uptick in teenage use of nicotine devices made by companies such as Juul Labs Inc.
The San Francisco Board of Supervisors approved the ordinance on Tuesday, banning the sale and distribution of e-cigarettes until they have approval from the U.S. Food and Drug Administration.
States and cities across the United States have already moved to ban flavored e-cigarettes and raise the legal age for purchasing tobacco products to 21, but San Francisco's new approach is the most far-reaching yet.
No other major cities have proposed a similar hardline ban, though San Francisco's move could lead others to consider it.
The city council in Beverly Hills, California, this month approved a ban on the sale of tobacco products beginning 2021, though it carved out exceptions for some cigar lounges and hotels.
Juul, which is based in San Francisco and has grown to be the dominant e-cigarette maker in the United States, has been at the center of the debate. As its sales soared over the last two years, so did its popularity among teenagers.
Federal data last year showed a 78% increase in e-cigarette use among U.S. high schoolers, and state and local lawmakers have been grappling with how to regulate Juul and other similar products.
San Francisco City Attorney Dennis Herrera, who spearheaded the ordinance earlier this year, praised the move and said it was necessary because of what he called an "abdication of responsibility" by the FDA in regulating e-cigarettes.
E-cigarettes have existed in a regulatory gray area for years. Its makers originally faced a 2018 deadline to submit applications to the FDA to sell products, but the deadline was pushed back to 2022.
Amid the surge in teenage use, the FDA in March moved up that deadline to 2021. A separate court case from anti-tobacco groups may force the FDA to set an earlier deadline.
"This lack of clarity is causing tremendous confusion at the same time that a whole new generation of young people are getting addicted to nicotine," Herrera told Reuters. "The explosion in youth use and the health risks to young people are undeniable."
San Francisco Supervisor Shamann Walton, who sponsored the ordinance, said he has been constantly hearing from young people about e-cigarettes and "how readily available they are in schools, the fact that they're easily hidden from educators."
After Tuesday's vote, Juul spokesman Ted Kwong said the ban "will drive former adult smokers who successfully switched to vapor products back to deadly cigarettes, deny the opportunity to switch for current adult smokers, and create a thriving black market instead of addressing the actual causes of underage access and use."
He said the company has already taken steps to prevent underage use and has proposals of its own to prevent sales to minors in the city.
Juul, in which Marlboro maker Altria Group has a 35% stake, has pulled popular flavors such as mango and cucumber from retail store shelves and shut down its social media channels on Instagram and Facebook.
FDA spokesman Michael Felberbaum declined to comment on the San Francisco ban, but said the agency is "committed to continuing to tackle the troubling epidemic of e-cigarette use among kids," including limiting access to flavored e-cigarettes and cracking down on companies and retailers who sell to minors.
E-cigarettes are generally thought to be safer than traditional cigarettes, which kill up to half of all lifetime users, according to the World Health Organization, but the long-term health effects of the nicotine devices remain largely unknown.
Bruce Colbert, who was at a tobacco retailer called the Smoke Shop in San Francisco, said the ordinance will harm people like him who are trying to stop smoking cigarettes.
"You can get high. You can get drunk, too. But you can't vape to cut back on your cigarettes," he said. "Either I go back to smoking cigarettes full time, or go across the Bay and go somewhere else. No big deal."
San Francisco city officials last year approved a ban on flavored tobacco and e-cigarette liquids, a move upheld by voters.
Juul last month filed paperwork in San Francisco for another ballot measure that experts say would make the flavor ban and Tuesday's e-cigarette ban unenforceable.
Juul spokesman Kwong disagreed that the ballot initiative would affect the flavor ban, but said it would supersede the e-cigarette ordinance approved on Tuesday.
The ballot measure, if approved, would put in place regulations favored by Juul, which it says would "ensure that underage access and use is addressed comprehensively but adults aren't driven back to cigarettes."
The e-cigarette ban will go into effect early next year, according to the city attorney's office, and will apply to both online and brick-and-mortar sales in San Francisco.
City officials also passed a separate ordinance prohibiting the manufacture and distribution of all tobacco products on city property.
(Reporting by Uday Sampath in Bengaluru, Chris Kirkham in Los Angeles and Jane Lanhee Lee in San Francisco; Editing by Arun Koyyur) |
Can We See Significant Insider Ownership On The LiveHire Limited (ASX:LVH) Share Register?
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If you want to know who really controls LiveHire Limited (ASX:LVH), then you'll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.'
LiveHire is not a large company by global standards. It has a market capitalization of AU$104m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholder can tell us about LVH.
Check out our latest analysis for LiveHire
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that LiveHire does have institutional investors; and they hold 12% of the stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of LiveHire, (below). Of course, keep in mind that there are other factors to consider, too.
It looks like hedge funds own 5.0% of LiveHire shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our most recent data indicates that insiders own a reasonable proportion of LiveHire Limited. Insiders own AU$33m worth of shares in the AU$104m company. This may suggest that the founders still own a lot of shares. You canclick here to see if they have been buying or selling.
With a 48% ownership, the general public have some degree of sway over LVH. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Our data indicates that Private Companies hold 3.1%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
I like to dive deeperinto how a company has performed in the past. You can findhistoric revenue and earnings in thisdetailed graph.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss thisfreereport on analyst forecasts.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Here's What You Should Know About Generation Development Group Limited's (ASX:GDG) 3.8% Dividend Yield
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Could Generation Development Group Limited (ASX:GDG) be an attractive dividend share to own for the long haul? Investors are often drawn to strong companies with the idea of reinvesting the dividends. If you are hoping to live on your dividends, it's important to be more stringent with your investments than the average punter. Regular readers know we like to apply the same approach to each dividend stock, and we hope you'll find our analysis useful.
With Generation Development Group yielding 3.8% and having paid a dividend for over 10 years, many investors likely find the company quite interesting. We'd guess that plenty of investors have purchased it for the income. Some simple research can reduce the risk of buying Generation Development Group for its dividend - read on to learn more.
Explore this interactive chart for our latest analysis on Generation Development Group!
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. So we need to form a view on if a company's dividend is sustainable, relative to its net profit after tax. Generation Development Group paid out 78% of its profit as dividends, over the trailing twelve month period. It's paying out most of its earnings, which limits the amount that can be reinvested in the business. This may indicate limited need for further capital within the business, or highlight a commitment to paying a dividend.
We update our data on Generation Development Group every 24 hours, so you can always getour latest analysis of its financial health, here.
From the perspective of an income investor who wants to earn dividends for many years, there is not much point buying a stock if its dividend is regularly cut or is not reliable. Generation Development Group has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of payments. Its dividend payments have fallen by 20% or more on at least one occasion over the past ten years. During the past ten-year period, the first annual payment was AU$0.03 in 2009, compared to AU$0.02 last year. This works out to be a decline of approximately 4.0% per year over that time. Generation Development Group's dividend has been cut sharply at least once, so it hasn't fallen by 4.0% every year, but this is a decent approximation of the long term change.
When a company's per-share dividend falls we question if this reflects poorly on either the business or management. Either way, we find it hard to get excited about a company with a declining dividend.
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Strong earnings per share (EPS) growth might encourage our interest in the company despite fluctuating dividends, which is why it's great to see Generation Development Group has grown its earnings per share at 60% per annum over the past five years. Generation Development Group earnings have been growing very quickly recently, but given that it is paying out more than half of its earnings, we wonder if it will have enough capital to fund further growth in the future.
To summarise, shareholders should always check that Generation Development Group's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. First, we think Generation Development Group has an acceptable payout ratio. Next, earnings growth has been good, but unfortunately the dividend has been cut at least once in the past. While we're not hugely bearish on it, overall we think there are potentially better dividend stocks than Generation Development Group out there.
Are management backing themselves to deliver performance? Check their shareholdings in Generation Development Group inour latest insider ownership analysis.
If you are a dividend investor, you might also want to look at ourcurated list of dividend stocks yielding above 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Scry Takes the Lead in Offering Blockchain-Based API Interface Services
API Interface Companies Have Become a Favorite Choice in the Traditional Software Industry. Scry is the First Company to Devote Itself to Providing Blockchain-Based Application API Interface Services
CHENGDU, CHINA / ACCESSWIRE / June 25, 2019 /API interface companies have become a favorite choice for numerous investment companies and individual investors in the traditional software industry. Here we must mention Amazon, which has not only received acclaim for upending the retail industry, but is also recognized as a pioneer in cloud computing. At the same time, it has brought about great change in the IT industry, giving rise to an all-new business category. In 2018, revenue of United States-listed companies in the API interface industry grew by 67%, with Amazon's API interface business alone contributing US$25.6 billion. Now, a large number of shrewd complex code software providers have begun to pivot to API application interfaces. Rapid-use complex computing software services with lower docking costs is an emerging industry with enormous future investment potential.
Amazon read the trends in the software service industry, correctly predicting that providing basic IT functions to technology companies could generate massive revenue, and put it into practice. Amazon's idea has been borne out, not only driving the upheaval of the entire industry, but also becoming a driving force the company's revenue growth; it contributed U$25.6 billion in revenue in 2018, an increase of 47%. Similarly, it has also become a profitable business for Amazon's competitors such as Microsoft and Google. The explosive proliferation of cloud computing has set off a massive chain reaction, leading to a "Big Bang" in API. The share price of Twilio, which provides an API communications interface, rose by 256.2% in one year, while that of Adyen, which provides payment for API, rose by 165.8% in the previous year. The share prices of companies relevant in the API field have increased significantly, and it is clear that the demand for API will continue to increase, leading to an increase in the number of related companies in the future.
Scry is the first company to devote itself to providing blockchain-based application API interface services in order to reduce development costs: there is no need to learn a multitude of blockchain algorithms, write complex intelligent contract code, or design digital signature schemes for construction of functions. SCRY handles everything from indexing and transfer of data to third-party payment interfaces and token asset payment, along with various other boring, complex or cumbersome data-related issues for its clients.
API is a bridge between applications that makes it possible to quickly invoke connections - a channel for data flow and interaction, just like sockets on wires. "One of the oldest sayings in the industry is that 'software is eating the world'; now, API is eating software," said Rishi Jaluria, an analyst from the investment management company D.A. Davidson & Co.
The API that SCRY provides is designed to disassemble the complex, cumbersome, expensive and repetitive bottom blockchain layer, which includes encryption and decryption algorithms, data transmission, token payment transfer, intelligent contracting, signatures, etc., in order to form independent abstract functions through modularization, just like children's Lego blocks. Furthermore, it adds rules and general mechanisms such as communication, payment, content management, transmission, electronic signature, encryption and decryption, etc., all packaged into an API interface exclusively for SCRY developers and users. It can be quickly transformed according to the products of partner development companies and enterprises into a blockchain application or application with the functional characteristics of blockchain. It provides clients with an intelligent blockchain contract function that matches the complex development process, leaving the tedious work to SCRY so that the business customers can focus on more important things.
With the continuous enrichment of big data in the oil industry and combination of data-enabling blockchain formats, as well as the development of the open-source and shared software industry, SCRY's goal is to become an industry leader and the first choice for customers seeking data commerce and blockchain services. Scry's data container warehouse Depot, which is based on SCRY, has access to streaming commercial information data application and free trading markets, which will become the entrance for natural flow and bring significant scaling effects to SCRY in the future.
Company Website:https://home.scry.info/
Contact Info:
Name: Media RelationsEmail:Send EmailOrganization: SCRY.INFOAddress: SCRY.INFO, Chengdu, Sichuan, ChinaWebsite:https://home.scry.info/
SOURCE:SCRY.INFO
View source version on accesswire.com:https://www.accesswire.com/549933/Scry-Takes-the-Lead-in-Offering-Blockchain-Based-API-Interface-Services |
Why Detection Technology Oyj (HEL:DETEC) Could Be Worth Watching
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Detection Technology Oyj (HEL:DETEC), which is in the electronic business, and is based in Finland, led the HLSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Detection Technology Oyj’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Detection Technology Oyj
Detection Technology Oyj appears to be overvalued by 21.01% at the moment, based on my discounted cash flow valuation. The stock is currently priced at €22.60 on the market compared to my intrinsic value of €18.68. This means that the opportunity to buy Detection Technology Oyj at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that Detection Technology Oyj’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Detection Technology Oyj’s earnings over the next few years are expected to increase by 40%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
Are you a shareholder?DETEC’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe DETEC should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor?If you’ve been keeping tabs on DETEC for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for DETEC, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Detection Technology Oyj. You can find everything you need to know about Detection Technology Oyj inthe latest infographic research report. If you are no longer interested in Detection Technology Oyj, you can use our free platform to see my list of over50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
What Kind Of Shareholder Appears On The Oakajee Corporation Limited's (ASX:OKJ) Shareholder Register?
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If you want to know who really controls Oakajee Corporation Limited (ASX:OKJ), then you'll have to look at the makeup of its share registry. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.'
Oakajee is not a large company by global standards. It has a market capitalization of AU$5.9m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about OKJ.
See our latest analysis for Oakajee
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
Oakajee already has institutions on the share registry. Indeed, they own 16% of the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone, since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Oakajee, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don't have many shares in Oakajee. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our most recent data indicates that insiders own a reasonable proportion of Oakajee Corporation Limited. It has a market capitalization of just AU$5.9m, and insiders have AU$818k worth of shares in their own names. This may suggest that the founders still own a lot of shares. You canclick here to see if they have been buying or selling.
The general public, mostly retail investors, hold a substantial 60% stake in OKJ, suggesting it is a fairly popular stock. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
It seems that Private Companies own 10%, of the OKJ stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
Many find it usefulto take an in depth look at how a company has performed in the past. You can accessthisdetailed graphof past earnings, revenue and cash flow.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, backed by strong financial data.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Is Pilbara Minerals Limited (ASX:PLS) A Financially Sound Company?
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Pilbara Minerals Limited (ASX:PLS) is a small-cap stock with a market capitalization of AU$1.0b. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Given that PLS is not presently profitable, it’s vital to assess the current state of its operations and pathway to profitability. The following basic checks can help you get a picture of the company's balance sheet strength. Nevertheless, this is not a comprehensive overview, so I suggest youdig deeper yourself into PLS here.
PLS has built up its total debt levels in the last twelve months, from AU$123m to AU$142m , which accounts for long term debt. With this increase in debt, the current cash and short-term investment levels stands at AU$70m to keep the business going. Its negative operating cash flow means calculating cash-to-debt wouldn't be useful. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can take a look at some of PLS’soperating efficiency ratios such as ROA here.
With current liabilities at AU$57m, it seems that the business has been able to meet these obligations given the level of current assets of AU$113m, with a current ratio of 1.99x. The current ratio is calculated by dividing current assets by current liabilities. Generally, for Metals and Mining companies, this is a reasonable ratio as there's enough of a cash buffer without holding too much capital in low return investments.
PLS is a relatively highly levered company with a debt-to-equity of 43%. This is somewhat unusual for small-caps companies, since lenders are often hesitant to provide attractive interest rates to less-established businesses. But since PLS is presently loss-making, sustainability of its current state of operations becomes a concern. Maintaining a high level of debt, while revenues are still below costs, can be dangerous as liquidity tends to dry up in unexpected downturns.
Although PLS’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised. Since there is also no concerns around PLS's liquidity needs, this may be its optimal capital structure for the time being. This is only a rough assessment of financial health, and I'm sure PLS has company-specific issues impacting its capital structure decisions. I suggest you continue to research Pilbara Minerals to get a more holistic view of the small-cap by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for PLS’s future growth? Take a look at ourfree research report of analyst consensusfor PLS’s outlook.
2. Valuation: What is PLS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether PLS is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
If You Had Bought Vereinigte Filzfabriken (MUN:VFF) Shares Five Years Ago You'd Have Made 28%
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When we invest, we're generally looking for stocks that outperform the market average. And in our experience, buying the right stocks can give your wealth a significant boost. To wit, the Vereinigte Filzfabriken share price has climbed 28% in five years, easily topping the market return of 7.5% (ignoring dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 12%, including dividends.
Check out our latest analysis for Vereinigte Filzfabriken
Given that Vereinigte Filzfabriken only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last 5 years Vereinigte Filzfabriken saw its revenue grow at 4.1% per year. That's not a very high growth rate considering the bottom line. While it's hard to say just how much value the company added over five years, the annualised share price gain of 5.0% seems about right. We'd be looking for the underlying business to grow revenue a bit faster.
Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
Thisfreeinteractive report on Vereinigte Filzfabriken'sbalance sheet strengthis a great place to start, if you want to investigate the stock further.
We've already covered Vereinigte Filzfabriken's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. We note that Vereinigte Filzfabriken's TSR, at 48% is higher than its share price return of 28%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
We're pleased to report that Vereinigte Filzfabriken shareholders have received a total shareholder return of 12% over one year. That's better than the annualised return of 8.2% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Shareholders might want to examinethis detailed historical graphof past earnings, revenue and cash flow.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on DE exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
What Indonesia Reveals About Facebook’s Cryptocurrency Ambitions
Facebook published plans for the Libra cryptocurrency in seven languages, including Indonesia’s Bahasa – a move that offers perhaps the clearest glimpse of what Facebook’s fintech ascent might look like.
“Indonesia has the fourth-highest number of Facebook users in the world,” Pang Xue Kai, co-founder of the Indonesian crypto exchange Tokocrypto, told CoinDesk. “If Facebook’s Libra can address the [local] issues, it has the potential to succeed.”
According to the annual media report released byWe Are Social and Hootsuite, Indonesia has the world’s highest rate of Facebook post engagement among internet users, over 4 percent, and the highest frequency of online shopping, with 86 percent of Indonesian survey respondents saying they bought something online in the past month.
Related:Swiss Central Banker ‘Relaxed’ About Facebook’s Libra Crypto
Since nearly 10 percent of Indonesian respondents said they also own some cryptocurrency, double American percentage, Facebook couldn’t have dreamed up a better market for Libra.
QCP Capital co-founder Joshua Ho, a trader who works closely with Indonesian exchange Tokocrypto, told CoinDesk Facebook’s Libra ecosystem could be a “gamechanger” in Indonesia.
“People are already very aligned with mobile payments,” Ho said. “It is geographically decentralized. Creating banking access is a huge challenge.”
Since theAsian financial crisis in 1997, which sparked rampant inflation, economic recession and political turmoil in Indonesia, Ho said cryptocurrency offers an attractive alternative to fiat currencies and banks the population still distrusts.
Related:Facebook’s Libra Cryptocurrency: Bad for Privacy, Bad for Competition
Add all this to theWorld Bank’s estimate that Indonesia is a collection of islands with one of the world’s largest unbanked populations, 97 million adults as of 2017, and it’s clear why Facebook prioritized publishing its crypto materials in the native language.
Anchorage CEO Nathan McCauley, a founding member of the Libra Association, told CoinDesk getting merchants to accept Libra will be a crucial part of encouraging adoption among the unbanked. TheAndreessen Horowitz–backedstartup will primarily contribute to security and custody features for the Libra ecosystem, especially custody services related to theLibra investment tokenfor institutional investors.
McCauley said Anchorage is currently applying for various licenses, but declined to specify which. He said he did not believe the association or its members would require additional licenses for money transmission or custody features for retail users in various jurisdictions.
Although Facebook’s dominance across Indonesia’s communication networks is growing rapidly, accessibility can still be hindered by government intervention.
“Of course the platform that facilitated a transaction is going to know who the transaction is coming from, who it is going to, and will have the ability to enforce whatever norms, laws or regulations that they need to do so,” McCauley said. “That tends to be jurisdiction dependent and client dependent.”
Facebook’s omnipresence in Indonesia raises questions about how Libra will impact retail users.
For example,TechCrunchreported the Indonesian government censored access to WhatsApp and Instagram, both owned by Facebook, in May whenprotestsabout controversial election results turned violent. Numerous reports have called Facebook a political “battleground” in Indonesia, where data from over a million user accounts was reportedly sold toCambridge Analyticafor targeted political campaigns.
A Facebook spokesperson declined to comment on how relations with local authorities evolved since the protests in May, focusing instead on partnerships forged with six fact-checking entities certified by the Poynter Institute to quell the spread of misinformation among Indonesian users.
This type of scenario raises red flags for Cornell University professor and blockchain researcher Emin Gun Sirer.
“I did not see anything in their roadmap related to privacy at all,” he told CoinDesk about the Libra Association. “I don’t think people are talking about how aggressive the Facebook approach is.”
A blog post by the crypto startupNymwent even further. Nym’s CTO, Dave Hrycyszyn, was briefly with the social media giant after the acqui-hire of Chainspace, a startup he co-founded.
“Libra will provide Facebook and its partners with the ability to analyze every purchase by every single Libra user,” theblog postsaid:
“While Facebook currently promises that it will not triangulate its vast hordes of personal data with financial transaction information to probe ever deeper into the minds of its human subjects, there are no cryptographic or technical privacy guarantees in Libra to prevent Facebook from doing exactly this.”
Mass reliance on the same provider for mobile communication and financial access would give Silicon Valley even more leverage in markets like Indonesia.
CoinDesk contributorDaniel Evansnoted Facebook’s Libra Association doesn’t have any partners in the region yet and may not be able to operate “freely.”
Shaun Djie, co-founder of Tokocrypto’s Singapore-based partner, DigixGlobal, told CoinDesk the fintech ecosystem in Indonesia is currently “very malleable” as young people are “receptive to owning cryptocurrencies.” In general, crypto veterans with experience in the Indonesian market were optimistically curious about Libra.
Regardless of privacy concerns, WhatsApp and Instagram would inherently be huge factors in the local Libra ecosystem. Ho confirmed that WhatsApp, with roughly70 millionIndonesian users, is a pivotal tool forlocal businesses.
TheHootsuitereport said 90 percent of small-to-medium businesses in Indonesia identified WhatsApp as a tool for communicating with customers. Plus, the report estimated 20 percent of Indonesian internet users are on Instagram, soaring above the global average of 15 percent.
Speaking to the local vision for Libra, a Facebook spokesperson told CoinDesk:
“Facebook is committed to helping Indonesians come together to build communities and support businesses – both large and small – through initiatives and programs with local partners.”
Image of Jakarta, Indonesian rupahs via
• Second US Congressional Hearing Is Scheduled on Facebook’s Libra Crypto
• Facebook Seeking Crypto Wallet Data Engineer, Regulatory Policy Expert |
Shakti Pumps (India) Limited (NSE:SHAKTIPUMP): Commentary On Fundamentals
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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Shakti Pumps (India) Limited (NSE:SHAKTIPUMP) due to its excellent fundamentals in more than one area. SHAKTIPUMP is a company with great financial health as well as a a great track record of performance. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, read the fullreport on Shakti Pumps (India) here.
Over the past year, SHAKTIPUMP has grown its earnings by 32%, with its most recent figure exceeding its annual average over the past five years. Not only did SHAKTIPUMP outperformed its past performance, its growth also surpassed the Machinery industry expansion, which generated a 21% earnings growth. This is what investors like to see! SHAKTIPUMP is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. SHAKTIPUMP’s earnings amply cover its interest expense. Paying interest on time and in full can help the company get favourable debt terms in the future, leading to lower cost of debt and helps SHAKTIPUMP expand.
For Shakti Pumps (India), I've compiled three essential factors you should further examine:
1. Future Outlook: What are well-informed industry analysts predicting for SHAKTIPUMP’s future growth? Take a look at ourfree research report of analyst consensusfor SHAKTIPUMP’s outlook.
2. Valuation: What is SHAKTIPUMP worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether SHAKTIPUMP is currently mispriced by the market.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of SHAKTIPUMP? Exploreour interactive list of stocks with large potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Did You Miss Solara Active Pharma Sciences's (NSE:SOLARA) 77% Share Price Gain?
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These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, theSolara Active Pharma Sciences Limited(NSE:SOLARA) share price is 77% higher than it was a year ago, much better than the market return of around 1.0% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Solara Active Pharma Sciences hasn't been listed for long, so it's still not clear if it is a long term winner.
View our latest analysis for Solara Active Pharma Sciences
In his essayThe Superinvestors of Graham-and-DoddsvilleWarren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the last year Solara Active Pharma Sciences saw its earnings per share (EPS) increase strongly. While that particular rate of growth is unlikely to be sustained for long, it is still remarkable. So we're unsurprised to see the share price gaining ground. Strong growth like this can be evidence of a fundamental inflection point in the business, making it a good time to investigate the stock more closely.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination ofhistoric growth trends, available here..
Solara Active Pharma Sciences shareholders should be happy with thetotalgain of 77% over the last twelve months, including dividends. The more recent returns haven't been as impressive as the longer term returns, coming in at just 7.3%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). It is all well and good that insiders have been buying shares, but we suggest youcheck here to see what price insiders were buying at.
Solara Active Pharma Sciences is not the only stock insiders are buying. So take a peek at thisfreelist of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Why I Like SEB SA (EPA:SK)
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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on SEB SA (EPA:SK) due to its excellent fundamentals in more than one area. SK is a financially-robust , dividend-paying company with a a great track record of performance. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the fullreport on SEB here.
Over the past few years, SK has demonstrated a proven ability to generate robust returns of 6.1% Not surprisingly, SK outperformed its industry which returned 5.0%, giving us more conviction of the company's capacity to drive bottom-line growth going forward. SK's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that SK has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. SK appears to have made good use of debt, producing operating cash levels of 0.3x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
Income investors would also be happy to know that SK is a great dividend company, with a current yield standing at 1.4%. SK has also been regularly increasing its dividend payments to shareholders over the past decade.
For SEB, I've compiled three relevant aspects you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for SK’s future growth? Take a look at ourfree research report of analyst consensusfor SK’s outlook.
2. Valuation: What is SK worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether SK is currently mispriced by the market.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of SK? Exploreour interactive list of stocks with large potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Large carmakers including Volkswagen, FCA could face 2021 EU emissions fines: study
FRANKFURT (Reuters) - Volkswagen and FiatChrysler could face penalties of up to 1.83 billion euros ($2.08 billion) and 746 million euros respectively, if they fail to meet the European Union's emissions targets set for 2021, according to AlixPartners.
The study by the consulting firm, which was published on Wednesday, shows how hard it is for carmakers to meet European rules for cutting average fleet emissions for passenger cars to 95 grams of carbon dioxide per kilometer by 2021.
AlixPartners forecast the size of potential penalties based on the vehicle emissions levels reported by carmakers at the end of 2017. Since then, major carmakers have reduced carbon dioxide emissions through higher sales of electric and hybrid vehicles.
Volkswagen said it plans to comply with the European rules while FiatChrysler has said it will pursue the cheapest option for complying with the rules, a step which may include paying fines.
Volvo and Toyota are the only major carmaking groups which do not face penalties, and could sell their surplus emission credits to other carmakers, the study showed.
Volkswagen Group, faces the biggest fine because it is Europe's biggest carmaker by market share. To meet European Union emissions rules it plans to mass produce electric cars in 2020.
"If you build heavier cars and have a large market share of diesels you have some homework to do if you want to mitigate possible penalties," said Elmar Kades, Managing Director at AlixPartners.
"Customers are switching to petrol and this needs to be compensated with electrification and or hybridization."
In its Global Automotive Outlook study, AlixPartners said that car sales will stagnate or decline in the next three years, hitting the margins of suppliers and carmakers, particularly those balancing sales of electric and combustion engine cars.
Designing and building both combustion engine and fully electric cars simultaneously costs automakers $2.3 billion per platform per year, the study said.
"One of the most dramatic developments is that demand is stagnant or falling, while investments are at an all time high. To counter margin deterioration we see comprehensive cost cutting measures across the board," Kades said.
($1 = 0.8780 euros)
(Reporting by Edward Taylor; editing by David Evans) |
UPDATE 1-N.Korea says U.S. extension of sanctions 'a hostile act' -KCNA
(Adds details, background)
By Hyonhee Shin
SEOUL, June 26 (Reuters) - The recent U.S. extension of sanctions against North Korea was an act of hostility and an outright challenge to an historic summit between the two countries in Singapore last year, a spokesman for Pyongyang's foreign ministry said on Wednesday.
The White House last week extended six executive orders containing sanctions imposed over North Korea's nuclear and missile programmes by one year.
The unidentified North Korean foreign ministry spokesman denounced U.S. Secretary of State Mike Pompeo's remarks on Sunday that more than 80 percent of the North Korean economy has been affected by sanctions.
The spokesman also accused Washington of "viciously slandering" Pyongyang in its latest reports on human trafficking and religious freedom around the world.
"This is ... a manifestation of the most extreme hostile acts by the United States," the spokesman said in a statement carried by the North's official KCNA news agency.
"All these speak clearly to the fact that the wild dream of the United States to bring us to our knees by means of sanctions and pressure has not changed at all but grows even more undisguised," he added.
U.S. President Donald Trump and North Korean leader Kim Jong Un held their first, groundbreaking summit in Singapore in June last year, agreeing to foster new relations and work towards the denuclearisation of the Korean peninsula.
But a second summit in Vietnam in February collapsed as both sides failed to bridge differences between U.S. calls for denuclearisation and North Korean demands for sanctions relief.
Since then, North Korea has complained of U.S. sanctions and demanded Pompeo be replaced by someone "more mature", while lauding the rapport Kim built with Trump.
Pompeo, speaking to reporters on Sunday, raised hopes for a revival of nuclear talks after a recent exchange of letters between Trump and Kim.
The North Korean spokesman warned it would be difficult to achieve denuclearisation as long as U.S. politics are dominated by policymakers who have an "inveterate antagonism" towards North Korea.
"We would not thirst for a lifting of sanctions," the spokesman said.
"Our state is not a country that will surrender to the U.S. sanctions, nor are we a country which the U.S. could attack whenever it desires to do so," he added. (Reporting by Hyonhee Shin and Jack Kim Editing by Paul Tait and Darren Schuettler) |
Should Compagnie de Saint-Gobain S.A. (EPA:SGO) Be Your Next Stock Pick?
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I've been keeping an eye on Compagnie de Saint-Gobain S.A. (EPA:SGO) because I'm attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe SGO has a lot to offer. Basically, it is a dependable dividend payer that has been able to sustain great financial health over the past. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, read the fullreport on Compagnie de Saint-Gobain here.
SGO's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that SGO has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. SGO seems to have put its debt to good use, generating operating cash levels of 0.23x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
SGO pays a decent dividend yield to its shareholders, beating the low-risk savings rate, which is what investors want in order to compensate them for the risk of holding a stock. That said, please remember that dividend yields are a function of stock prices and corporate profits, both of which can be volatile.
For Compagnie de Saint-Gobain, I've put together three key aspects you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for SGO’s future growth? Take a look at ourfree research report of analyst consensusfor SGO’s outlook.
2. Historical Performance: What has SGO's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of SGO? Exploreour interactive list of stocks with large potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Masters of what universe? Central bankers in a bind as G20 bickers over trade
By Leika Kihara and Howard Schneider TOKYO/WASHINGTON (Reuters) - For decades the United States led the push for lower tariffs worldwide, but President Donald Trump is testing the solidarity of his G20 peers with a protectionist line on trade, putting central bankers in a tough spot with depleted resources to battle a downturn that may be coming sooner than expected. The U.S.-China trade war is the elephant in the room at this week's G20 summit of the world's top economies, and major central banks may find themselves pressed into defensive action in short order should an expected face-to-face meeting between Trump and Chinese President Xi Jinping go badly. The resulting race to the bottom in interest rates - and currency values - could rekindle the kind of acrimony among G20 officials so evident during the years of massive bond buying by the U.S. Federal Reserve after the financial crisis. And the race may already be under way. Under pressure from financial markets and wary of signs the global economy might be slowing, the Fed earlier this year called an effective halt to further rate increases, and at its meeting this month indicated rate cuts may be on the way. While Fed officials on Thursday pushed back on market expectations for a significant, half a percentage point rate cut as soon as next month, the U.S. central bank is still seen lowering rates once or twice by the end of this year. It is a shift that could make for tense talks at the G20 meetings, and force a discussion on how to fight the next recession before Europe and Japan end the extraordinary monetary steps taken to fight the previous one. The impact of looser Fed policy may be felt around the world through a decline in the dollar, which could pressure Europe and Japan to follow suit to keep their exporters competitive - the makings of the tension over currency that has plagued G20 meetings before. "It is hard to see how you get a cooperative outcome," said Vincent Reinhart, chief economist at Standish Mellon Asset Management and a former top staffer at the Fed. Story continues "A trade dispute can become a currency dispute pretty quickly. If what the United States ultimately wants is a depreciation, I don't see others raising their hands and saying I will take the appreciation ... We don't have many trading partners that are in a position to share weakness." European and Japanese policymakers say they will abide by the G20 agreement to refrain from competitive currency devaluation, and use monetary tools only for domestic purposes. With little firepower left, however, the ECB and the BOJ both have good reason to try and prevent a spike in their currencies from weighing on already soft exports and inflation. Some ECB policymakers have already expressed concern in the June policy meeting that any easing from the Fed could drive the euro higher, supporting the case for more ECB easing. "I'll give you five reasons for a rate cut," said a policymaker, who asked not to be identified, before repeating "exchange rate" five times. Bank of Japan Governor Haruhiko Kuroda also signalled last week his readiness to ramp up stimulus if growth slumps, going so far as to say any step the central bank takes could take will seek maximum stimulus effect at minimum cost. If Fed rate cuts trigger a spike in the euro, that could put pressure on the ECB to ramp up stimulus to counter the pain, analysts say. The ECB next meets for a rate review on July 25. There is also increasing market speculation the BOJ, which applies a 0.1% negative short-term rate and a zero percent cap on long-term rates, will ease as early as its rate review on July 29-30 depending on the Fed's moves. "If the Fed cuts rates, the BOJ and the ECB must do something more powerful to contain currency appreciation," said Sayuri Shirai, a former BOJ policymaker who is currently professor at Japan's Keio University. "They might be acting to achieve their domestic mandates. But the fact is such action would affect the global economy and yet, the G20 isn't discussing this." (To read a broader preview of other issues expected to dominate the G20 leaders' talks, click) (Additional reporting by Balazs Koranyi in Frankfurt and Tetsushi Kajimoto in Tokyo; Editing by Daniel Burns & Kim Coghill) |
Why Skanska AB (publ) (STO:SKA B) Could Be Your Next Investment
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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Skanska AB (publ) (STO:SKA B) due to its excellent fundamentals in more than one area. SKA B is a well-regarded dividend payer that has been able to sustain great financial health over the past. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at thereport on Skanska here.
SKA B's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that SKA B has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. SKA B seems to have put its debt to good use, generating operating cash levels of 0.97x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
For those seeking income streams from their portfolio, SKA B is a robust dividend payer as well. Over the past decade, the company has consistently increased its dividend payout, reaching a yield of 3.7%.
For Skanska, I've compiled three key factors you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for SKA B’s future growth? Take a look at ourfree research report of analyst consensusfor SKA B’s outlook.
2. Historical Performance: What has SKA B's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of SKA B? Exploreour interactive list of stocks with large potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
These Factors Make Compagnie de Saint-Gobain S.A. (EPA:SGO) An Interesting Investment
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Compagnie de Saint-Gobain S.A. (EPA:SGO) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of SGO, it is a highly-regarded dividend-paying company that has been able to sustain great financial health over the past. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at thereport on Compagnie de Saint-Gobain here.
SGO is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. SGO's has produced operating cash levels of 0.23x total debt over the past year, which implies that SGO's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
SGO pays a decent dividend yield to its shareholders, exceeding the low-risk savings rate, which is able to compensate investors for taking on the risk of holding a risky stock over a riskless asset. That said, please remember that dividend yields are a function of stock prices and corporate profits, both of which can be volatile.
For Compagnie de Saint-Gobain, there are three fundamental factors you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for SGO’s future growth? Take a look at ourfree research report of analyst consensusfor SGO’s outlook.
2. Historical Performance: What has SGO's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of SGO? Exploreour interactive list of stocks with large potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Mexico power utility to seek "fairer" deal over pipeline disputes
MEXICO CITY, June 25 (Reuters) - Mexican state power utility CFE said on Tuesday it will seek to negotiate a "fairer" resolution to contractual disputes with companies behind several pipelines yet to go into operation, and whose costs have been questioned by Mexico's president. President Andres Manuel Lopez Obrador earlier this year vowed to respect contracts signed under the previous administration for the infrastructure, but the loss-making CFE is hoping to secure better terms for the projects. The dispute centers on seven projects undertaken by companies that include Mexican billionaire Carlos Slim's infrastructure arm Grupo Carso, TransCanada Corp and Mexican energy firm IEnova, a unit of U.S. company Sempra Energy. CFE spokesman Luis Bravo said the utility would set out plans on Thursday morning to sit down with the firms. "All the companies involved in the conflicts will be called in with the aim of negotiating as the president has said, and to follow up on talks that have already started. There have already been initial soundings with each of them," he said. "(The aim) is to seek a much fairer negotiation," Bravo added, noting that there was no fixed time frame for the talks. The CFE had not ruled out pursuing international arbitration if necessary, but that was not its principal goal, he noted. IEnova said in a statement on Tuesday evening that it had received an arbitration request from the CFE over a pipeline it had built in a tie-up with TransCanada, and that it was ready to continue dialogue with the state-run firm. Lopez Obrador has expressed concerns that close ties between former government officials and the private sector led to energy deals that were unfavorable for the state. The president, who took office in December, has alarmed investors by cancelling a partially built $13 billion new Mexico City airport, and with his commitment to infrastructure projects that are viewed skeptically by financial markets. He has pledged to revive the CFE and Mexico's heavily- indebted state oil firm Petroleos Mexicanos (Pemex). (Reporting by Ana Isabel Martinez and Dave Graham; editing by Richard Pullin) |
MAN SE (FRA:MAN): Time For A Financial Health Check
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Small-caps and large-caps are wildly popular among investors; however, mid-cap stocks, such as MAN SE (FRA:MAN) with a market-capitalization of €8.3b, rarely draw their attention. However, generally ignored mid-caps have historically delivered better risk adjusted returns than both of those groups. MAN’s financial liquidity and debt position will be analysed in this article, to get an idea of whether the company can fund opportunities for strategic growth and maintain strength through economic downturns. Don’t forget that this is a general and concentrated examination of MAN’s financial health, so you should conduct further analysisinto MAN here.
View our latest analysis for MAN
MAN's debt levels surged from €3.1b to €4.2b over the last 12 months , which includes long-term debt. With this rise in debt, MAN's cash and short-term investments stands at €3.3b to keep the business going. Moreover, MAN has produced €544m in operating cash flow in the last twelve months, leading to an operating cash to total debt ratio of 13%, meaning that MAN’s operating cash is less than its debt.
At the current liabilities level of €8.6b, it appears that the company arguably has a rather low level of current assets relative its obligations, with the current ratio last standing at 0.85x. The current ratio is the number you get when you divide current assets by current liabilities.
MAN is a relatively highly levered company with a debt-to-equity of 75%. This is not uncommon for a mid-cap company given that debt tends to be lower-cost and at times, more accessible. We can check to see whether MAN is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In MAN's, case, the ratio of 13.17x suggests that interest is comfortably covered, which means that lenders may be inclined to lend more money to the company, as it is seen as safe in terms of payback.
MAN’s high cash coverage means that, although its debt levels are high, the company is able to utilise its borrowings efficiently in order to generate cash flow. But, its lack of liquidity raises questions over current asset management practices for the mid-cap. I admit this is a fairly basic analysis for MAN's financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research MAN to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for MAN’s future growth? Take a look at ourfree research report of analyst consensusfor MAN’s outlook.
2. Historical Performance: What has MAN's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
You Have To Love Tornos Holding AG's (VTX:TOHN) Dividend
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! Dividend paying stocks like Tornos Holding AG ( VTX:TOHN ) tend to be popular with investors, and for good reason - some research suggests a significant amount of all stock market returns come from reinvested dividends. If you are hoping to live on your dividends, it's important to be more stringent with your investments than the average punter. Regular readers know we like to apply the same approach to each dividend stock, and we hope you'll find our analysis useful. Tornos Holding has only been paying a dividend for a year or so, so investors might be curious about its 3.2% yield. Some simple analysis can reduce the risk of holding Tornos Holding for its dividend, and we'll focus on the most important aspects below. Click the interactive chart for our full dividend analysis SWX:TOHN Historical Dividend Yield, June 26th 2019 Payout ratios Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. So we need to form a view on if a company's dividend is sustainable, relative to its net profit after tax. In the last year, Tornos Holding paid out 36% of its profit as dividends. A medium payout ratio strikes a good balance between paying dividends, and keeping enough back to invest in the business. Plus, there is room to increase the payout ratio over time. Remember, you can always get a snapshot of Tornos Holding's latest financial position, by checking our visualisation of its financial health . Dividend Volatility From the perspective of an income investor who wants to earn dividends for many years, there is not much point buying a stock if its dividend is regularly cut or is not reliable. This company has been paying a dividend for less than 2 years, which we think is too soon to consider it a reliable dividend stock. During the past one-year period, the first annual payment was CHF0.15 in 2018, compared to CHF0.28 last year. This works out to be a compound annual growth rate (CAGR) of approximately 87% a year over that time. Story continues Tornos Holding has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle. Dividend Growth Potential The other half of the dividend investing equation is evaluating whether earnings per share (EPS) are growing. Growing EPS can help maintain or increase the purchasing power of the dividend over the long run. Strong earnings per share (EPS) growth might encourage our interest in the company despite fluctuating dividends, which is why it's great to see Tornos Holding has grown its earnings per share at 84% per annum over the past five years. Earnings per share have rocketed in recent times, and we like that the company is retaining more than half of its earnings to reinvest. However, always remember that very few companies can grow at double digit rates forever. We'd also point out that Tornos Holding issued a meaningful number of new shares in the past year. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective. Conclusion When we look at a dividend stock, we need to form a judgement on whether the dividend will grow, if the company is able to maintain it in a wide range of economic circumstances, and if the dividend payout is sustainable. First, we like that the company's dividend payments appear well covered, although the retained capital also needs to be effectively reinvested. Next, earnings growth has been good, but unfortunately the company has not been paying dividends as long as we'd like. Overall we think Tornos Holding scores well on our analysis. It's not quite perfect, but we'd definitely be keen to take a closer look. Are management backing themselves to deliver performance? Check their shareholdings in Tornos Holding in our latest insider ownership analysis. If you are a dividend investor, you might also want to look at our curated list of dividend stocks yielding above 3%. We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
How Financially Strong Is MAN SE (FRA:MAN)?
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Stocks with market capitalization between $2B and $10B, such as MAN SE (FRA:MAN) with a size of €8.3b, do not attract as much attention from the investing community as do the small-caps and large-caps. While they are less talked about as an investment category, mid-cap risk-adjusted returns have generally been better than more commonly focused stocks that fall into the small- or large-cap categories. MAN’s financial liquidity and debt position will be analysed in this article, to get an idea of whether the company can fund opportunities for strategic growth and maintain strength through economic downturns. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourselfinto MAN here.
View our latest analysis for MAN
MAN's debt levels surged from €3.1b to €4.2b over the last 12 months – this includes long-term debt. With this increase in debt, MAN's cash and short-term investments stands at €3.3b , ready to be used for running the business. Moreover, MAN has produced cash from operations of €544m in the last twelve months, leading to an operating cash to total debt ratio of 13%, indicating that MAN’s operating cash is less than its debt.
With current liabilities at €8.6b, it appears that the company may not be able to easily meet these obligations given the level of current assets of €7.3b, with a current ratio of 0.85x. The current ratio is calculated by dividing current assets by current liabilities.
MAN is a relatively highly levered company with a debt-to-equity of 75%. This is not unusual for mid-caps as debt tends to be a cheaper and faster source of funding for some businesses. We can test if MAN’s debt levels are sustainable by measuring interest payments against earnings of a company. Ideally, earnings before interest and tax (EBIT) should cover net interest by at least three times. For MAN, the ratio of 13.17x suggests that interest is comfortably covered, which means that debtors may be willing to loan the company more money, giving MAN ample headroom to grow its debt facilities.
Although MAN’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet debt obligations which means its debt is being efficiently utilised. Though its low liquidity raises concerns over whether current asset management practices are properly implemented for the mid-cap. I admit this is a fairly basic analysis for MAN's financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research MAN to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for MAN’s future growth? Take a look at ourfree research report of analyst consensusfor MAN’s outlook.
2. Historical Performance: What has MAN's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Sotheby's must face Russian billionaire's lawsuit over art fraud: U.S. judge
By Jonathan Stempel
NEW YORK (Reuters) - A federal judge in New York rejected Sotheby's bid to dismiss a $380 million lawsuit where Russian billionaire Dmitry Rybolovlev accused the auction house of helping his longtime art dealer's scheme to overcharge him on dozens of masterworks.
U.S. District Judge Jesse Furman said Sotheby's failed to establish that the case did not belong in his court because Rybolovlev was already litigating in Switzerland, where much of the key evidence and many witnesses were located, and that principles of international comity justified dismissal.
Furman found no showing that New York was "genuinely inconvenient" and Switzerland was "significantly preferable," saying the New York case had made more progress and Sotheby's might save money by defending itself in its home forum.
Sotheby's has called Rybolovlev's claims against it baseless. Lawyers for the auction house were not immediately available for comment. A lawyer for Rybolovlev had no immediate comment.
The case is part of a multi-year effort by Rybolovlev, 52, to recoup alleged losses he has blamed on the art dealer, Yves Bouvier, who has denied wrongdoing. Litigation has also ensued in France, Monaco and Singapore.
Rybolovlev, through his companies Accent Delight International Ltd and Xitrans Finance Ltd, accused Bouvier of overcharging him by more than $1 billion on 38 artworks, for which he paid in excess of $2 billion between 2003 and 2015.
According to the New York complaint, Sotheby's had a hand in 14 of the transactions, and had been "the willing auction house that knowingly and intentionally made the fraud possible" because it knew how much Bouvier was paying the sellers.
The complaint said the artworks included paintings by Amedeo Modigliani, Gustav Klimt and Leonardo da Vinci for which he paid a combined $429.3 million from 2011 to 2013.
Rybolovlev sold the da Vinci, "Salvator Mundi," for $450.3 million at Christie's in 2017, making it the most expensive painting ever sold.
Forbes magazine on Tuesday estimated Rybolovlev's fortune at $6.8 billion, mainly from his 2010 sale of Russian fertilizer producer Uralkali.
Sotheby's agreed last week to be acquired by French-Israeli telecommunications magnate Patrick Drahi for $3.7 billion.
The case is Accent Delight International Ltd et al v Sotheby's et al, U.S. District Court, Southern District of New York, No. 18-09011.
(Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker) |
Did You Manage To Avoid Treasure's (OB:TRE) 16% Share Price Drop?
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While it may not be enough for some shareholders, we think it is good to see theTreasure ASA(OB:TRE) share price up 11% in a single quarter. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 16% in the last three years, significantly under-performing the market.
See our latest analysis for Treasure
Given that Treasure didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
Balance sheet strength is crucual. It might be well worthwhile taking a look at ourfreereport on how its financial position has changed over time.
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Treasure's TSR for the last 3 years was -6.6%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted thetotalshareholder return.
It's nice to see that Treasure shareholders have gained 4.0% (in total) over the last year. That's including the dividend. What is absolutely clear is that is far preferable to the dismal 2.3% average annuallosssuffered over the last three years. It could well be that the business has turned around -- or else regained the confidence of investors. You could get a better understanding of Treasure's growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
But note:Treasure may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NO exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Gold drops as bets fade for big Fed rate cut fade; eyes on trade talks
By Karthika Suresh Namboothiri
(Reuters) - Gold prices dipped on Wednesday on signals the U.S. Federal Reserve would not make too steep a cut to interest rates next month, but still held ground above the key psychological $1,400 level.
Spot gold shed 0.8% to $1,411.21 per ounce as of 1:56 p.m. EDT (1756 GMT), having fallen more than 1% earlier in the session.
Gold is on track to snap a six-session streak of gains and also its biggest one day percentage fall in more than two weeks.
U.S. gold futures settled 0.2% lower to $1,415.40.
"In gold, people were looking for a reason to sell some just because over the past week and a half gold has gone up exponentially. It had that break down and then kept on running," said Michael Matousek, head trader at U.S. Global Investors.
"You're seeing people playing the volatility."
In the previous session, prices had hit a six-year peak of $1,438.63 primarily on the back of heightened expectations that the Fed, like many counterparts around the world, would cut rates in acknowledgment of tepid economic stimulus and weak data.
Fed Chairman Jerome Powell stressed the central bank's independence from U.S. President Donald Trump, who is pushing for rate cuts. St. Louis Fed President James Bullard, considered one of the most dovish U.S. central bankers, surprised some investors by saying a 50 basis point cut in rates "would be overdone."
Following the statements from the Fed officials, gold sapped gains and has dropped nearly 2.6%. Lower interest rates reduce the opportunity cost of holding non-yielding gold, prompting investors to sell some.
The comments by Powell and Bullard have assisted in "enabling the dollar to find some much-needed support and undermining buck-denominated precious metals," Fawad Razaqzada, market analyst with Forex.com, wrote in a note, adding that a rebound in equities on trade talk hopes between U.S. and China has further pressured gold.
Trump is expected to meet with Chinese leader Xi Jinping at the G20 summit in Japan, where he said there is a possibility a deal could be struck, omitting the need for imposing more tariffs on goods from China.
"As time goes on, there are more uncertainties and that's what is keeping gold prices above $1,400," said an analyst based in New York.
"Prices should hold and continue to trend higher, unless there is some resolution on (U.S.-China) trade issues."
Among other precious metals, silver fell 0.3% to $15.31 per ounce, while platinum rose 0.8% to $812.50. Spot palladium was 0.4% higher at $1,534.00 per ounce.
(Reporting by Karthika Suresh Namboothiri in Bengaluru; Editing by Nick Zieminski) |
Do You Like K2A Knaust & Andersson Fastigheter AB (publ) (STO:K2A B) At This P/E Ratio?
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Today, we'll introduce the concept of the P/E ratio for those who are learning about investing. We'll apply a basic P/E ratio analysis to K2A Knaust & Andersson Fastigheter AB (publ)'s (STO:K2A B), to help you decide if the stock is worth further research.K2A Knaust & Andersson Fastigheter has a P/E ratio of 1.4, based on the last twelve months. In other words, at today's prices, investors are paying SEK1.4 for every SEK1 in prior year profit.
Check out our latest analysis for K2A Knaust & Andersson Fastigheter
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for K2A Knaust & Andersson Fastigheter:
P/E of 1.4 = SEK85.4 ÷ SEK60.91 (Based on the year to March 2019.)
A higher P/E ratio implies that investors paya higher pricefor the earning power of the business. That isn't necessarily good or bad, but a high P/E implies relatively high expectations of what a company can achieve in the future.
P/E ratios primarily reflect market expectations around earnings growth rates. If earnings are growing quickly, then the 'E' in the equation will increase faster than it would otherwise. That means unless the share price increases, the P/E will reduce in a few years. So while a stock may look expensive based on past earnings, it could be cheap based on future earnings.
K2A Knaust & Andersson Fastigheter's earnings per share fell by 2.4% in the last twelve months. But it has grown its earnings per share by 17% per year over the last five years.
The P/E ratio indicates whether the market has higher or lower expectations of a company. If you look at the image below, you can see K2A Knaust & Andersson Fastigheter has a lower P/E than the average (7.4) in the real estate industry classification.
Its relatively low P/E ratio indicates that K2A Knaust & Andersson Fastigheter shareholders think it will struggle to do as well as other companies in its industry classification. While current expectations are low, the stock could be undervalued if the situation is better than the market assumes. If you consider the stock interesting, further research is recommended. For example, I often monitordirector buying and selling.
The 'Price' in P/E reflects the market capitalization of the company. That means it doesn't take debt or cash into account. In theory, a company can lower its future P/E ratio by using cash or debt to invest in growth.
Such spending might be good or bad, overall, but the key point here is that you need to look at debt to understand the P/E ratio in context.
K2A Knaust & Andersson Fastigheter's net debt is considerable, at 214% of its market cap. This is a relatively high level of debt, so the stock probably deserves a relatively low P/E ratio. Keep that in mind when comparing it to other companies.
K2A Knaust & Andersson Fastigheter's P/E is 1.4 which is below average (16.4) in the SE market. When you consider that the company has significant debt, and didn't grow EPS last year, it isn't surprising that the market has muted expectations.
When the market is wrong about a stock, it gives savvy investors an opportunity. If the reality for a company is not as bad as the P/E ratio indicates, then the share price should increase as the market realizes this. Although we don't have analyst forecasts, you might want to assessthis data-rich visualizationof earnings, revenue and cash flow.
You might be able to find a better buy than K2A Knaust & Andersson Fastigheter. If you want a selection of possible winners, check out thisfreelist of interesting companies that trade on a P/E below 20 (but have proven they can grow earnings).
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Huawei Blacklist Loopholes Were Made in the U.S.A.
(Bloomberg Opinion) -- American technology products aren’t necessarily American.
At least, that’s the conclusion some U.S. executives have come to.
That loophole could explain why Micron Technology Inc. and Intel Corp. have resumed shipping to Huawei Technologies Co. after the Trump administration blocked U.S. companies from supplying the Chinese firm and some peers. During an earnings conference call Tuesday, Micron CEO Sanjay Mehrotra said:
“To ensure compliance, Micron immediately suspended shipments to Huawei and began a review of Micron products sold to Huawei to determine whether they are subject to the imposed restrictions. Through this review, we determined that we could lawfully resume shipping a subset of current products because they are not subject to export administration regulations and entity list restrictions.”
He didn’t elaborate on that “subset,” and noted that there’s ongoing uncertainty. In at least some cases, the U.S. Department of Commerce, which administers the ban, has been consulted about what can and can’t be sold, the New York Times reported. Meanwhile, officials at the Commerce Department and the White House are frustrated that companies have resumed Huawei shipments, Bloomberg reported.
If one thing is clear about President Donald Trump’s May 15 Executive Order, it’s that the precise scope of the ban caused confusion throughout the global technology supply chain. Simple labels like “Made in the U.S.A.” aren’t so straightforward when you consider that a product’s conception, assembly and packaging can crisscross multiple borders. This reality complicates the president’s assault on foreign companies, and should serve as a warning that broad-stroke measures against Chinese firms can backfire on the U.S. At the same time, the very interconnected nature of manufacturing could wind up helping companies skirt restrictions.
Consider Micron. According to its annual report, “a significant portion of our facilities are located outside the United States, including Taiwan, Singapore, Japan, and China.”
That’s an understatement. Only 22% of its property, plants and equipment are in U.S. A third is in Taiwan, followed by 30% in Singapore. Less than 2% is in China. In other words, most of Micron’s product isn’t made in America. That might exempt a good portion of its product from Trump’s ban.
The Commerce Department last week added another five Chinese companies to its Entity List. As this lineup grows, so too does the tally of missed revenue opportunities for U.S. companies.
That makes the profits from finding clauses and exceptions to the ban even more enticing – because while executives hate uncertainty, they love loopholes. I can just imagine teams of lawyers throughout the U.S. poring over regulations and product lists searching for exploits in the same way hackers hunt for security vulnerabilities.
Over time, companies weighing the risks and returns may opt to go ahead and ship to China, reasoning that any possible punishment from the U.S. government will pale in comparison to the revenue potential. Fines could end up being just a tax on business, in the same way that banking and environmental regulations are often flouted because complying is more costly than the penalties.
In such cases, expect technology companies to realize that it’s a better deal to sell to China than not. And we all know that Trump loves a good deal.
To contact the author of this story: Tim Culpan at tculpan1@bloomberg.net
To contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.
For more articles like this, please visit us atbloomberg.com/opinion
©2019 Bloomberg L.P. |
Can Zodiac Energy Limited (NSE:ZODIAC) Maintain Its Strong Returns?
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While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. We'll use ROE to examine Zodiac Energy Limited (NSE:ZODIAC), by way of a worked example.
Our data showsZodiac Energy has a return on equity of 15%for the last year. One way to conceptualize this, is that for each ₹1 of shareholders' equity it has, the company made ₹0.15 in profit.
See our latest analysis for Zodiac Energy
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Zodiac Energy:
15% = ₹31m ÷ ₹205m (Based on the trailing twelve months to March 2019.)
Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. It is all earnings retained by the company, plus any capital paid in by shareholders. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
Return on Equity measures a company's profitability against the profit it has kept for the business (plus any capital injections). The 'return' is the profit over the last twelve months. That means that the higher the ROE, the more profitable the company is. So, as a general rule,a high ROE is a good thing. Clearly, then, one can use ROE to compare different companies.
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. As you can see in the graphic below, Zodiac Energy has a higher ROE than the average (8.4%) in the Electrical industry.
That's what I like to see. In my book, a high ROE almost always warrants a closer look. One data point to check is ifinsiders have bought shares recently.
Virtually all companies need money to invest in the business, to grow profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the use of debt will improve the returns, but will not change the equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
While Zodiac Energy does have some debt, with debt to equity of just 0.20, we wouldn't say debt is excessive. Its ROE isn't particularly impressive, but the debt levels are quite modest, so the business probably has some real potential. Judicious use of debt to improve returns can certainly be a good thing, although it does elevate risk slightly and reduce future optionality.
Return on equity is one way we can compare the business quality of different companies. In my book the highest quality companies have high return on equity, despite low debt. If two companies have the same ROE, then I would generally prefer the one with less debt.
Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. It is important to consider other factors, such as future profit growth -- and how much investment is required going forward. You can see how the company has grow in the past by looking at this FREEdetailed graphof past earnings, revenue and cash flow.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Can Zodiac Energy Limited (NSE:ZODIAC) Maintain Its Strong Returns?
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While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. To keep the lesson grounded in practicality, we'll use ROE to better understand Zodiac Energy Limited (NSE:ZODIAC).
Over the last twelve monthsZodiac Energy has recorded a ROE of 15%. Another way to think of that is that for every ₹1 worth of equity in the company, it was able to earn ₹0.15.
View our latest analysis for Zodiac Energy
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Zodiac Energy:
15% = ₹31m ÷ ₹205m (Based on the trailing twelve months to March 2019.)
Most readers would understand what net profit is, but it’s worth explaining the concept of shareholders’ equity. It is all the money paid into the company from shareholders, plus any earnings retained. The easiest way to calculate shareholders' equity is to subtract the company's total liabilities from the total assets.
Return on Equity measures a company's profitability against the profit it has kept for the business (plus any capital injections). The 'return' is the amount earned after tax over the last twelve months. That means that the higher the ROE, the more profitable the company is. So, all else being equal,a high ROE is better than a low one. That means ROE can be used to compare two businesses.
By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. Pleasingly, Zodiac Energy has a superior ROE than the average (8.4%) company in the Electrical industry.
That's what I like to see. I usually take a closer look when a company has a better ROE than industry peers. For example,I often check if insiders have been buying shares.
Virtually all companies need money to invest in the business, to grow profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the use of debt will improve the returns, but will not change the equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
While Zodiac Energy does have some debt, with debt to equity of just 0.20, we wouldn't say debt is excessive. I'm not impressed with its ROE, but the debt levels are not too high, indicating the business has decent prospects. Conservative use of debt to boost returns is usually a good move for shareholders, though it does leave the company more exposed to interest rate rises.
Return on equity is useful for comparing the quality of different businesses. Companies that can achieve high returns on equity without too much debt are generally of good quality. If two companies have the same ROE, then I would generally prefer the one with less debt.
Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. You can see how the company has grow in the past by looking at this FREEdetailed graphof past earnings, revenue and cash flow.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
What Should Investors Know About Tong Ren Tang Technologies Co. Ltd.'s (HKG:1666) Future?
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Looking at Tong Ren Tang Technologies Co. Ltd.'s (HKG:1666) earnings update in December 2018, it seems that analyst expectations are fairly bearish, with earnings expected to grow by 6.2% in the upcoming year against the higher past 5-year average growth rate of 11%. Presently, with latest-twelve-month earnings at CN¥678m, we should see this growing to CN¥720m by 2020. Below is a brief commentary around Tong Ren Tang Technologies's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you canresearch its fundamentals here.
Check out our latest analysis for Tong Ren Tang Technologies
The view from 2 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 7.8% based on the most recent earnings level of CN¥678m to the final forecast of CN¥873m by 2022. This leads to an EPS of CN¥0.68 in the final year of projections relative to the current EPS of CN¥0.53. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 13% to 13% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Tong Ren Tang Technologies, I've put together three essential aspects you should look at:
1. Financial Health: Does it have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Valuation: What is Tong Ren Tang Technologies worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether Tong Ren Tang Technologies is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of Tong Ren Tang Technologies? Exploreour interactive list of stocks with large growth potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
What Do Analysts Think About Tong Ren Tang Technologies Co. Ltd.'s (HKG:1666) Earnings Trend?
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Tong Ren Tang Technologies Co. Ltd.'s (HKG:1666) latest earnings update in April 2019 signalled that the business experienced a small tailwind, eventuating to a single-digit earnings growth of 1.7%. Below, I've laid out key growth figures on how market analysts predict Tong Ren Tang Technologies's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for Tong Ren Tang Technologies
Market analysts' prospects for next year seems rather muted, with earnings climbing by a single digit 6.2%. The growth outlook in the following year seems much more optimistic with rates reaching double digit 14% compared to today’s earnings, and finally hitting CN¥873m by 2022.
Although it’s useful to be aware of the rate of growth each year relative to today’s level, it may be more beneficial to estimate the rate at which the business is moving on average every year. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Tong Ren Tang Technologies's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 7.8%. This means that, we can expect Tong Ren Tang Technologies will grow its earnings by 7.8% every year for the next couple of years.
For Tong Ren Tang Technologies, there are three key factors you should further examine:
1. Financial Health: Does it have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Valuation: What is 1666 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether 1666 is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1666? Exploreour interactive list of stocks with large growth potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
How Much Did Café de Coral Holdings Limited's (HKG:341) CEO Pocket Last Year?
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In 2016 Peter Lo was appointed CEO of Café de Coral Holdings Limited (HKG:341). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Café de Coral Holdings
At the time of writing our data says that Café de Coral Holdings Limited has a market cap of HK$14b, and is paying total annual CEO compensation of HK$11m. (This is based on the year to March 2018). While we always look at total compensation first, we note that the salary component is less, at HK$4.3m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of HK$7.8b to HK$25b. The median total CEO compensation was HK$3.9m.
Thus we can conclude that Peter Lo receives more in total compensation than the median of a group of companies in the same market, and of similar size to Café de Coral Holdings Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Café de Coral Holdings, below.
Café de Coral Holdings Limited saw earnings per share stay pretty flat over the last three years, albeit with a slight decrease, according to the line of best fit. In the last year, its revenue changed by just 0.8%.
Unfortunately there is a complete lack of earnings per share improvement, over three years. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to checkthis free visual report onanalyst forecastsfor future earnings.
Café de Coral Holdings Limited has served shareholders reasonably well, with a total return of 12% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We compared total CEO remuneration at Café de Coral Holdings Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
And while shareholder returns have been respectable, they have hardly been superb. So we doubt many shareholders would consider the CEO pay to be particularly modest! Shareholders may want tocheck for free if Café de Coral Holdings insiders are buying or selling shares.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Investors In Sinofert Holdings Limited (HKG:297) Should Consider This, First
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Dividend paying stocks like Sinofert Holdings Limited (HKG:297) tend to be popular with investors, and for good reason - some research suggests a significant amount of all stock market returns come from reinvested dividends. Yet sometimes, investors buy a stock for its dividend and lose money because the share price falls by more than they earned in dividend payments.
While Sinofert Holdings's 2.6% dividend yield is not the highest, we think its lengthy payment history is quite interesting. Some simple analysis can offer a lot of insights when buying a company for its dividend, and we'll go through this below.
Click the interactive chart for our full dividend analysis
Companies (usually) pay dividends out of their earnings. If a company is paying more than it earns, the dividend might have to be cut. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. In the last year, Sinofert Holdings paid out 30% of its profit as dividends. This is medium payout level that leaves enough capital in the business to fund opportunities that might arise, while also rewarding shareholders. One of the risks is that management reinvests the retained capital poorly instead of paying a higher dividend.
In addition to comparing dividends against profits, we should inspect whether the company generated enough cash to pay its dividend. Last year, Sinofert Holdings paid a dividend while reporting negative free cash flow. While there may be an explanation, we think this behaviour is generally not sustainable. It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
As Sinofert Holdings has a meaningful amount of debt, we need to check its balance sheet to see if the company might have debt risks. A rough way to check this is with these two simple ratios: a) net debt divided by EBITDA (earnings before interest, tax, depreciation and amortisation), and b) net interest cover. Net debt to EBITDA is a measure of a company's total debt. Net interest cover measures the ability to meet interest payments on debt. Essentially we check that a) a company does not have too much debt, and b) that it can afford to pay the interest. With net debt of 2.82 times its EBITDA, Sinofert Holdings's debt burden is within a normal range for most listed companies.
We calculated its interest cover by measuring its earnings before interest and tax (EBIT), and dividing this by the company's net interest expense. Sinofert Holdings has interest cover of more than 12 times its interest expense, which we think is quite strong.
We update our data on Sinofert Holdings every 24 hours, so you can always getour latest analysis of its financial health, here.
One of the major risks of relying on dividend income, is the potential for a company to struggle financially and cut its dividend. Not only is your income cut, but the value of your investment declines as well - nasty. Sinofert Holdings has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of payments. Its dividend payments have fallen by 20% or more on at least one occasion over the past ten years. During the past ten-year period, the first annual payment was CN¥0.041 in 2009, compared to CN¥0.02 last year. The dividend has shrunk at around 7.1% a year during that period. Sinofert Holdings's dividend hasn't shrunk linearly at 7.1% per annum, but the CAGR is a useful estimate of the historical rate of change.
When a company's per-share dividend falls we question if this reflects poorly on either the business or management. Either way, we find it hard to get excited about a company with a declining dividend.
Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. It's not great to see that Sinofert Holdings's have fallen at approximately 33% over the past five years. If earnings continue to decline, the dividend may come under pressure. Every investor should make an assessment of whether the company is taking steps to stabilise the situation.
When we look at a dividend stock, we need to form a judgement on whether the dividend will grow, if the company is able to maintain it in a wide range of economic circumstances, and if the dividend payout is sustainable. Firstly, the company has a conservative payout ratio, although we'd note that its cashflow in the past year was substantially lower than its reported profit. Earnings per share have been falling, and the company has cut its dividend at least once in the past. From a dividend perspective, this is a cause for concern. In summary, Sinofert Holdings has a number of shortcomings that we'd find it hard to get past. Things could change, but we think there are a number of better ideas out there.
Are management backing themselves to deliver performance? Check their shareholdings in Sinofert Holdings inour latest insider ownership analysis.
We have also put together alist of global stocks with a market capitalisation above $1bn and yielding more 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Is Sinofert Holdings Limited's (HKG:297) CEO Pay Justified?
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Hengde Qin became the CEO of Sinofert Holdings Limited (HKG:297) in 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Sinofert Holdings
At the time of writing our data says that Sinofert Holdings Limited has a market cap of HK$6.0b, and is paying total annual CEO compensation of CN¥6.1m. (This figure is for the year to December 2018). Notably, that's an increase of 53% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at CN¥1.8m. We looked at a group of companies with market capitalizations from CN¥2.8b to CN¥11b, and the median CEO total compensation was CN¥3.1m.
It would therefore appear that Sinofert Holdings Limited pays Hengde Qin more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Sinofert Holdings has changed from year to year.
Earnings per share at Sinofert Holdings Limited are much the same as they were three years ago, albeit with a positive trend. Its revenue is up 30% over last year.
It's great to see that revenue growth is strong. With that in mind, the modestly improving EPS seems positive. So while I'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! It could be important to checkthis free visual depiction ofwhat analysts expectfor the future.
With a three year total loss of 8.2%, Sinofert Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared the total CEO remuneration paid by Sinofert Holdings Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. This contrasts with the growth in CEO remuneration, in the last year. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. Shareholders may want tocheck for free if Sinofert Holdings insiders are buying or selling shares.
Arguably, business quality is much more important than CEO compensation levels. So check out thisfreelist of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
Is GEL S.p.A.'s (BIT:GEL) Balance Sheet A Threat To Its Future?
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GEL S.p.A. (BIT:GEL) is a small-cap stock with a market capitalization of €8.1m. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Evaluating financial health as part of your investment thesis is crucial, as mismanagement of capital can lead to bankruptcies, which occur at a higher rate for small-caps. The following basic checks can help you get a picture of the company's balance sheet strength. However, this is not a comprehensive overview, so I’d encourage you todig deeper yourself into GEL here.
Over the past year, GEL has reduced its debt from €7.4m to €5.2m , which includes long-term debt. With this reduction in debt, the current cash and short-term investment levels stands at €1.9m to keep the business going. Moving on, operating cash flow was negative over the last twelve months. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can assess some of GEL’soperating efficiency ratios such as ROA here.
At the current liabilities level of €7.5m, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.61x. The current ratio is calculated by dividing current assets by current liabilities. Generally, for Machinery companies, this is a reasonable ratio as there's enough of a cash buffer without holding too much capital in low return investments.
With debt reaching 64% of equity, GEL may be thought of as relatively highly levered. This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. We can check to see whether GEL is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In GEL's, case, the ratio of 2.39x suggests that interest is not strongly covered, which means that lenders may be more reluctant to lend out more funding as GEL’s low interest coverage already puts the company at higher risk of default.
GEL’s high cash coverage means that, although its debt levels are high, the company is able to utilise its borrowings efficiently in order to generate cash flow. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. I admit this is a fairly basic analysis for GEL's financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research GEL to get a better picture of the small-cap by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for GEL’s future growth? Take a look at ourfree research report of analyst consensusfor GEL’s outlook.
2. Valuation: What is GEL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether GEL is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading. |
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