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U.S. wants 'reasonable' trade deal with China: U.S. Commerce Secretary
WASHINGTON (Reuters) - The United States "is not looking for victory" with China over trade but wants "a sensible deal that addresses the legitimate issues that we have," U.S. Commerce Secretary Wilbur Ross said on Wednesday.
"There are some inappropriate activities underway by the Chinese. They must cease. If they do, if we make some redressing of the trade imbalance, then that's a reasonable deal for both parties," Ross told Fox Business Network in an interview.
(Reporting by Susan Heavey; Editing by Chizu Nomiyama) |
Xi-Trump talks at G20 unlikely to end trade war, warn Bank of America Merrill Lynch, Barings
Two major international financial institutions have joined a growing chorus of voices urging investors not to be too optimistic about a significant deal between the US and China being reached this weekend.
Analysts at Bank of America Merrill Lynch and Barings, a global asset manager, said it is unlikely trade tensions between the world's two largest economies will be fully resolved at a meeting between the countries' leaders at the Group of 20 summit.
As the trade war uncertainty and its ripple effects on the global economy prevail, Barings is betting against emerging markets and export-reliant Asian countries like South Korea, Taiwan and Singapore, where reports show exports have slumped.
Key decisions to watch for, analysts said, would be whether the US will back down on its threats for the next round of tariffs on an additional US$300 billion of Chinese imports, and whether another truce can be reached.
Chinese President Xi Jinping and his US counterpart Donald Trump are expected to negotiate terms to relieve their trade tensions on the sidelines of the G20 summit in Osaka on June 28 and 29. On the table is the proposed US$300 billion of tariffs on Chinese imports consisting largely of consumer and electronic goods.
"If [the talks] turns sour, then there is a possibility that we could see 5 to 10 per cent tariffs being put on the remaining US$300 billion of exports from China," said Khiem Do, head of Greater China investments at Barings.
"And in the best case, I don't know what the best case is. It's difficult for me to think of a best case at the moment."
Economists at Merrill Lynch, the investment arm of the Bank of America, have likewise set their expectations low for the Xi-Trump meeting at the summit, predicting that negotiations will probably "end in another ceasefire, with both sides delaying additional tariffs".
"The strength of US equity markets and the Fed's dovish turn have greatly reduced the pressure on the US to compromise. Moreover, the trade war has become intertwined with many other issues such as tech and geopolitics", they wrote in a BofA Merrill Lynch global research report on Tuesday.
Beijing and Washington have been locked in a trade war for over a year, having slapped tariffs of up to 25 per cent on imports of each other's products. The last time the two leaders met was at a G20 meeting last December in Buenos Aires, which resulted in a 90-day truce.
Analysts noted that markets could react positively to any sign of a de-escalation of the trade war in the short term. Their outlook in the medium- to long-term, however, is gloomy.
Merrill Lynch also said it expects "further slowing in both economies even without major escalation".
"Trade war uncertainty is already eating away at business confidence and the equity market is only being held up by the promise of very aggressive policy easing in both the US and China," it wrote.
As the global economic slowdown continues, Barings is urging caution around emerging markets and Asian countries whose exports have taken a hit.
"We downgraded everything to do with emerging market [equities]," said Do.
These equities "tend to only do well when the world is booming. And the world can only boom if we have two big economies booming", he added.
Barings recommends consumer staples and energy equities, secure high-yield bonds and gold, which Do said he is "personally very bullish on". For currencies, Barings recommends the Japanese yen which Do said is a "hedge against trouble."
This article originally appeared in theSouth China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore theSCMP appor visit the SCMP'sFacebookandTwitterpages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved. |
Xi-Trump G20 meeting in Japan boosts hopes of a trade war truce but raises anxiety over global economy
This is the final of four stories examining important issues ahead of the meeting between Chinese President Xi Jinping and US President Donald Trump at the G20 leaders summit on June 28-29 in Osaka, Japan.
The most likely outcome from the meeting between Chinese President Xi Jinping and US counterpart Donald Trump at the G20 summit in Osaka, Japan, this weekend is another truce on new tariffs to buy time for Beijing and Washington to negotiate a final deal to end their trade war, analysts say.
That's because the obstacles to an immediate deal are too high, while an escalation is in neither side's interest, the analysts said.
Like the Xi-Trump summit in Buenos Aires in December, the meeting between the Chinese and US leaders and their top economic and security aides will take place on the sidelines of the G20 leaders' meeting.
The high-stakes gathering, which is expected to take place on Saturday, is the real focus of global attention, as its outcome will have greater implications for global politics and the global economy than the multilateral conference itself, which often produces little action other than a joint statement.
China's President Xi Jinping and US President Donald Trump are expected to meet on Saturday in Osaka, Japan. Photo: AFP alt=China's President Xi Jinping and US President Donald Trump are expected to meet on Saturday in Osaka, Japan. Photo: AFP
Trump is expected to agree not to impose new tariffs of up to 25 per cent on US$300 billion worth of Chinese products to ease tensions and allow for further talks to end the conflict.
That is exactly what happened in Argentina at the end of last year, when Xi and Trump agreed to a three-month tariff truce, during which time the US held off on its previous decision to raise tariffs from 10 per cent to 25 per cent on US$200 billion worth of Chinese products.
In a less likely scenario, Xi and Trump could agree on a deal to officially end the year-long trade war between the world's two largest economies, with the US lifting some of the existing tariffs in exchange for China's vow to accept Washington's demands for a series of checks to ensure that the agreement is fully implemented.
However, it remains a long shot that the two sides can resolve all their remaining differences in the few days before the leaders meet, analysts said.
Craig Allen, president of the US-China Business Council, said both leaders want to end the trade war but it might be "overly optimistic" to expect a deal in Osaka.
"There is probably not the time necessary to reach a full agreement, but rather to talk about next steps and how, when, where and why to get back to the negotiation table," Allen said.
"The other thing we are hopeful of is that there will be no new tariffs. The tariffs that already exist have done a lot of harm to many companies, workers and farmers."
Trump, a Republican, decided to break off negotiations in early May because a deal would be a "political liability" for him if right-wing hardliners and Democratic opponents saw its terms as inadequate.
In China, the terms negotiated by Vice-Premier Liu He, Xi's top economic aide, were "politically unsaleable," with powerful forces in Beijing suggesting US demands were excessive, Kroeber added.
At the same time, the fact that Xi and Trump have agreed to meet in Japan " after the war of words that followed the collapse of talks in early May " is a strong sign that both sides are trying to avoid further escalation of the conflict.
While Trump is not willing to agree a "weak" deal with Xi that would give his political foes an excuse to attack him, he does not intend to roil financial markets or dampen consumer and investor confidence ahead of his 2020 re-election campaign by falling out with China completely.
"He is under severe pressure from industry and from [the US] Congress to work things out and finally to remove the tariffs that have been imposed," said Joel Trachtman, a professor of international law at Tufts University who specialises in globalisation and trade. "There's real pain."
China's Vice-Premier Liu He with US trade representative Robert Lighthizer and U S Treasury secretary during the last round of talks in Washington in May. Photo: Bloomberg alt=China's Vice-Premier Liu He with US trade representative Robert Lighthizer and U S Treasury secretary during the last round of talks in Washington in May. Photo: Bloomberg
Over the past week, representatives from hundreds of US companies sat before an Office of the United States Trade Representative panel to request their products be exempt from potential new tariffs on US$300 billion of Chinese imports.
In total, the trade agency received almost 3,000 written submissions concerning the tariff proposal, mostly from consumer goods and electronics firms.
Such tariffs would hit low-income American families particularly hard, according to a study by the National Retailers Federation, which estimated an annual cost toAmerican consumersof US$18 billion a year.
The potential cost of the US trade war with China comes into even starker relief given recent forecasts that, if the US implements more tariffs, there is a credible risk of recession in the US towards the end of 2020, just around the same time the 2020 US presidential election vote will take place.
Xi, meanwhile, is not going to sign a deal that could be viewed as unfair to China as he understands that a full-blown confrontation with the US could further hurt domestic growth, impede China's development, and even bring with it risks to Chinese social and political stability.
"Cooperation is in the interests of both China and US, while confrontation hurts both," Xi said, according to the state-owned Xinhua news service in a telephone conversation with Trump on June 11.
Vice-Minister of Commerce Wang Shouwen,a top deputy in China's negotiation team, said on Monday that Beijing is ready to make a deal if the US shows respect and makes concessions, although he did not reveal China's demands.
Vice-Minister of Commerce Wang Shouwen. Photo: Simon Song alt=Vice-Minister of Commerce Wang Shouwen. Photo: Simon Song
"We should meet each other halfway, which means that both sides will need to compromise and make concessions, and not just one side," Wang said.
Trade negotiators " led by US trade representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin on the US side and Liu on the Chinese side " resumed discussions on Monday via telephone, Xinhua confirmed on Tuesday morning.
A Chinese government official, who declined to be named, summarised Beijing's stance as "to talk is better than not to talk, and to have a deal is better than no deal".
A separate source said Beijing's pursuit of a less confrontational relationship with the US is one factor underlying the decision to take a step back on the passing of the controversial and high-profile extradition bill in Hong Kong.
Beijing is also seeking to add leverage from other fronts before the meeting after Xi made a state visit to North Korea last week, showing Beijing's influence over Pyongyang and raising the prospects that he could help make progress on a deal to denuclearise the Korean peninsula, a key foreign policy goal for Trump.
In 2017, Trump also promised that if Xi helped him make progress with North Korea, China would get a better trade deal.
The two leaders are also expected to touch on other important bilateral topics, including Washington's ban on US companies supplying Chinese telecommunications giant Huawei, growing US support for Taiwan and recent incidents in the South China Sea.
A scaling back of tariffs as a gesture of good faith in exchange for commitments from China is one possibility, said a source close to the talks, who confirmed that the US government's treatment of Huawei was also up for discussion.
"Whether or not all of the US national security apparatus is happy or not, the president has signalled that [Huawei is] on the table," the source said.
"If the US starts to play with tariffs, that should, I would think, make it easier for President Xi to show a little more flexibility on the issues where he couldn't show flexibility before."
Trump may propose easing restrictions on Huawei in a way "where [he still] protects national security, but does not go all the way in terms of knocking them out as an economic competitor", added the source, who also confirmed Trump has a track record of resisting calls from those around him for even tougher action against China.
"I've heard him say, 'I just want fair competition.' And a lot of the things that his advisers may push him to do, he ultimately pushes back on because he says, 'Look, as long as we're competing on a level playing field, let's compete with each other.'"
This article originally appeared in theSouth China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore theSCMP appor visit the SCMP'sFacebookandTwitterpages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved. |
US wraps up hearings on plan to hit all Chinese goods with tariffs as trade war nears first anniversary
US government hearings on proposed new tariffs on around US$300 billion of Chinese goods came to a close on Tuesday, after seven days of testimony by hundreds of companies and industry associations seeking shelter from the costs of the countries' escalating trade war.
The hearings wrapped up in Washington just days before US President Donald Trump and his Chinese counterpart Xi Jinping are to meet in Japan on Saturday in a bid to get trade talks back on track after a six-week impasse.
With the trade conflict set to pass the one-year mark on July 6, Trump has threatened to slap 25 per cent duties on the remaining untaxed Chinese goods, should the discussions go poorly.
Over 300 representatives from industries that would be hit by such tariff action have testified before an inter-agency committee over the past week, while close to 3,000 additional written comments have been filed to the office of the US Trade Representative (USTR) from companies including Apple, Fitbit and Keurig Dr Pepper.
They said, however, that the use of tariffs is costing American jobs, raising prices for consumers and, in some cases, posing a national security risk.
The committee will accept written responses and rebuttals from companies until July 2, then deliver its recommendations on possible exemptions to the USTR.
The trade war has ruptured global supply chains, plunged US soybean futures to their lowest point in a decade and led to higher costs for US importers.
"China doesn't pay the tariffs," Nate Herman, director of government relations at the Travel Goods Association (TGA), said on Tuesday during his testimony. "We do."
TGA estimates that the third tranche of tariffs on US$200 billion of Chinese imports cost the travel goods industry an additional US$288 million over seven months.
One member company had exhausted its line of credit to pay those tariffs upon the goods' entry into the US, Herman said in an interview on the sidelines of the hearing.
A fourth and final tranche, which would cover the remaining untaxed items in the travel goods sector, would "only put the remaining nails in the coffin for our industry", Herman told the panel.
In a recent letter to the USTR opposing the tariff action, Apple highlighted its pledge to invest US$350 billion in the US economy over five years and said tariff action on the company's products "would result in a reduction of Apple's US economic contribution".
Wearable technology maker Fitbit, whose fitness trackers are assembled in China, argued that further tariffs posed not just a financial burden to Americans but also a national security risk to the US.*
In its written testimony, the company said putting tariffs on fitness trackers and smartwatches would give Chinese competitors such as Huawei and Xiaomi a competitive edge in the US market.
That change would place "sensitive US health, location and financial data within the Chinese government's reach", said the company, whose stock trades on the New York Stock Exchange.
Testifying on Tuesday, Fitbit executive vice-president Andy Missan said that absorbing the costs of more duties in the short term was out of the question.
"It would take many years and millions of dollars to replicate what we've found in China, which has developed over 40 years these very high precision, small form factor processes that, frankly, coupled with the labour costs, just don't exist elsewhere in the world," Missan said.
US President Donald Trump talks to Apple CEO Tim Cook during a meeting of the American Workforce Policy Advisory Board in May. In a letter to the US trade representative's office, the technology company said new US tariff action "would result in a reduction of Apple's US economic contribution". Photo: AP alt=US President Donald Trump talks to Apple CEO Tim Cook during a meeting of the American Workforce Policy Advisory Board in May. In a letter to the US trade representative's office, the technology company said new US tariff action "would result in a reduction of Apple's US economic contribution". Photo: AP
The question of tariffs will be looming large this weekend when Trump and Xi meet in Japan on the sidelines of the G20 summit, with the US administration having threatened repeatedly that it would go ahead with the fourth tranche of duties should the talks not yield progress.
Trump would be happy with any result of the upcoming parley with Xi, including a decision to escalate tariffs, a senior US administration official said on Monday.
"The US economy is stronger than it's been in many, many decades, so he's quite comfortable with his vision going into this meeting," the official said. "The president is quite comfortable with any outcome."
Wearable technology maker Fitbit, whose fitness trackers are assembled in China, argued that further tariffs posed a national security risk to the US. Photo: Handout alt=Wearable technology maker Fitbit, whose fitness trackers are assembled in China, argued that further tariffs posed a national security risk to the US. Photo: Handout
In the event that Trump does decide to push ahead with further tariffs, a source close to the talks said the duties would likely be staggered so as not to "inflame public opinion".
"I don't think it'll go ahead at 25 per cent on 300 billion," the person said on condition of anonymity. "There's a lot of room there to escalate. You can do another 50 billion at 10 per cent, for example."
Speaking on the sidelines of Tuesday's hearing, Herman of the Travel Goods Association said he had "high hopes but not high expectations" that upcoming presidential discussions would lead to a stalling of additional tariffs and a relaxation of existing duties.
This article originally appeared in theSouth China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore theSCMP appor visit the SCMP'sFacebookandTwitterpages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved. |
Mika Brzezinski on Trump as a 'Morning Joe' Guest to Being His Target: "It has Gotten Scary"
“Through Her Eyes” is a weekly show hosted by human rights activist Zainab Salbi that explores contemporary news issues from a female perspective. You can watch a full episode of “Through Her Eyes” every Tuesday at 8 p.m. ET on Roku, or at the bottom of this article. “Morning Joe” co-host Mika Brzezinski says in a new interview that her conflict with President Trump has made her worried about her security, family and privacy. "It has gotten scary,” she told the Yahoo News show “Through Her Eyes,” expressing concern that “anything goes” with Trump. “And we've made changes in our life to deal with the fact that it has gotten scary,” she said of her husband and co-host, Joe Scarborough. “There have been times where he sent the National Enquirer after us,” she further claimed. “Calling my daughters, calling people who have worked for me over the years, personal friends.” In the summer of 2017, Brzezinski and Scarborough published an op-ed accusing the White House of threatening them with a hit piece in the National Enquirer, a supermarket tabloid that had a cozy relationship with Trump. Both the National Enquirer and Trump denied the allegation. Watched low rated @Morning_Joe for first time in long time. FAKE NEWS. He called me to stop a National Enquirer article. I said no! Bad show — Donald J. Trump (@realDonaldTrump) June 30, 2017 Brzezinski, who is promoting her new book "Earn It! Know Your Value and Grow Your Career, in Your 20s and Beyond" , said the “Morning Joe” hosts and Trump once enjoyed an amicable relationship. She likened Trump to a “crazy uncle.” “We did things together,” she recalled. “He gave money to my philanthropic events that I would take part in.” Trump made regular appearances on the show during the early months of his campaign. “A lot of people misunderstood the relationship,” Brzezinski said. “We were very critical of Donald Trump during the campaign. When he said racist things, we called him out on it. We even went and assailed him in private and said, ‘You've got to stop this. It's disgusting. It's wrong, and it's not what we know.’" Story continues She said Trump was dismissive of their concerns. “He said, ‘Well, it works,’ or he'd say, ‘OK, OK, I won't do it. But, you know, it works.’” “And we're just like, ‘You know what, we can't support this.’" Brzezinski noted that she “knew things had changed” between the MSNBC hosts and Trump in June 2017, when he sent a series of tweets calling her “low I.Q. Crazy Mika” and claiming she had been “bleeding badly from a face-lift” during a recent encounter around New Year’s Eve. But the discourse between the hosts and Trump had been deteriorating in the public eye for some time before that. She recalled an episode in December 2015, when Trump phoned into “Morning Joe” and attempted to “filibuster” while discussing his recently proposed Muslim ban , resulting in Scarborough cutting Trump off midsentence. “Joe just hung up on him on TV,” she said. “And that's never happened to him before. So he came back after the break and behaved.” “You know, he definitely was obsessed with the show, with being on the show,” Brzezinski added. “Because being on ‘Morning Joe’ has something to do with being accepted in clubs that I think Donald didn't feel accepted in. Polite society. So it was important to him.” Days after Scarborough interrupted Trump on air, he was back on “Morning Joe” again, this time discussing the Republican candidate’s public embrace of Russian President Vladimir Putin’s praise. “What he showed was a very weak, small, more and more overtly racist individual who is obsessed with dictators and especially, for some reason, Vladimir Putin,” Brzezinski said, noting that she and Scarborough didn’t hide their dismay on air. "You can see our faces fall in real time, the relationship turning.” Brzezinski further said Trump is destroying “the value of truth.” “This is something we've never seen before in the history of America,” she said. “There's Republicans and Democrats — and then there's Trump, which is a whole different ball game. Someone not following the law. Someone probably taking part in impeachable offenses by the day.” She said she is hoping to stay above the fray as the 2020 presidential race heats up. “The only way we can fight back as the media being assaulted by this president on a daily basis is to be the best we can, to stick to the facts,” she said. “You know, there were days that I said things that were shrill. I said things that were — I used inappropriate language. Those are days I lose.” “If we get our facts slightly wrong, if we overmodulate our language, if we become the story, those are the days we lose.” |
Swiss ban planemaker Pilatus from operating in Saudi Arabia, UAE
ZURICH (Reuters) - Switzerland has banned planemaker Pilatus from operating in Saudi Arabia and the United Arab Emirates (UAE), saying on Wednesday the company had breached Swiss rules on giving logistical support to foreign armed forces now engaged in a war in Yemen.
The Swiss foreign ministry said it had gathered "sufficient evidence" that Pilatus failed to declare activities backing foreign militaries, as required by Swiss law, and added it has reported the shortcomings to the nation's attorney general for further investigation.
The Swiss government has been investigating Pilatus for months. In 2017 the company signed a contract with Saudi Arabia to support a fleet of PC-21 turboprop planes operated by the Royal Saudi Air Force, according to the Stans-based firm's annual report.
The Western-backed Sunni Muslim coalition led by Saudi Arabia and the UAE intervened in Yemen in 2015, helping plunge the Middle Eastern country into a humanitarian crisis.
"Support services supplied by Pilatus Aircraft to the armed forces of Saudi Arabia and the United Arab Emirates... are incompatible with the federal government's foreign policy objectives," the Federal Department of Foreign Affairs (FDFA) said in a statement. "The FDFA has therefore called for these services to be discontinued."
Privately held Pilatus now has 90 days to pull out of Saudi Arabia and the United Arab Emirates, the FDFA said, adding the company could still supply armed forces in Qatar and Jordan.
"Pilatus Aircraft Ltd will review the Federal Department of Foreign Affairs' decision and provide a response in due course," the company said.
(Reporting by John Miller, editing by John Revill) |
What Does Profile Systems & Software A.E.'s (ATH:PROF) Share Price Indicate?
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! Profile Systems & Software A.E. ( ATH:PROF ), which is in the software business, and is based in Greece, saw a significant share price rise of over 20% in the past couple of months on the ATSE. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Profile Systems & Software A.E’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Profile Systems & Software A.E What's the opportunity in Profile Systems & Software A.E? The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 31.99x is currently trading in-line with its industry peers’ ratio, which means if you buy Profile Systems & Software A.E today, you’d be paying a relatively fair price for it. In addition to this, it seems like Profile Systems & Software A.E’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta. What kind of growth will Profile Systems & Software A.E generate? ATSE:PROF Past and Future Earnings, June 26th 2019 Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double over the next couple of years, the future seems bright for Profile Systems & Software A.E. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation. Story continues What this means for you: Are you a shareholder? PROF’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at PROF? Will you have enough confidence to invest in the company should the price drop below its fair value? Are you a potential investor? If you’ve been keeping an eye on PROF, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for PROF, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, 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 Profile Systems & Software A.E. You can find everything you need to know about Profile Systems & Software A.E in the latest infographic research report . If you are no longer interested in Profile Systems & Software A.E, you can use our free platform to see my list of over 50 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 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. |
Papua New Guinea treasurer calls for more benefits from LNG, mining projects
MELBOURNE, June 26 (Reuters) - Papua New Guinea's new treasurer on Wednesday put Total SA, Exxon Mobil Corp , Newcrest Mining and their partners on notice that the country wants to extract more benefits from their gas and mining projects.
Treasurer Sam Basil said the country also needs better forecasts from Exxon and Total on the expected income flow from a $13 billion plan to double the country's liquefied natural gas (LNG) exports. Basil was appointed earlier this month by Prime Minister James Marape, who led a revolt against former prime minister Peter O'Neill in May.
France's Total is leading the Papua LNG project, which will develop the Elk-Antelope gas fields to feed two new LNG production units to be sited at the PNG LNG plant, run by Exxon.
At the same time, Exxon and its partners plan to add a third new unit at PNG LNG, which will partly be fed by another new field, P'nyang.
Total recently reached an agreement with the government setting terms for its Papua LNG project, while Exxon is in the process of negotiating a separate agreement with the government for P'nyang.
Treasurer Basil said the projects should all be treated as one, rather than "under the cloak of separate joint ventures".
"I am putting each of the project partners in all of these projects on notice that the concerns of our people must be addressed through dialogue and negotiations with the state and that we expect all parties to contribute to a fair and equitable outcome," he said.
Exxon's original $19 billion PNG LNG project is the biggest foreign investment in the country and crucial to the economy, but the plant has been a disappointing contributor since it started exporting LNG in 2014.
Last year's earthquake which forced a shutdown of PNG LNG dented the government's take from the project more than Exxon had expected it would. The 2019 budget had assumed that oil and gas sector revenue would fall by 9.4 pct from 2018, but it actually fell by 16.4 percent, Basil said.
He plans to ask the Treasury and Exxon to come up with new detailed forecasts of future cash flows from the project to the national and provincial governments and local landowners.
He also said the government would put on hold talks with the owners of the Wafi Golpu gold project, Newcrest and South Africa's Harmony Gold, until the state negotiating team has talked to the Morobe provincial government about its aspirations for the project.
"Our future prosperity depends on delivering these projects and delivering them well. But we must now find a way to ensure that these major resource project agreements capture enough value to the state and to our people," he said.
Exxon and Total were not immediately available to comment. Newcrest had no immediate comment. (Reporting by Sonali Paul; Editing by Tom Hogue) |
CEE MARKETS-Crown eases off 9-month high, Czech rates seen on hold
* Crown joins CEE fx easing as dollar rebounds on Fed comments * Czech central bank seen keeping rates on hold * Crown is off 9-month highs reached on technical factors * Dovish ECB signals play key role in CEE central bank decisions By Sandor Peto and Robert Muller BUDAPEST/PRAGUE, June 26 (Reuters) - The crown retreated from 9-month highs reached against the euro in the previous session as the Czech central bank (CNB) was expected to keep rates on hold at its meeting on Wednesday, and dollar buying weakened Central European currencies. Demand for the dollar often influences the region's units. Funds flowed into the greenback after a Federal Reserve official tempered expectations for aggressive monetary easing. The forint and the zloty shed 0.2% against the euro by 0831 GMT. The crown eased 0.1% to 25.497, still near Tuesday's 9-month highs of 25.435. The CNB, after delivering its eighth interest rate hike in two years in early May, is expected to keep its 2% two-week repo rate on hold in its decision due at 1100 GMT. Technical factors rather than monetary tightening expectations boosted the crown on Tuesday as some speculative positions were closed so as to stop losses, after the currency crossed 25.52-25.53 versus the euro, one dealer said. Positions are also closed in the market because the end of the half year is near. "I would not expect anything market-moving from the CNB today, after all, they can be quite happy with the crown at these levels," the dealer said. Earlier expectations for deeper Fed rate cuts and last week's dovish comments from the European Central Bank were positive to currencies in the European Union's eastern wing. Economies in the region grow faster than euro zone peers, and a fast catch-up with higher Western wages has boosted consumer prices in the past months. Dovish policy signals from the ECB, however, indicated that import prices could help moderate inflation. The National Bank of Hungary cited those signals after its meeting on Tuesday as a justification for keeping rates on hold despite a rise in annual inflation near the top of its 2-4% target range, while it said it would continue to watch incoming economic data. While most analysts expect Czech rates to stay on hold in the rest of the year, some market participants do not rule out dovish noise from the CNB. "We expect CPI to peak mainly due to considerable base effects related to energy prices and the headline rate to fall back towards the CNB 2% mid-target point in the upcoming months (similar to Hungary)," Raiffeisen analyst Stephan Imre said in a note. "This coupled with signs of economic moderation should prompt a moderate CNB easing cycle as early as Q1 2020; our call has received additional support recently on the heels of another ECB (& FED) dovish push," he added. CEE SNAPSHOT AT MARKETS 1031 CET CURRENCI ES Latest Previous Daily Change bid close change in 2019 Czech <EURCZK= 25.4970 25.4780 -0.07% +0.82% crown > Hungary <EURHUF= 323.6500 322.9500 -0.22% -0.79% forint > Polish <EURPLN= 4.2635 4.2545 -0.21% +0.61% zloty > Romanian <EURRON= 4.7202 4.7199 -0.01% -1.40% leu > Croatian <EURHRK= 7.3950 7.3975 +0.03% +0.20% kuna > Serbian <EURRSD= 117.7600 117.8400 +0.07% +0.46% dinar > Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2019 Prague 1037.57 1040.050 -0.24% +5.17% 0 Budapest 40176.95 40061.95 +0.29% +2.65% Warsaw 2305.32 2303.31 +0.09% +1.26% Bucharest 8588.95 8594.90 -0.07% +16.32% Ljubljana <.SBITOP 889.24 890.23 -0.11% +10.57% > Zagreb 1903.10 1905.02 -0.10% +8.82% Belgrade <.BELEX1 721.69 722.28 -0.08% -5.25% 5> Sofia 574.27 575.34 -0.19% -3.40% BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 1.5490 0.0760 +229bps +9bps R> 5-year <CZ5YT=R 1.3540 0.0600 +201bps +5bps R> 10-year <CZ10YT= 1.5210 -0.0250 +184bps -4bps RR> Poland 2-year <PL2YT=R 1.5730 0.0010 +232bps +1bps R> 5-year <PL5YT=R 1.9330 0.0040 +259bps -1bps R> 10-year <PL10YT= 2.3460 0.0280 +267bps +2bps RR> FORWARD RATE AGREEMEN T 3x6 6x9 9x12 3M interban k Czech Rep 2.17 2.06 1.96 2.17 <PRIBOR= > Hungary 0.33 0.42 0.52 0.24 Poland 1.74 1.73 1.71 1.72 Note: FRA are for ask prices quotes ************************************************* ************* (Reporting by Sandor Peto Editing by Alexandra Hudson) |
Is PC Jeweller Limited's (NSE:PCJEWELLER) CEO Being Overpaid?
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Balram Garg became the CEO of PC Jeweller Limited (NSE:PCJEWELLER) in 2005. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for PC Jeweller
According to our data, PC Jeweller Limited has a market capitalization of ₹19b, and pays its CEO total annual compensation worth ₹72m. (This is based on the year to March 2018). Notably, the salary of ₹72m is the vast majority of the CEO compensation. We examined companies with market caps from ₹6.9b to ₹28b, and discovered that the median CEO total compensation of that group was ₹17m.
Thus we can conclude that Balram Garg receives more in total compensation than the median of a group of companies in the same market, and of similar size to PC Jeweller 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 PC Jeweller, below.
On average over the last three years, PC Jeweller Limited has shrunk earnings per share by 33% each year (measured with a line of best fit). Its revenue is down -9.7% over last year.
Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but shareholders might want to examinethis detailed historical graphof earnings, revenue and cash flow.
Given the total loss of 74% over three years, many shareholders in PC Jeweller Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at PC Jeweller Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! So you may want tocheck if insiders are buying PC Jeweller shares with their own money (free access).
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. |
Should We Be Delighted With Pashupati Cotspin Limited's (NSE:PASHUPATI) ROE Of 14%?
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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 Pashupati Cotspin Limited (NSE:PASHUPATI).
Our data showsPashupati Cotspin has a return on equity of 14%for the last year. One way to conceptualize this, is that for each ₹1 of shareholders' equity it has, the company made ₹0.14 in profit.
See our latest analysis for Pashupati Cotspin
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Pashupati Cotspin:
14% = ₹95m ÷ ₹689m (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. 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 yearly profit. The higher the ROE, the more profit the company is making. So, all else being equal,a high ROE is better than a low one. That means it can be interesting to compare the ROE of different companies.
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. As you can see in the graphic below, Pashupati Cotspin has a higher ROE than the average (7.9%) in the Luxury industry.
That is a good sign. 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.
Most companies need money -- from somewhere -- to grow their profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. 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.
Pashupati Cotspin clearly uses a significant amount of debt to boost returns, as it has a debt to equity ratio of 1.74. While the ROE isn't too bad, it would probably be a lot lower if the company was forced to reduce debt. Debt increases risk and reduces options for the company in the future, so you generally want to see some good returns from using it.
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.
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. So I think it may be worth checking thisfreethisdetailed graphof past earnings, revenue and cash flow.
Of coursePashupati Cotspin 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. |
Special Counsel Robert Mueller to Testify on July 17
Special counsel Robert Mueller has agreed to testify publicly before Congress on July 17 after Democrats issued subpoenas to compel him to appear, the chairmen of two House committees announced Tuesday.
Mueller’s unusual back-to-back testimony in front of the House Judiciary and Intelligence committees is likely to be the most highly anticipated congressional hearing in years, particularly given Mueller’s resolute silence throughout his two-year investigation into Russian contacts with President Donald Trump’s campaign. Mueller never responded to angry, public attacks from Trump, nor did he ever personally join his prosecutors in court or make announcements of criminal charges from the team.
His sole public statement came from the Justice Department podium last month as he announced his departure, when he sought to explain his decision to not indict Trump or to accuse him of criminal conduct. He also put lawmakers on notice that he did not ever intend to say more than what he put in the 448-page report.
“We chose those words carefully and the work speaks for itself,” Mueller said May 29. “I would not provide information beyond what is already public in any appearance before Congress.”
Those remarks did little to settle the demands for his testimony. The two committees continued negotiations that had already been going on for weeks, saying they still wanted to hear from Mueller no matter how reluctant he was.
“When you accept the role of special counsel in one of the most significant investigations in modern history you’re going to have to expect that you’re going to be asked to come and testify before Congress,” House Intelligence Committee Chairman Adam Schiff, D-Calif., told reporters shortly after the announcement.
Trump himself simply tweeted, “Presidential Harassment!”
In the report issued in April, Mueller concluded there was not enough evidence to establish a conspiracy between Trump’s presidential campaign and Russia, which was the original question that started the investigation. But he also said he could not exonerate Trump on obstruction of justice. The report examined several episodes in which Trump attempted to influence the investigation.
Democrats say it is now the job of Congress to assess the report’s findings. Lawmakers are likely to confront Mueller on why he did not come to a firm conclusion on obstruction of justice. They are also likely to seek his reaction to a drumbeat of incessant criticism from the president and ask for his personal opinion about whether Trump would have been charged were he not the commander-in-chief.
Schiff and House Judiciary Committee Chairman Jerrold Nadler said they issued the subpoenas Tuesday, and Mueller agreed to testify pursuant to those subpoenas. In a letter to Mueller accompanying the subpoenas, the committee chairmen said “the American public deserves to hear directly from you about your investigation and conclusions.”
Schiff said there will be two hearings “back to back,” one for each committee, and they will also meet with Mueller’s staff in closed session afterward.
The Justice Department declined to comment.
Republicans have criticized Democrats for their continuing investigations of the president. House Minority Leader Kevin McCarthy, R-Calif., questioned why they would still want to hear from Mueller after the lengthy report was issued. “He said he didn’t want to talk to us anymore, didn’t he?”
But Georgia Rep. Doug Collins, the top Republican on the Judiciary panel, has said he has no objections to Mueller’s testimony.
“May this testimony bring to House Democrats the closure that the rest of America has enjoyed for months, and may it enable them to return to the business of legislating,” Collins said. |
Is RATH Aktiengesellschaft's (VIE:RAT) ROE Of 12% Impressive?
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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. By way of learning-by-doing, we'll look at ROE to gain a better understanding of RATH Aktiengesellschaft (VIE:RAT).
Over the last twelve monthsRATH has recorded a ROE of 12%. That means that for every €1 worth of shareholders' equity, it generated €0.12 in profit.
View our latest analysis for RATH
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for RATH:
12% = €5.9m ÷ €48m (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.
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. The higher the ROE, the more profit the company is making. So, all else being equal,a high ROE is better than a low one. 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. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. The image below shows that RATH has an ROE that is roughly in line with the Basic Materials industry average (11%).
That's neither particularly good, nor bad. ROE can give us a view about company quality, but many investors also look to other factors, such as whether there are insiders buying shares. For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
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 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. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.
While RATH does have some debt, with debt to equity of just 0.83, we wouldn't say debt is excessive. Its very respectable ROE, combined with only modest debt, suggests the business is in good shape. 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 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. 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. Check the past profit growth by RATH by looking at thisvisualization of 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. |
6 Surprising Takeaways From Bitcoin’s 2019 Bull Run
Bitcoin (BTC) rising above $10,000, $11,000 and $12,000 surprised everyone in 2019 - but the takeaways from this year’s surge makes for unbelievable reading.
As Cointelegraphreported, this year’s bitcoin price action has little in common with 2017 - the last time a parabolic advance occurred. Instead, the current cycle is giving investors serious reasons to celebrate.
Since November 2018, when turbulence from the bitcoin cash (BCH) hard fork hit markets, BTC/USD has recoveredthree times over.
At the time, the pair hit its lowest point in a bear market which had lasted 11 months - around $3,130. Just seven months later, bitcoin is topping out at $12,800.
The past three months - since the ‘major’ phase of the bull run began - has seen BTC/USD gain an astonishing $9,000.
Parabolic price moves tend to trigger worry as well as rejoicing. According to one analyst, however, even despite the $9,000 leg-up, Bitcoin in fact remains appropriately priced.
According toBloombergjournalist Tracy Alloway, creator of a bitcoin price index based on - of all things - avocados, current BTC/USD levels show appropriate correlation.
Bitcoin has shared surprisingly similar behavior with Mexican Hass avocados during a mutual bear market.
“Bitcoin remains fairly valued according to my avocado-based pricing model, even after rising past $11,000,” Allowaysummarized.
If roughly the same number of avocados will net you a bitcoin, the same certainly cannot be said about the US dollar.
A chartcurrently circulating on social media capture the moment when 1 USD no longer corresponded to 10,000 satoshis, bitcoin’s smallest increment.
In January this year, $1 could have netted almost 30,000 satoshis.
As the bull run continues, questions are being asked about its source. As Cointelegraphpreviously reported, Asian markets appear particularly actively involved in Bitcoin this year, reversing a trend from 2018.
Among these, the so-called ‘Kimchi Premium’ - a phenomenon whereSouth Koreantraders pay more for bitcoin in fiat terms - remains conspicuous this week.
According toexchange data, the price of bitcoin on major South Korean platforms has already passed $13,000.
As previously mentioned, strong bitcoin network fundamentals provided the backdrop to sustained price gains.
Among these, the total network hash rate continuesbreaking recordson an almost daily basis in June.
In the words of Hodlonaut, theTwitteruser whoreturnedto the platform amid alegal battlewith infamous self-proclaimed Bitcoin creator,Craig Wright, bitcoin “won” after reversing its hash rate downturn.
Given the speed of its gains, the future for BTC/USD remains uncertain. According to one popular analystFilb Filb, the historic trend should ultimately spark a price correction to around $9,500.
First, however, markets could easily run to $16,000 or even higher.
He said:
“This would mean that although bitcoin is in the final leg of this run, it could still top out at 16k before a correction to somewhere around $9.5k.”
“This would meet the criteria of surprising the market, which is what bitcoin does best,” he adds.
• Bitcoin Price Correction Continues as $13,800 Becomes Key to Further Gains
• Winklevoss Twins Fortune Doubles in 2019 Reclaiming ‘Bitcoin Billionaire’ Status
• Bitcoin Breaks $13,000 As Rally Continues
• Genesis Capital: Institutional Activity in Crypto Up 300% in 12 Months |
Ethereum Analysis – Resistance Levels in Play – 26/06/19
It’s been a bullish first half of the week. Following last week’s 14.6% rally, Ethereum was up by 2.62%, Sunday through Tuesday.
A bearish start to the week saw Ethereum fall to an early Monday current week low $296.68 before finding support.
Steering well clear of the first major support level at $274.48, Ethereum rallied to a Tuesday high $317.4.
In spite of 3 consecutive days in the green, Ethereum came up short of the first major resistance level at $329.02.
Following a 66.9% rally in May, Ethereum was up by 18.3%. After a choppy start to the month, Ethereum managed to recover from a fall back through the 23.6% FIB of $257 to a June low $226.56.
The extended bearish trend, formed at last May 2018’s swing hi $828.97, remained firmly intact, however. Ethereum continued to fall short of the 38.2% FIB Retracement Level of $367, following December’s swing lo $80.6.
For the bulls, a breakout from the 38.2% FIB of $367 would be needed to form a near-term bullish trend.
At the time of writing, Ethereum was up by 5% to $332.43. The Wednesday morning rally saw Ethereum break through the first major resistance level at $329.02 to a current week high $339.0.
A move back through the Wednesday morning current week high $339.0 would support a run at $350 levels.
Ethereum would need the support of the broader market, however, to break out from $340 levels.
In the event of a broad-based crypto rebound, a breakthrough the second major resistance level at $349.55 would bring the 38.2% FIB of $367 into view. A hold above the first major resistance level at $329.02 would be key mid-week.
A Bitcoin break through to $13,000 levels would give Ethereum momentum through the latter part of the week.
For the current week, however, we would expect Ethereum to come up short of $360 levels.
Failure to move back through the current week high $339.0 could see Ethereum give up some of the current week gains.
A fall through to sub-$325 levels could see Ethereum pullback to $315 levels before any recovery.
Barring a broad-based sell-off in the 2ndhalf of the week, however, Ethereum should steer well clear of the first major support level at $274.48.
In the event of a broad-based crypto reversal, Ethereum could visit $280 levels before any recovery.
Major Support Level: $274.48
Major Resistance Level: $329.02
23.6% FIB Retracement Level: $257
38.2% FIB Retracement Level: $367
62% FIB Retracement Level: $543
Thisarticlewas originally posted on FX Empire
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How Good Is RATH Aktiengesellschaft (VIE:RAT), When It Comes To ROE?
Want to participate in ashort research study? Help shape the future of investing tools and you could win a $250 gift card!
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. By way of learning-by-doing, we'll look at ROE to gain a better understanding of RATH Aktiengesellschaft (VIE:RAT).
RATH has a ROE of 12%, based on the last twelve months. That means that for every €1 worth of shareholders' equity, it generated €0.12 in profit.
View our latest analysis for RATH
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for RATH:
12% = €5.9m ÷ €48m (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 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 it can be interesting to compare the ROE of 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. The image below shows that RATH has an ROE that is roughly in line with the Basic Materials industry average (11%).
That isn't amazing, but it is respectable. ROE doesn't tell us if the share price is low, but it can inform us to the nature of the business. For those looking for a bargain, other factors may be more important. For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
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 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. That will make the ROE look better than if no debt was used.
Although RATH does use debt, its debt to equity ratio of 0.83 is still low. The fact that it achieved a fairly good ROE with only modest debt suggests the business might be worth putting on your watchlist. 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. Companies that can achieve high returns on equity without too much debt are generally of good quality. All else being equal, a higher ROE is better.
But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. Check the past profit growth by RATH by looking at thisvisualization of past earnings, revenue and cash flow.
Of courseRATH 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. |
Despite Its High P/E Ratio, Is Panache Digilife Limited (NSE:PANACHE) Still Undervalued?
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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 show how you can use Panache Digilife Limited's (NSE:PANACHE) P/E ratio to inform your assessment of the investment opportunity.Panache Digilife has a P/E ratio of 15.4, based on the last twelve months. That means that at current prices, buyers pay ₹15.4 for every ₹1 in trailing yearly profits.
See our latest analysis for Panache Digilife
Theformula for P/Eis:
Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)
Or for Panache Digilife:
P/E of 15.4 = ₹95 ÷ ₹6.17 (Based on the year to March 2019.)
A higher P/E ratio implies that investors paya higher pricefor the earning power of the business. 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. And in that case, the P/E ratio itself will drop rather quickly. Then, a lower P/E should attract more buyers, pushing the share price up.
Panache Digilife's earnings per share fell by 24% in the last twelve months. But over the longer term (5 years) earnings per share have increased by 43%.
One good way to get a quick read on what market participants expect of a company is to look at its P/E ratio. You can see in the image below that the average P/E (11.6) for companies in the tech industry is lower than Panache Digilife's P/E.
That means that the market expects Panache Digilife will outperform other companies in its industry. The market is optimistic about the future, but that doesn't guarantee future growth. 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. In other words, it does not consider any debt or cash that the company may have on the balance sheet. 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 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.
Net debt is 33% of Panache Digilife's market cap. While it's worth keeping this in mind, it isn't a worry.
Panache Digilife has a P/E of 15.4. That's around the same as the average in the IN market, which is 15.4. When you consider the lack of EPS growth last year (along with some debt), it seems the market is optimistic about the future for the business.
Investors have an opportunity when market expectations about a stock are wrong. If the reality for a company is better than it expects, you can make money by buying and holding for the long term. We don't have analyst forecasts, but you might want to assessthis data-rich visualizationof earnings, revenue and cash flow.
But note:Panache Digilife 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. |
Britain braced for 31c heatwave this weekend as 'Saharan Bubble' causes deaths in Europe
People cool off in the fountain of the Trocadero in Paris (AP Photo/Alessandra Tarantino) At least three people have died in France in the heatwave dubbed hell sweeping across Europe . The Saharan Bubble weather system is forecast to cause temperatures as high as 45 degrees in Paris by Friday. According to reports, three people have died in France so far this week in the south of the country - one on Monday and two yesterday - after diving into the sea to cool off causing their deaths by cold shock. Temperatures in Britain over Friday and Saturday are expected to top 30 degrees as the heatwave arrives over the Channel. Peak temperatures forecast for heatwave. See story WEATHER Storms. Infographic from PA Graphics Europe is sizzling at the start of a heatwave tipped to break records (Getty Images) The west of the country will get the best of the weather on Friday, before that switches to the east of England the following day. Glastonbury festival is likely to have temperatures in the high 20s over the weekend. France is introducing safety measures such as temporary fountains and longer opening hours for public pools. A heatwave in the country in 2003 was blamed for 15,000 deaths, many of whom were elderly. The Glastonbury Festival is set for clement conditions this year People cool off in a fountain in Pamplona, northern Spain (AP Photo/Alvaro Barrientos) Met Office forecaster Matthew Box said: There is an enormous reservoir of warm air across Europe at the moment. On Friday we will have high pressure over the UK and low pressure out in the Atlantic, and that will bring settled weather conditions across the UK and an easterly flow of air across the southern half of the country. Those easterly winds are drawing that warm air from the near continent and that reservoir across the UK and thats why were getting those warm temperatures. We are looking at 28 or 29 degrees (82-84F), perhaps peaking at 30 here or there on Friday and that will be across western or south-western parts of the UK. Then we could see 30 or 31 across eastern areas of England; London and the Home Counties through Lincolnshire and parts of Yorkshire, on Saturday. Switzerland has been hit by temperatures of up to 39 degrees (Gian Ehrenzeller/Keystone via AP) The high temperatures in Europe are being caused by what has been dubbed the Saharan bubble, a 3,200km-wide plume of hot air which has blown in from North Africa. Meteorologist Silvia Laplana tweeted a graphic of the scorching temperatures heading to Europe this week along with the message: El infierno [hell] is coming. El infierno is coming. pic.twitter.com/j0iGEYF0ge Silvia Laplana (@slaplana_tve) June 24, 2019 Britain will be left relatively unscathed, with unsettled weather moving in from the Atlantic on Sunday. |
Do Insiders Own Lots Of Shares In Rosenblatt Group Plc (LON:RBGP)?
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If you want to know who really controls Rosenblatt Group Plc (LON:RBGP), then you'll have to look at the makeup of its share registry. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. 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.
With a market capitalization of UK£91m, Rosenblatt Group is a small cap stock, so it might not be well known by 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 delve deeper into each type of owner, to discover more about RBGP.
View our latest analysis for Rosenblatt Group
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors own 53% of Rosenblatt Group. 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 Rosenblatt Group's earnings history, below. Of course, the future is what really matters.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Rosenblatt Group. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 Rosenblatt Group Plc. Insiders have a UK£34m stake in this UK£91m 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 10% stake in the company, will not easily be ignored. 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.
It's always worth thinking about the different groups who own shares in a company. But to understand Rosenblatt Group better, we need to consider many other factors.
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.
Ultimatelythe future is most important. You can access thisfreereport on analyst forecasts for the company.
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. |
UPDATE 3-Austria prices first euro zone public debt sale below ECB deposit rate
(Adds final pricing, further detail)
By Abhinav Ramnarayan and Virginia Furness
June 26 (Reuters) - Austria on Wednesday became the first euro zone country to price a public sale of debt below the European Central Bank's deposit rate, as expectations of more ECB stimulus and worries over the global economy push yields in the bloc to new lows.
The country's debt management agency launched the sale of 3 billion euros of five-year bonds at 23 basis points below the mid-swap rate, translating to a yield of -0.435%. The deposit rate stands at -0.40%. It also announced a tap of a 100-year note.
Investor interest was high despite the unprecedentedly low rate.
"It's completely uncharted territory. It's never been seen before that a euro government bond prices through the deposit rate - and yet, the demand is going very well," said a lead manager on the trade.
Other government-linked borrowers have priced bond sales below the deposit rate - French agency Cades this week priced a 250 million euro tap of its May 2023 notes at a yield of -0.462%.
But this is the first euro zone sovereign to do so, and that with a bond deal of a substantial size.
According to another lead manager, there was over 22.8 billion euros of demand for the five-year paper, allowing the leads to tighten guidance from around 19 basis points below mid-swaps initially to 23 bps below.
They also revised pricing lower for a tap of Austria's outstanding debt maturing in 2117 with demand there exceeding 5.3 billion euros. That 1.25 billion euro issue priced at 48 bps over an outstanding Fed 2047 bond, translating to a yield of 1.171%.
"The idea is to inject more liquidity to bring it up to about 5 billion - and the DMO decided to come before the summer," said the first lead manager ahead of pricing. "The market seems to be crazy, it's an absolute issuers' market."
The ECB is widely expected to cut its deposit rate further this year to boost a moribund economy.
Bond yields have fallen to record lows across the bloc, with Austria one of several euro zone countries to see their 10-year borrowing costs drop into negative territory.
In September 2017, it became the first euro zone sovereign to sell a "century bond" publicly via syndication, placing a 3.5 billion euro 100-year note. That issue currently yields 1.43% .
Bank of America Merrill Lynch, Goldman Sachs, JP Morgan, Nomura and UniCredit arranged the deal. (Reporting by Abhinav Ramnarayan and Virginia Furness; editing by Sujata Rao and John Stonestreet) |
Grubhub Loses #1 Spot in US Online Food Delivery Market
Reportedly,GrubhubGRUB has lost its top position in the U.S. online food delivery market to its nearest competitor, DoorDash.Per Quartz, which cited a recent report by analytics firm Second Measure, the company’s monthly sales were lower than DoorDash in May. Notably, Second Measure’s data doesn’t include sales from Grubhub’s latest acquisitions — Tapingo and LevelUp.Moreover, per the report, DoorDash outperformed the company in terms of market share.Although Grubhub didn’t comment on the latest Second Measure report, it is known for snubbing third-party reports, citing incorrect data.Nevertheless, the latest data do not paint a rosy picture for shares of the company, which have declined 1.2% on a year-to-date basis compared with 5.7% growth of the industry.
Year-to-date Performance
Can Grubhub Revive in the Second Half of 2019?Competition in the U.S. online food delivery market is intensifying for the company, with expanding services from the likes of DoorDash, Uber UBER arm UBER Eats, Postmates and Waitr Holdings WTRH, among others.However, Amazon’s AMZN decision to shut down Amazon Restaurants bodes well for Grubhub. Moreover, the partnership with Dunkin’ Brands Group DNKN is likely to boost its footprint across markets like Boston, Chicago and Philadelphia in the coming months.Additionally, partnership with Smoothie King is expected to boost Grubhub’s user base. Notably, the company ended first-quarter 2019 with 19.3 million active diners.Moreover, momentum in gross food sales is a key catalyst. Despite stiff competition, the company is well poised on the back of an efficient delivery network and new quality-focused restaurant partners that include renowned brands like Yelp, Groupon and Yum! Brands.However, increasing expenses due to planned expansion into new delivery markets are likely to keep margins under pressure. Furthermore, as these markets will take some time to generate volumes, higher upfront costs will hurt profitability.Zacks RankCurrently, Grubhub has a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.Click here for the 6 trades >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportAmazon.com, Inc. (AMZN) : Free Stock Analysis ReportGrubhub Inc. (GRUB) : Free Stock Analysis ReportDunkin' Brands Group, Inc. (DNKN) : Free Stock Analysis ReportWaitr Holdings Inc. (WTRH) : Free Stock Analysis ReportUber Technologies, Inc. (UBER) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
No-deal Brexit unlikely to go into Bank of England forecasts: Carney
By David Milliken and Andy Bruce
LONDON (Reuters) - Bank of England Governor Mark Carney said the BoE would only cut its economic forecasts to reflect the risk of a no-deal Brexit if Britain's next prime minister makes leaving the European Union without a transition agreement his preferred policy.
"In the event that the policy of the government were to switch, the forecast of the Bank of England would switch accordingly," Carney told lawmakers on Wednesday.
Last week, the BoE acknowledged the disconnect between the "smooth" Brexit scenario that underpins its forecasts and a more chaotic exit from the EU that many investors are increasingly thinking might happen and that could lead to interest rate cuts.
Carney, speaking to parliament's Treasury Committee, said both candidates to be prime minister - former foreign minister Boris Johnson and the current incumbent Jeremy Hunt - had said they wanted to reach a deal with the EU if possible.
His comments suggested the central bank was unlikely to make major changes to its underlying Brexit assumptions during its next round of economic forecasts, due to be published in August.
These forecasts underpin the BoE's main message to financial markets that interest rates are likely to go up in a "limited and gradual" way if a Brexit deal can be done.
Many investors take a different view, given the slowdown in the global economy as well as the risk of a no-deal Brexit. Some have begun to price in the possibility of a rate cut by the BoE.
Michael Saunders, one of the nine members of the BoE's Monetary Policy Committee, denied the difference was hurting the credibility of the British central bank.
"I don't think it's a communications failure on our side. I don't think it's a sign of loss of credibility over the Committee's commitment to the inflation target," he said.
But Oliver Blackbourn, a portfolio manager at investment firm Janus Henderson, said the BoE's assumption of a smooth Brexit transition looked "increasingly flawed" because Johnson and Hunt have both said they are prepared to lead Britain into a no-deal Brexit if necessary.
"Without taking a view on the political outcome - and being accused of bias as a result - there is a danger that the Bank’s forecasts may look increasingly detached from day-to-day reality," he said.
Carney repeated his view that the BoE was more likely to provide extra stimulus for the economy in the event of a no-deal Brexit than to tighten monetary policy.
Asked about comments he made last week, when he challenged a claim by Johnson that Britain could use world trade rules to avoid the hit of EU trade tariffs in the event of a no-deal Brexit, Carney stuck to his position that such a solution would only work if the EU was in agreement.
"I did not say that there needed to be the withdrawal agreement for GATT 24 to apply. I said there needed to be an agreement," he said when asked about a comment by Johnson on Tuesday that Carney had been wrong.
"There needs to be some form of agreement and an intention, and a credible intention to move towards a free trade (deal) or customs union," Carney said.
(Reporting by David Milliken and Andy Bruce; Writing by William Schomberg; Editing by Louise Heavens) |
Switzerland aims to legalise medical marijuana
By John Miller ZURICH (Reuters) - The Swiss government aims to make it easier for patients to get medical marijuana, proposing on Wednesday to allow prescriptions for cannabis to treat people suffering from cancer or other serious conditions. The proposal, separate from a Swiss government push to allow some cities to experiment with recreational marijuana, would replace the current system, in which those seeking medical cannabis must apply for an exception from the Federal Health Office to get what is otherwise an illegal drug. Marijuana is sometimes used to help cancer patients manage chronic pain, to help boost their appetites, and to reduce spasticity associated with multiple sclerosis. "The proposal makes it possible for doctors to directly prescribe cannabis as part of their treatment," the Swiss cabinet said in a statement. "Growing and processing medical cannabis as well as its sale would then be possible under a system regulated" by Swissmedic, the country's drug regulatory agency. A formal comment period runs until mid-October. Just how insurers will handle reimbursement for medical marijuana will be dealt with separately, the government said. "The biggest obstacle to automatic reimbursement is that the scientific evidence of efficacy is not yet sufficient and the conclusions of existing studies are sometimes contradictory," the government said. The Federal Health Office will launch an evaluation project to help answer questions about whether the drug is an effective remedy and, if so, for what conditions, it said. POT PUSH Switzerland cited increased use of medical marijuana in the treatment of a variety of conditions as driving its initiative. Federal authorities granted around 3,000 exceptions for people seeking to get medical marijuana in 2018. Elsewhere, medical marijuana is also booming. Portugal's parliament has approved a bill to legalise marijuana-based medicines, following in the footsteps of Italy, Germany, Canada and parts of the United States. Britain made a similar move in July 2018. Story continues Companies are moving, too. Swiss drugmaker Novartis last year struck a deal with Canadian medical cannabis maker Tilray to support commercialisation of some of its products. Separately, Switzerland is tinkering with laws that now forbid recreational marijuana, a potential precursor to joining other countries and an increasing number of U.S. states -- Illinois became the latest this week -- in legalising the drug. A plan released in February could let up to 5,000 people smoke marijuana in pilot studies. (Reporting by John Miller; Editing by Gareth Jones) |
Should Autohellas S.A. (ATH:OTOEL) Be Part Of Your Dividend Portfolio?
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Dividend paying stocks like Autohellas S.A. (ATH:OTOEL) 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 the income from dividends, it's important to be a lot more stringent with your investments than the average punter.
In this case, Autohellas likely looks attractive to investors, given its 4.4% dividend yield and a payment history of over ten years. It would not be a surprise to discover that many investors buy it for the dividends. Some simple analysis can offer a lot of insights when buying a company for its dividend, and we'll go through this below.
Explore this interactive chart for our latest analysis on Autohellas!
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. As a result, we should always investigate whether a company can afford its dividend, measured as a percentage of a company's net income after tax. Looking at the data, we can see that 35% of Autohellas's profits were paid out as dividends in the last 12 months. This is a middling range that strikes a nice balance between paying dividends to shareholders, and retaining enough earnings to invest in future growth. One of the risks is that management reinvests the retained capital poorly instead of paying a higher dividend.
We also measure dividends paid against a company's levered free cash flow, to see if enough cash was generated to cover the dividend. Unfortunately, while Autohellas pays a dividend, it also reported negative free cash flow last year. While there may be a good reason for this, it's not ideal from a dividend perspective. 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 Autohellas 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 measures a company's total debt load relative to its earnings (lower = less debt), while net interest cover measures the company's ability to pay the interest on its debt (higher = greater ability to pay interest costs). With net debt of more than twice its EBITDA, Autohellas has a noticeable amount of debt, although if business stays steady, this may not be overly concerning.
Net interest cover can be calculated by dividing earnings before interest and tax (EBIT) by the company's net interest expense. With EBIT of 4.70 times its interest expense, Autohellas's interest cover is starting to look a bit thin.
Remember, you can always get a snapshot of Autohellas's latest financial position,by checking our visualisation of its financial health.
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. For the purpose of this article, we only scrutinise the last decade of Autohellas's dividend payments. The dividend has been cut by more than 20% on at least one occasion historically. During the past ten-year period, the first annual payment was €0.09 in 2009, compared to €0.28 last year. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. The dividends haven't grown at precisely 12% every year, but this is a useful way to average out the historical rate of growth.
Autohellas has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, but it might be worth considering if the business has turned a corner.
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? It's good to see Autohellas has been growing its earnings per share at 43% a year over the past 5 years. With high earnings per share growth in recent times and a modest payout ratio, we think this is an attractive combination if earnings can be reinvested to generate further growth.
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. Autohellas has a low payout ratio, which we like, although it paid out virtually all of its generated cash. We were also glad to see it growing earnings, but it was concerning to see the dividend has been cut at least once in the past. Ultimately, Autohellas comes up short on our dividend analysis. It's not that we think it is a bad company - just that there are likely more appealing dividend prospects out there on this analysis.
You can also discover whether shareholders are aligned with insider interests bychecking our visualisation of insider shareholdings and trades in Autohellas stock.
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. |
Uk population growth stalls
UK population growth has stalled, figures have shown (PA) New figures show that the UK population has risen to 66.4 million - but the growth rate has stalled. According to data from the Office of National Statistics (ONS), there were an estimated 66,436,000 people living in the country at the end of June last year. However, the growth rate remained the same as the previous year. The population of the UK has risen to 66.4 million, according to the Office of National Statistics (PA) The UK population rose year-on-year over the 12 months to the middle of 2018 by 0.6%, with the annual growth rate remaining slower than any year since mid-2004. With the fewest births and highest deaths in a decade, Neil Park, head of the ONS population estimates unit, put net international migration as a bigger driver of population change. He said: "However, overall population change to the year mid-2018 has remained fairly stable as an increase in net international migration has been roughly matched by the fewest births in over a decade and the highest number of deaths since the turn of the century.” Read more from Yahoo News UK: More than 5,000 turtles seized in luggage at Malaysian airport New UK law will raise maximum jail time for animal abusers to five years Ian Brady ‘had access to vulnerable teenagers in Wormwood Scrubs’ Figures released in 2018 showed in the 12 months leading to the middle of 2017, the number of UK inhabitants increased by 392,000 – the lowest rate of growth since 2004. The ONS said at the time that Brexit may have been a factor, saying there had been a decrease in the number of people immigrating to look for work. |
3 Smart Reasons to Do a Roth IRA Conversion
So you've stashed your money in a 401(k) or a traditional Individual Retirement Account to reap the tax benefits that come with these tax-deferred accounts, but now you wonder if that was the right move. You'll have to pay taxes on your distributions in retirement, and this can cost more than you realize. But you can change all of that with a Roth IRA conversion. Here are three reasons to consider it.
You may know that tax-deferred retirement accounts, like most 401(k)s and traditional IRAs, make more sense if you believe you're in a higher tax bracket today than you will be in retirement. By delaying taxes until retirement, you'll lose a smaller percentage of your income to the government.
Image source: Getty Images.
But if you think you'll be in the same or a higher tax bracket in retirement, a Roth IRA is your best bet for reducing taxes. This may be the case for you if you're just starting out in your career or if you're only working part time. You pay taxes on your initial contributions in the tax year you make them for. Then, after that, the money grows tax-free. You won't pay any taxes on withdrawals in retirement, as long as the account has been open for at least five years and you're 59 1/2 or older.
A Roth IRA conversion can help you take advantage of these benefits and minimize your taxes in retirement if most of your savings is currently in a 401(k) or traditional IRA. The catch is, when you do this, you must pay taxes on the converted account in the year you make the conversion, which could raise your tax bill significantly.
But you don't have to convert all your tax-deferred funds to a Roth IRA all at once. You can do a little year by year to minimize the impact on your taxes. Consult with a tax professional or a financial advisor if you're not sure how much to convert at a time.
Once you turn 70 1/2, the government forces you to start takingrequired minimum distributions (RMDs)from all of your retirement accounts except Roth IRAs, unless you're still working and you own less than 5% of the company you work for. This is how Uncle Sam gets his cut of your retirement savings. You can calculate how much your RMDs will be by dividing the value of each of your retirement accounts by the distribution period listed next to your age inthis worksheet from the Internal Revenue Service.
RMDs could force you to withdraw more money from your tax-deferred retirement accounts than you wanted to, which could raise your tax bill for the year. But if you move your money into a Roth IRA, you don't have to worry about RMDs. You can take out what you need and leave the rest in the account so it can continue growing.
Most people can contribute up to $6,000 to a Roth IRA in 2019 or $7,000 if they're 50 or older, but the rules are different for higher earners. Single individuals who make between $122,000 and $137,000 in 2019 and married couples filing jointly who make between $193,000 and $203,000 can only contribute a reduced amount determined by the following formula:
1. Start with yourmodified adjusted gross income (MAGI), which is youradjusted gross income (AGI)with certain tax deductions added back in.
2. Subtract one of the following from your MAGI:
3. Divide the result from Step 2 by $15,000 for single individuals or heads of household or $10,000 for married couples filing jointly or separately or qualifying widow(er).
4. Multiply the result from Step 3 by the maximum IRA contribution limit for the year ($6,000 in 2019 or $7,000 if you're over 50).
5. Subtract the amount in Step 4 from the maximum IRA contribution limit for the year. The remainder is the amount you can contribute to a Roth IRA this year.
So if, for example, you're a single adult with a MAGI of $130,000 in 2019, you'd subtract $122,000, leaving you with $8,000. Then you'd divide that by $15,000 and multiply the result by $6,000, assuming you're under 50. That gives you $3,200. Subtract that amount from $6,000 and you're left with a maximum Roth IRA contribution of $2,800 for the year. Single individuals earning more than $137,000 and married couples earning more than $203,000 cannot contribute to a Roth IRA directly at all.
But there is another way. It's called abackdoor Roth IRA. This is where you contribute money to a tax-deferred retirement account and then convert the money to a Roth IRA in the same year. It's a little more hassle, but it enables you to take advantage of the tax-free growth you wouldn't otherwise have access to. Of course, given that you're likely to be in a high tax bracket today if you're making that much money, putting too much in Roth savings may not make as much sense unless you expect your high income to continue into retirement. If you anticipate your income dropping off, you may be able to save more in taxes by leaving your money in tax-deferred accounts.
A Roth IRA isn't the best place for everyone's savings, but if you think it may be a good fit for yours, consider opening a Roth IRA or doing a Roth IRA conversion. Just make sure you understand the tax implications of this move, both today and in the future.
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Oil & Gas Stock Roundup: Anadarko's Mozambique FID, Archrock's Acquisition & More
It was a week where oil prices scored almost 9% gain – the largest percentage climb for the period since December 2016. Meanwhile, natural gas futures slumped to a 37-month low. On the news front, Anadarko Petroleum APC and partners took the final investment decision on a $20 billion LNG project in Mozambique, while midstream energy company Archrock, Inc. AROC agreed to acquire a gas compression assets-provider for $410 million. Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures rose 8.8% to close at $57.43 per barrel, natural gas prices moved down 8.4% for the week to finish at $2.186 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: C&J Energy-Keane Merger, Phillips 66 JVs & More) The U.S. crude benchmark hit the highest settlement level since May 29 amid the possibility of mounting geopolitical tensions in the Middle East hampering global supplies. Hopes for an interest rate cut next month by the US Federal Reserve also send oil prices soaring. On a further bullish note, the U.S. Energy Department's latest inventory release showed that crude stockpiles recorded a much bigger-than-anticipated weekly draw. On the other hand, natural gas prices suffered after a government report showed another larger-than-expected increase in natural gas supplies. The bearish injection, which was also higher than the five-year average, intensified a sell-off that left the U.S. benchmark with its lowest close in more than three years. Recap of the Week’s Most Important Stories 1. Anadarko Petroleum and the co-venturers in Mozambique's Offshore Area 1 made a final investment decision (FID) on the $20 billion LNG project. The facility will be Mozambique's first onshore LNG unit. The project comprises two LNG train with total initial capacity of 12.88 million tons per annum (MTPA). Of the total capacity, 86% is committed by the key LNG buyers in Asia and Europe. Moreover, the project is expected to boost Mozambique's in-country consumption as well as contribute to domestic economic development. Anadarko, which is set to be acquired by Occidental Petroleum Corporation for $38 billion, has entered into a binding agreement with French supermajor TOTAL SA to sell its African assets for $8.8 billion (including the Mozambique holdings).(Read more Anadarko Petroleum Makes FID on Mozambique LNG Project) 2. Archrock is set to acquire Texas-based Elite Compression Services, LLC in a cash-and-stock deal valued at $410 million. The Houston-based energy infrastructure company will pay approximately $205 million in cash and issue 21.66 million new shares to fund the deal. Subject to satisfactory closing conditions and regulatory approvals, the deal is set for closure in third-quarter 2019. Story continues Per the deal, Archrock — which is focused on midstream natural gas compression — will receive Elite's large horsepower compression assets amounting to 430,000, majority of which are already contracted for more than three years with blue chip companies. Post the conclusion of the deal, Archrock expects to realize $55 million of annualized adjusted EBITDA, including cost synergies of $5 million. The deal is expected to be accretive to earnings and cash flows of the firm, as well as boost basin density across core U.S. shale plays. This move is likely to support the Zacks Rank #3 (Hold) company’s goal of reducing leverage and maintaining adequate dividend coverage. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here . Concurrently, Archrock will also offload 80,000 active and idle compression horsepower assets to Houston-based Harvest Midstream Co. for $30 million in cash. This will further standardize Archrock’s portfolio. 3. Chevron CVX and Phillips 66 ’s PSX joint venture Chevron Phillips Chemical Company LLC has announced its decision to construct a petrochemical facility in collaboration with Qatar Petroleum. The facility will process ethane into ethylene, with Qatar Petroleum expected to have a 70% interest in the venture. In the Middle East, the to-be-constructed complex will likely be the largest when it comes to producing ethylene by processing ethane. Notably, the major constituent for manufacturing plastic is ethylene. With this transaction, Chevron Phillips Chemical will be helping Qatar Petroleum produce roughly 1.9 million tons of ethylene every year, said chief executive officer of Qatar Petroleum. Moreover, the completion of constructing the new plant, expected by 2025, will boost Qatar’s polyethylene production, added Qatar Petroleum. (Read more Chevron Phillips to Manufacture World-Class Ethylene Complex) 4. ConocoPhillips’ COP affiliate ConocoPhillips Alaska has agreed to acquire the entire stake in Nuna discovery. The deal has been signed with Caelus Natural Resources Alaska LLC for the prospect, which is situated in the east of the Colville River. Notably, the closing of the deal – with effective date of Jun 14, 2019 – awaits regulatory approval. The value of the transaction has not been disclosed yet. The Nuna prospect, spread across 21,000 acres with 11 tracts, was discovered in 2012. Before taking the final investment decision, ConocoPhillips will assess the discovery. In Alaska, ConocoPhillips is the largest producer of crude oil, operating roughly 1.3 million net undeveloped acres under leases. The latest deal has fortified the upstream energy player’s position in Alaska’s North Slope. ConocoPhillips has decided to employ the infrastructure of Kuparuk River Unit (KRU) field – the second biggest oilfield in North Slope of Alaska – for the development of the Nuna prospect. This will enable ConocoPhillips to minimize its cost structure while producing optimum oil volumes that will contribute to the company’s revenues and create jobs in Alaska.(Read more ConocoPhillips Agrees to Acquire Entire Stake in Nuna Field) 5. SM Energy Company ’s SM shares jumped 6.6% after it announced that second-quarter production is surpassing estimates on better-than-expected well performance and completion timing. As such, the company increased its second quarter and full-year 2019 production guidance by 400 thousand barrels of oil equivalent (MBoe) at the midpoint. Around 43-44% of total production in the second quarter and full-year 2019 is expected to be oil. Higher production volumes from the Permian Basin and South Texas areas enabled the company to upwardly revise its second-quarter guidance from 126-131 MBoe per day (MBoe/d) to 132-134 MBoe/d. The current projection indicates a significant rise from the year-ago period’s 115.2 MBoe/d. For full-year 2019 as well, SM Energy upwardly revised its production view from 123.3-131.5 MBoe/d to 124.4-132.6 MBoe/d. The new guidance is much higher than the 2018 figure of 120.3 MBoe/d. Moreover, the company announced several positive well test results from the RockStar area of the Permian Basin and Watson State Austin Chalk in South Texas. These are expected to enhance the company’s Midland Basin and South Texas inventories, as well as unlock value from the existing footprint.(Read more SM Energy Raises Production View, Eyes Positive FCF in 2H19) Price Performance The following table shows the price movement of some the major oil and gas players over the past week and during the last 6 months. Company Last Week Last 6 Months XOM +4.5% +12.1% CVX +3.4% +16.3% COP +2.6% -1.6% OXY +2.6% -17.7% SLB +8.2% +5.6% RIG +16.1% -11.6% VLO +6.7% +10.2% MPC +9.8% -11.6% Reflecting the bullish market sentiment, the Energy Select Sector SPDR – a popular way to track energy companies – rose 5.1% last week. The best performer was offshore driller Transocean Ltd. RIG whose stock surged 16.1%. Longer-term, over six months, the sector tracker is up 10.1%. Integrated energy major Chevron was the major gainer during this period, experiencing a 16.3% price increase. What’s Next in the Energy World? As usual, market participants will be closely tracking the regular releases i.e. the U.S. government statistics on oil and natural gas -- one of the few solid indicators that comes out regularly. Energy traders will also be focusing on the Baker Hughes data on rig count, while outcome from the July 1-2 OPEC meeting in Vienna, where the cartel would decide on its production policy for the next six months, will be of some interest. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Phillips 66 (PSX) : Free Stock Analysis Report Archrock, Inc. (AROC) : Free Stock Analysis Report Chevron Corporation (CVX) : Free Stock Analysis Report Transocean Ltd. (RIG) : Free Stock Analysis Report SM Energy Company (SM) : Free Stock Analysis Report Anadarko Petroleum Corporation (APC) : Free Stock Analysis Report ConocoPhillips (COP) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research View comments |
Motorola to Boost Israel Railways' Operational Efficiency
Motorola Solutions, Inc.MSI has secured a tender to provide The Israel Railways Company with an advanced push-to-talk over cellular (POC) communication solution, which will enhance operational efficiency and passenger safety. The company’s leading position alongside attractive portfolio for large addressable market augurs well for future growth. Following the news, Motorola’s share price slipped 0.86% in yesterday’s trading hours to eventually close at $164.19.Per the deal, the communications equipment maker will supply, install, operate and maintain the POC-based wireless communications system for Israel Railways for three years, with an optional extended period of five years. Hot Mobile will be the mobile network carrier for this project. Notably, the solution will replace the railway company’s prior communication service, Mirs, which was based on Integrated Digital Enhanced Network technology.In this context, Motorola expects to witness strong demand across land mobile radio products, services and software. These systems tend to drive demand for additional device sales, and promote software upgrades and infrastructure expansion. The comprehensive suite of services ensures continuity and reduces risks related to critical communications operations.The company aims to deliver up to 3,000 devices powered with WAVE — Motorola’s work group communication service — to enable operational communication across the railway’s lines, offices, and maintenance and logistical departments. WAVE will likely allow the railway company to benefit from an array of key features and services for smooth day-to-day operations.Motorola has long-term earnings growth expectation of 7.7%. Buoyed by increasing market traction of the company’s cutting-edge solution offerings, the stock has rallied 42.3% compared with the industry’s rise of 16.9% in the past year.
As a leading provider of mission-critical communication products and services worldwide, Motorola has ensured a steady revenue source from this niche market. The company intends to bolster its position in the public safety domain by working together with other players in the ecosystem. It is poised to benefit from organic growth and acquisition initiatives, disciplined capital deployment, and favorable global macroeconomic environment.Motorola currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the industry include Comtech Telecommunications Corp. CMTL, Ubiquiti Networks, Inc. UBNT and PCTEL, Inc. PCTI, each sporting a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.Comtech has long-term earnings growth expectation of 5%.Ubiquiti has long-term earnings growth expectation of 19.8%.PCTEL surpassed earnings estimates twice in the trailing four quarters, with an average positive surprise of 100%.More Stock News: This Is Bigger than the iPhone!It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.Click here for the 6 trades >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportMotorola Solutions, Inc. (MSI) : Free Stock Analysis ReportComtech Telecommunications Corp. (CMTL) : Free Stock Analysis ReportPC-Tel, Inc. (PCTI) : Free Stock Analysis ReportUbiquiti Networks, Inc. (UBNT) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
A Look At Rane Brake Lining Limited's (NSE:RBL) Exceptional Fundamentals
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I've been keeping an eye on Rane Brake Lining Limited (NSE:RBL) because I'm attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe RBL has a lot to offer. Basically, it is a dependable dividend-paying company 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 understanding where the figures come from and want to see the analysis, read the fullreport on Rane Brake Lining here.
RBL is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that RBL manages its cash and cost levels well, which is an important determinant of the company’s health. RBL's has produced operating cash levels of 723x total debt over the past year, which implies that RBL's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
Income investors would also be happy to know that RBL is one of the highest dividend payers in the market, with current dividend yield standing at 2.4%. RBL has also been regularly increasing its dividend payments to shareholders over the past decade.
For Rane Brake Lining, there are three key factors you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for RBL’s future growth? Take a look at ourfree research report of analyst consensusfor RBL’s outlook.
2. Historical Performance: What has RBL'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 RBL? 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. |
Exclusive: Russia to pay Kazakhstan fixed rate for contaminated oil in crisis breakthrough
By Alexander Ershov, Dmitry Zhdannikov and Alla Afanasyeva
MOSCOW/LONDON (Reuters) - Russia has agreed to pay Kazakhstan a fixed per-barrel rate of compensation for tainted oil, industry sources said on Wednesday, a breakthrough in an oil contamination crisis that disrupted Russian and Kazakh flows earlier this year.
It is the first such deal and could serve as a template for other agreements, including with Western buyers of Russian oil.
Russian oil flows have been contaminated with chemicals along several transit routes since the end of April. Around 700,000 tonnes of Kazakh oil sent via Russia were also affected.
Russian pipeline monopoly Transneft has agreed a preliminary deal under which it will pay a fixed rate for the contaminated oil to Kazakh pipeline firm KazTransOil or Kazakh oil producers, the sources said.
The sources declined to be identified because the talks are confidential. The sources did not disclose the dollars-per-barrel discount, saying the deal would be finalised next week.
Transneft's agreement to pay a fixed amount will be seen as a breakthrough by the industry after weeks of mixed messages from the company on how it would compensate for losses.
"We are waiting for documents from Transneft ... We have held the talks," a KazTransOil spokesman said on Wednesday.
Transneft did not respond to a request for comment.
On Tuesday, KazTransOil said it had agreed a mechanism with Transneft on compensation for Kazakhstan's share of the contaminated Urals oil.
KazTransOil gave no details of the proposed calculation mechanism or sums to be paid, adding that Transneft would provide such information to concerned parties.
Up to 5 million tonnes of oil contaminated with chemicals have been shipped by Russia from the Baltic port of Ust-Luga and via the Druzhba pipeline to central Europe since April.
The deal with Kazakhstan will be closely watched by Russian oil producers Rosneft and Surgut, which are also seeking compensation and will in turn have to pay reparations to buyers of their crude - Western oil majors and traders.
Transneft will have separate compensation agreements with Rosneft and Surgut, the industry sources said. It was unclear whether those arrangements would mirror the deal with Kazakhstan.
(Reporting by Alexander Ershov and Alla Afanasyeva in Moscow, Dmitry Zhdannikov in London; Additional reporting by Mariya Gordeyeva in Almaty; Editing by Dale Hudson) |
EU hits Broadcom with interim demands in antitrust probe
By Foo Yun Chee BRUSSELS (Reuters) - EU antitrust regulators want U.S. chipmaker Broadcom to scrap its exclusivity clauses with TV and modem makers to avoid irreparable harm to the market while they investigate whether this tactic and others are designed to block rivals. The European Commission said the so-called interim measures, the first in 18 years, were warranted because of Broadcom's likely dominance in the TV and modem chipset markets and deals between the company and seven major customers that resulted in the latter buying chips only from Broadcom. The EU competition enforcer on Wednesday sent a statement of objections, or charge sheet, to the company setting out reasons why such measures are needed. Broadcom has two weeks to respond. It can also ask for a closed door hearing to defend itself. Such measures are rare because of the high bar proving lasting harm. The Commission imposed interim measures against German insurer IMS Health in 2001 because of serious and irreparable damage to two rivals. The San Jose, California-based company's communications chips power Wi-Fi, Bluetooth and GPS connectivity in smartphones. Commission chief economist Tommaso Valletti said enforcers were sending a strong signal. "This is good because it says to the company: you are doing something which is possibly noxious. Stop now. Immediate effect. To the extent this is foreclosing others, then it stops now, not in 10 years," Valletti said in a tweet. The Commission said its investigation would focus on Broadcom's practices including exclusive purchasing obligations, tying rebates or other benefits to exclusive or minimum purchase requirements, product bundling, abusive IP-related strategies and deliberately making it difficult for Broadcom products to function with rival products Broadcom's anti-competitive practices prevent its customers, and ultimately consumers, from enjoying the benefits of choice and innovation, European Competition Commissioner Margrethe Vestager said in a statement. Story continues Broadcom said it believes it complies with European Competition rules and that the concerns are "without merit." In a filing with U.S. regulators, Broadcom said it did not expect a material impact on its set-top box or broadband modem business from the Commission's move. It said the Commission's planned interim measures would not preclude Broadcom from continuing to sell any products. The Commission can levy fines of up to 10% of a company's global revenues for breaching EU rules. Alphabet unit Google and Qualcomm have been hit with heavy fines in recent years for their anti-competitive practices. (Reporting by Foo Yun Chee; Editing by Deepa Babington and Mark Potter) |
Zooming in on NYSE:EQT's 0.8% Dividend Yield
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Dividend paying stocks like EQT Corporation (NYSE:EQT) 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.
While EQT's 0.8% dividend yield is not the highest, we think its lengthy payment history is quite interesting. The company also bought back stock during the year, equivalent to approximately 15% of the company's market capitalisation at the time. Remember that the recent share price drop will make EQT's yield look higher, even though recent events might have impacted the company's prospects. Some simple research can reduce the risk of buying EQT for its dividend - read on to learn more.
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. So we need to form a view on if a company's dividend is sustainable, relative to its net profit after tax. Although it reported a loss over the past 12 months, EQT currently pays a dividend. When a company recently reported a loss, we should investigate if its cash flows covered the dividend.
EQT paid out 24% of its free cash flow as dividends last year, which is conservative and suggests the dividend is sustainable.
Given EQT is paying a dividend but reported a loss over the past year, we need to check its balance sheet for signs of financial distress. A quick way to check a company's financial situation uses these two ratios: net debt divided by EBITDA (earnings before interest, tax, depreciation and amortisation), and 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 2.33 times its EBITDA, EQT's debt burden is within a normal range for most listed companies.
Net interest cover can be calculated by dividing earnings before interest and tax (EBIT) by the company's net interest expense. Interest cover of less than 5x its interest expense is starting to become a concern for EQT, and be aware that lenders may place additional restrictions on the company as well.
We update our data on EQT every 24 hours, so you can always getour latest analysis of its financial health, here.
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. EQT 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 US$0.88 in 2009, compared to US$0.12 last year. This works out to a decline of approximately 86% over that time.
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, and a poor history of shrinking dividends, it's even more important to see if EPS are growing. Over the past five years, it looks as though EQT's EPS have declined at around 49% a year. 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.
To summarise, shareholders should always check that EQT's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. We're not keen on the fact that EQT paid dividends despite reporting a loss over the past year, although fortunately its dividend was covered by cash flow. 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, EQT has a number of shortcomings that we'd find it hard to get past. Things could change, but we think there are likely more attractive alternatives out there.
Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from costs or inflation. Businesses can change though, and we think it would make sense to see whatanalysts are forecasting for the company.
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. |
Explainer: Why Switzerland and the EU face a battle of the bourses
By Michael Shields
ZURICH (Reuters) - A row over a stalled partnership treaty between Switzerland and the European Union is about to touch off a battle over share trading rules that could cause market ructions across Europe from July 1.
The pact with Switzerland that Brussels has sought for a decade and which was negotiated over 4-1/2 years would effectively cement the non-EU member state's participation in the EU single market, the biggest outlet for Swiss exports.
But political resistance to the treaty in Switzerland has held up the process. As a result, a frustrated EU says it will not recognise the Swiss stock market's rules as "equivalent" to its own beyond the end of June.
The Swiss government has responded with countermeasures, including a new system from July 1 that requires foreign stock exchanges to get Swiss permission to host trading in Swiss stocks.
Wilful, as well as negligent, violations of the Swiss requirements could result in criminal charges and even jail.
WHAT THE NEW RULES MEAN
The EU's decision not to recognise the Swiss stock market regulations' so-called equivalency beyond the end of June will effectively prevent EU-based banks and brokers from trading on Swiss exchanges. They traditionally generate more than half the turnover on Swiss stock markets.
The new Swiss regime, which aims to head off a possible liquidity crunch and to steer share trading to Swiss markets, requires foreign exchanges to get Swiss permission to host trading in Swiss stocks. Trading venues outside the EU would get a green light to carry on as before.
Barring an unlikely last-minute deal, pan-European stock trading platforms Aquis Exchange Plc, Cboe Europe and the London Stock Exchange will not be able to host trading in Swiss equities from July 1.
Such venues host a third of Swiss equities trading volume.
WHO COULD BE AFFECTED BY THE SWISS BAN?
Foreign trading venues, including stock exchanges and so-called multilateral trading facilities will be affected. Switzerland will let them host trading in Swiss-registered companies like Nestle, Roche and Novartis only if the foreign venues' regulations do not curb trading of Swiss stocks in Switzerland.
Markets outside the EU will not be affected. Once Brexit takes effect, British share trading platforms could be certified provided their regulation does not interfere with trading on Swiss markets.
WHAT COULD HAPPEN TO VIOLATORS?
Wilful and negligent violations of the Swiss rules could result in criminal charges. Sanctions can target foreign trading venues as well as their management or board of directors. Intentional violations can trigger imprisonment of up to three years or a fine; negligence could be punished with a fine.
WHY IS THE EU-SWISS TREATY SO CONTROVERSIAL?
The Swiss/EU deal would have Switzerland routinely adopt changes to single market rules. It would also create a more effective platform to resolve trade disputes and open a path to new trade deals such as an electricity union.
The pact would be an over-arching accord above a patchwork of 120 separate deals that already govern bilateral Swiss/EU ties and which emerged after Swiss voters in 1992 rejected plans to join the European Economic Area. These individual agreements were crafted when Switzerland still aimed to join the EU, a goal it has since dropped.
But the trade deal has become tangled up in domestic politics in Switzerland, which has parliamentary elections on Oct. 20. Those opposed to the EU trade deal range from the right-wing Swiss People's Party (SVP) to the centre-left Social Democrats (SP) and their allied labour unions.
The anti-EU SVP resents giving Brussels any say in Swiss affairs, while the left is dead set against diluting Swiss labour rules meant to protect Europe's highest wages from potential cut-rate EU workers on temporary cross-border assignments. That is a key demand from Brussels, which wants to avoid being soft on the Swiss with a potentially messy Brexit looming.
HOW LONG MIGHT THE STANDOFF LAST?
In theory, indefinitely, but both sides have said they are open to talks to break the logjam. In effect, the next deadline for Switzerland to sign the treaty and start the ratification process is the end of October.
That is when European Commission President Jean-Claude Juncker, a self-declared Swiss ally, leaves office and when a no-deal Brexit seems increasingly likely. But Swiss officials say there is no point signing a deal that is doomed to fail in parliament or get shot down by voters under the Swiss system of direct democracy.
(Reporting by Michael Shields. Editing by Jane Merriman) |
Volkswagen's Traton expected to price IPO toward lower end of range: sources
By Arno Schuetze
FRANKFURT (Reuters) - Volkswagen's truck unit Traton is expected to price its initial public offering (IPO) this week toward the lower end of the marketing range, people close to the matter said.
While demand is sufficient for the stock market flotation to go through, investors are cautious on price, they said.
"Investors are taking advantage of the fact that Volkswagen needs to show progress in its corporate restructuring after calling off the IPO in March and relaunching it now," one of the people said.
Books are oversubscribed for all the shares on sale, two people said.
Traton declined to comment, while Volkswagen had no immediate comment.
Markets are still receptive to IPOs as volatility remains at relatively low levels, although roughly where it stood in March when Volkswagen pulled the previous IPO attempt, citing market uncertainty.
Global Fashion Group on Tuesday delayed its listing amid subdued investor demand.
Volkswagen said earlier this month it aimed to raise 1.55-1.9 billion euros ($1.8-$2,2 billion) by selling 10%-11.5% of Traton, having scaled back earlier ambitions to list up to a 25% stake.
It has set a 27-33 euros per share price range, which would value Traton at Traton at 13.5-16.5 billion euros, a discount to some industry peers.
The carmaker plans to invest proceeds in transforming its auto production as it readies the launch of dozens of electric vehicles over the coming years and deepens an alliance with Ford Motor Co.
(Reporting by Arno Schuetze; Editing by Riham Alkousaa and Mark Potter) |
What You Should Know About Golden Queen Mining Co. Ltd.'s (TSE:GQM) Financial Strength
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Investors are always looking for growth in small-cap stocks like Golden Queen Mining Co. Ltd. (TSE:GQM), with a market cap of CA$7.5m. However, an important fact which most ignore is: how financially healthy is the business? Given that GQM is not presently profitable, it’s essential 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. However, these checks don't give you a full picture, so I recommend youdig deeper yourself into GQM here.
GQM has built up its total debt levels in the last twelve months, from US$42m to US$46m – this includes long-term debt. With this increase in debt, GQM's cash and short-term investments stands at US$5.7m , ready to be used for running the business. We note it produced negative cash flow 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 take a look at some of GQM’soperating efficiency ratios such as ROA here.
At the current liabilities level of US$55m, it appears that the company may not be able to easily meet these obligations given the level of current assets of US$39m, with a current ratio of 0.72x. The current ratio is calculated by dividing current assets by current liabilities.
With debt reaching 41% of equity, GQM may be thought of as relatively highly levered. This is somewhat unusual for small-caps companies, since lenders are often hesitant to provide attractive interest rates to less-established businesses. However, since GQM is currently unprofitable, there’s a question of sustainability of its current operations. 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 GQM’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 lack of liquidity raises questions over current asset management practices for the small-cap. Keep in mind I haven't considered other factors such as how GQM has been performing in the past. I suggest you continue to research Golden Queen Mining to get a better picture of the stock by looking at:
1. Historical Performance: What has GQM'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. |
Could The Golden Queen Mining Co. Ltd. (TSE:GQM) Ownership Structure Tell Us Something Useful?
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Every investor in Golden Queen Mining Co. Ltd. (TSE:GQM) should be aware of the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Companies that have been privatized tend to have low insider ownership.
Golden Queen Mining is a smaller company with a market capitalization of CA$7.5m, so it may still be flying under the radar of many institutional investors. In the chart below below, we can see 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 GQM.
View our latest analysis for Golden Queen Mining
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.
Golden Queen Mining already has institutions on the share registry. Indeed, they own 9.7% 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 Golden Queen Mining, (below). Of course, keep in mind that there are other factors to consider, too.
We note that hedge funds don't have a meaningful investment in Golden Queen Mining. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
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. 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 some shares in Golden Queen Mining Co. Ltd.. In their own names, insiders own CA$224k worth of stock in the CA$7.5m company. Some would say this shows alignment of interests between shareholders and the board, though I generally prefer to see bigger insider holdings. But it might be worth checkingif those insiders have been selling.
The general public, mostly retail investors, hold a substantial 87% stake in GQM, suggesting it is a fairly popular stock. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
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.
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. |
Shep Smith Delivers Scathing Fact-Check Of Trump’s Migrant Children Claim
Fox News’ Shep Smith on Tuesday doubled down on his criticism of the Trump administration’s treatment of migrant children who are being detained on the U.S.-Mexico border. The host of “Shepard Smith Reporting” debunked President Donald Trump’s claim that the youngsters are being treated well ― and used the widely watched conservative network’s own reporting on the crisis to do so. Smith highlighted the “deplorable” and “horrendous” conditions that some youngsters have been forced to endure at one particular facility in Clint, Texas , where they have been denied access to basic items including toothbrushes, toothpaste and soap. “We reported accurately here yesterday that were these prisoners of war instead of innocent children, withholding of those items would be violations of the Geneva Convention,” Smith noted. “That’s what the president considers treating well the children of migrants who came across the border without documents.” “Those are the facts,” he added. Check out the clip here: Related... Paul Ryan's 'Forgotten Man' Praise Of Donald Trump Backfires Shep Smith Uses War Crimes Analogy To Torch Trump Admin's Treatment Of Migrant Kids Ari Melber Breaks Down The Tactic That Donald Trump Keeps Using To Trick His Base Also on HuffPost Love HuffPost? Become a founding member of HuffPost Plus today. This article originally appeared on HuffPost . |
FOCUS-Fate of opioid litigation hinges on government "police power"
By Mike Spector and Nate Raymond
NEW YORK/BOSTON, June 26 (Reuters) - The fate of thousands of lawsuits seeking to hold drugmakers responsible for fueling the U.S. opioid epidemic hinges in part on a thorny legal question: Can a company can use a bankruptcy to stop lawsuits from cities and states?
U.S. Bankruptcy Judge Kevin Gross is expected in July to decide whether to halt more than 160 active lawsuits brought by state attorneys general, cities and counties against opioid manufacturer Insys Therapeutics Inc. When it filed for Chapter 11 protection in Delaware earlier this month, Insys requested the cases be paused.
A bankruptcy filing would normally halt active litigation immediately, giving a company such as Insys time to reorganize and preserve money that would otherwise be spent fighting the cases.
But a longstanding exception in U.S. bankruptcy law can keep the lawsuits alive if they are enforcing government officials’ “police or regulatory power.” The exception holds that government actions seeking to enforce laws related to matters such as public health and safety are not automatically stopped by a company's bankruptcy filing as other lawsuits are.
State and local officials are suing Insys and other drugmakers in an attempt to address harm from an opioid crisis that has killed nearly 400,000 people between 1999 and 2017. More than half these deaths resulted from prescription painkillers, according to the U.S. Centers for Disease Control and Prevention.
For a graphic, click https://tmsnrt.rs/2EgfT0n
“Criminal enterprises … should not be permitted to shield themselves from the consequences of their misconduct by running to bankruptcy court and obtaining the equivalent of a stay that allows them to evade justice,” said Minnesota Attorney General Keith Ellison and Maryland Attorney General Brian Frosh in a Tuesday legal filing opposing Insys’s request to halt lawsuits.
The opioid crisis "is a national public health emergency," they said in the filing, which other state attorneys general supported, including those in New York, New Jersey and Arizona. “The interests of the public therefore are served by allowing these police powers actions of the states to continue unfettered by the injunctions that Insys seeks.”
A spokesman for Insys, which faces trials in Maryland and Minnesota beginning in August, declined to comment beyond the company's court filings.
Insys already had reached a $225 million settlement before filing for bankruptcy with the U.S. Justice Department, admitting to illegal conduct in resolving claims that it bribed doctors to write prescriptions, including medically unnecessary ones, for a fentanyl spray called Subsys designed to treat cancer pain.
The Chandler, Arizona-based company still faces, overall, more than 1,000 lawsuits raising similar allegations of deception and fraud in marketing its opioids. The misconduct occurred under a prior management team that has since "entirely turned over" and Insys is now committed to lawful marketing practices, the company said in court papers.
Insys contends in bankruptcy-court filings that Judge Gross should halt the lawsuits against it regardless of any exceptions, lest the company drain limited financial resources fighting cases on multiple fronts.
Allowing the cases to continue would leave less money for creditors, including the very government officials seeking to hold it to account, Insys contends, adding that its request is not an attempt to escape liability.
It had less than $40 million in the bank when filing for bankruptcy and predicts spending up to $9 million through December to continue fighting lawsuits, according to court papers.
The judge’s ruling is expected to influence whether another opioid manufacturer facing 2,000 lawsuits - OxyContin maker Purdue Pharma LP - decides to file for bankruptcy protection, according to a person familiar with the matter and legal experts. A Purdue spokesman declined to comment.
A ruling allowing the Insys litigation to proceed could discourage Purdue from seeking bankruptcy protection, while pausing the cases might signal that Chapter 11 bankruptcy proceedings are a viable way to halt lawsuits and take advantage of breathing room to reach a broader settlement with plaintiffs, according to the person familiar with the matter and several legal experts.
Insys lawyers are attempting to persuade government officials to agree to voluntarily halt their cases, according to a bankruptcy-court filing. Insys is nearing a deal that would effectively halt some of those legal claims against the drugmaker that are consolidated in an Ohio federal court, said Paul Hanly, a lead lawyer for plaintiffs in the opioid litigation.
An Insys spokesman declined to comment on the potential agreement.
Insys has some legal precedent backing its approach. In 2017, a bankruptcy judge sided with Takata Corp when temporarily halting lawsuits brought by Hawaii, New Mexico and the U.S. Virgin Islands against the Japanese supplier of automobile airbags that exploded, finding that allowing the litigation to continue threatened the company’s reorganization. That would have harmed creditors, including those seeking to hold Takata accountable for widespread deaths and injuries, the judge ruled.
The ruling allowed Takata to focus on completing a sale to a rival, creating a combined company called Joyson Safety Systems. A Joyson representative declined to comment. The Minnesota and Maryland attorneys general argued in their legal filing on Tuesday that Insys has not demonstrated the kind of exceptional circumstances present in the Takata case - an unprecedented automotive recall - that warranted halting government lawsuits.
While the outcome in the Insys case is not critical for opioid manufacturers with stronger balance sheets that face lawsuits, such as Johnson & Johnson, it holds significance for the likes of OxyContin maker Purdue, according to several legal experts.
In March, Reuters reported that Purdue was exploring filing for bankruptcy protection to address lawsuits alleging it pushed prescription painkillers while downplaying their abuse and overdose risks, according to people familiar with the matter. Purdue's CEO later confirmed the company was considering a bankruptcy filing.
The company has denied allegations it contributed to the opioid crisis, pointing to the U.S. Food and Drug Administration approving labels on its drugs carrying warnings about risk and abuse associated with treating pain.
(Editing by Vanessa O'Connell and Edward Tobin) |
Plaehn's Pipeline Picks for Rising Yields
Next week we start a new quarter; income focused investors can look forward to a new round of dividend announcements and payments, suggestsTim Plaehn, income expert and editor ofThe Dividend Hunter.
A number of the companies in the energy infrastructure sector make dividend announcements in the early days of a new quarter, weeks before they report earnings for the quarter. Dividend announcements with dividend increases are “real” news that can give a nice boost to share prices.
More from Tim Plaehn:Look to Utilities as a Safe Harbor
Energy infrastructure, also called midstream services, was until a few years ago almost exclusively populated by companies organized as master limited partnerships (MLPs).
The energy sector from upstream, through midstream, to downstream went through a severe bear market in 2015-2016 after the price of crude oil crashed down to less than $30 per barrel. The midstream sector was forced into significant financial restructuring, which included numerous dividend cuts, or at least a suspension of dividend growth.
The restructuring in the sector is now complete. The midstream group is no longer exclusively K-1 reporting MLPs. There is close to an equal number of corporations or limited partnerships reporting tax information on IRS Form 1099.
Of more impact to your brokerage account, the days of dividend cuts are over and many companies in the sector have resumed dividend growth.
One appealing factor is that a lot of the companies have policies of increasing the dividend every quarter. It’s nice to see your investment income growing each and every quarter.
Here are three energy infrastructure stocks that will likely announce dividend increases in the early days of July.
Plains All American Pipelines LP(PAA) owns and operates the largest independent crude oil pipeline and storage network. It’s pipelines transport oil from the major upstream plays from Canada to Texas. Plains is a major crude oil gathering and transport force in the Permian basin.
The new Cactus II pipeline will start transporting oil from the basin in the third quarter. Capacity on the Cactus II will ramp up to 670,000 barrels per day. Plains cut its dividend rate in both 2016 and 2016.
Earlier this year, management announced the financial restructuring was complete and increased the dividend by 20%. I expect 5% to 8% annual dividend growth going forward with quarterly increases. The n
See also:The 3 Pillars of ESG: Environmental, Social and Governance
ext dividend announcement should come within the first week of July. PAA yields 6.0%.
Enterprise Products Partners LP(EPD) is the largest MLP with a $63 billion market cap. The company owns pipelines and storage terminals for natural gas, NGLs, crude oil, petrochemicals and refined energy products.
It also owns 26 natural gas processing plants. To round out the assets is an 18 dock export facility.
Enterprise is one MLP that was able to continue to grow its distributions through the energy sector bear market.
The next dividend increase will be the 60th consecutive boost to the payout. The next, higher distribution will be announced in the first third of July. Look for a 1% increase. EPD currently yields 6.0%.
Tallgrass Energy LP(TGE) owns and operates interstate crude oil and natural gas pipelines. The current company is the result of the 2018 merger of an MLP and its publicly traded general partner. TGE is a 1099 reporting publicly traded partnership. The merger became official one year ago.
Tallgrass has increased its dividend every quarter, with a lot of variability in the size of the increase. Recent increases have been in the 2% to 3% range. Expect the dividend announcement in the week after the 4th of July long holiday weekend. TGE yields 9.5%.
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Do You Have More Credit Cards Than the Average Person?
How many credit cards do you have? Find out here how you compare to the typical American.
Image source: Getty Images
Did you know that most people have more than one credit card -- and in some cases, many more? The average number of credit cards varies by generation, as revealed ina recent study conducted by The Ascent. Baby boomers and Gen Xers have an average of four cards each, while millennials average three.
Of course, these are averages. Some people have none, while others have a wallet-full. In fact, across all age groups, 10% of survey respondents said they had six or morecredit cards.
Having a lot of credit cards can be good, but it can also lead to problems. Let's take a look at some pros and cons of having tons of cards. Then we'll discuss things to consider when deciding if opening another card is the right choice for you.
Having access to many credit cards can be good for a few big reasons.
• Having multiple cards helps you increase yourcredit scorewith a positive payment record. You’ll have lots of accounts to develop a strong history of on-time payments. Payment history is the single most important factor that determines your credit score, so this is a major advantage.
• Having multiple cards also means a better credit utilization ratio.Credit utilization ratio is the percentage of your available credit that you're currently using. It's another an important factor in determining your credit score. It should be below 30% to earn the best credit score -- and the lower, the better. With multiple cards, you should have a high total credit limit across all accounts, so achieving a good utilization ratio is easier. If you have six credit cards with a limit of $5,000 each, your available credit is $30,000. A balance of $3,000 across all six cards results in utilization ratio is just 10%. If you only have one card with a limit of $5,000 and you owe $3,000 onthatcard, your utilization ratio is 60%. That's way too high.
• You’ll have lots of credit available in case of emergencies.Having anemergency fundis best. But with only a single credit card, you could find yourself in a situation where your card is maxed out, you have no cash, and you’re forced to turn to high-interest debt like payday loans. This is less likely to happen if you have more credit available.
• You maximize your rewards or cash back. If the credit cards have different rewards programs, you can be strategic about which you use. This helps you max out the rewards points or miles you receive for each purchase.
• You get access to many cardholder benefits.If the cards have different perks -- like airline lounge access or discounts at certain stores -- you can take advantage of varied benefits to get lots of cool stuff.
Unfortunately, there are also downsides to having multiple cards. Here are some of the biggest drawbacks of having tons of credit cards in your wallet.
• Multiple annual fees:If some or all of your cards charge fees, you could end up paying a lot. Paying a fee is only worth it if the value of the rewards or perks outweighs the cost of the fee. The more cards you have, the less likely that you'll be able to earn enough rewards to offset the cards' costs. There's also a greater chance their cardholder benefits will overlap, getting you less bang for your buck.
• Juggling multiple payments: When you have multiple cards to pay, it's easy to make mistakes and let a payment slip through the cracks. This can devastate your credit score.
• Navigating different rewards programs:Keeping track of which card to use for which purchase can be a hassle. The challenge is compounded if your rewards points expire, as you'll need to keep track of when rewards must be redeemed.
• Credit card debt risk:If you have multiple cards, you could get deep into debt if your spending isn't fully under control. The more you can charge, the greater the trouble you can get into.
• Applying for cards can hurt your score: Each time you apply for a new credit card, there's ahard inquiryon your credit report. Too many hard inquiries could damage your credit score, making it more expensive to get credit in the future.
Ultimately, only you can decide if you have enough cards or if applying for one more is worth it. When deciding whether to get a new card, consider
• the number of cards you already have,
• the potential hit to your credit,
• whether you can trust yourself to be responsible with the extra credit, and
• if the rewards program or cardholder perks are really worth it.
Having more cards than the average person isn't necessarily a bad thing. But if you find you're regularly maxing out your cards or missing payments, it's time to put some of those cards away for good. You may not want to close those accounts, as this could drop your credit score, but you don't need to use them on a regular basis.
Having fewer cards than average is okay, too -- so long as you have one or two good cards for building your credit history and getting rewards in return for your spending.
The Motley Fool owns and recommends MasterCard and Visa, and recommends American Express. We’re firm believers in the Golden Rule. If we wouldn’t recommend an offer to a close family member, we wouldn’t recommend it on The Ascent either. Our number one goal is helping people find the best offers to improve their finances. That is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. |
Bear of the Day: Visteon Corporation (VC)
Visteon Corporation (VC) shares have tumbled 20% since the company reported disappointing first-quarter 2019 results in April. Looking ahead, the cockpit electronics and connected-car technology firm’s full-year fiscal 2019 earnings are projected to tumble.
Quick Overview
Visteon designs, engineers, and manufactures cockpit electronics and connected car solutions. The Van Buren Township, Michigan-headquartered firm could be in a position to capitalize on the long-term digitalization of the auto industry as vehicle displays look more and more like something out of a science fiction novel. With that said, Visteon posted a massive first quarter earnings miss.
The firm posted adjusted Q1 earnings of $0.53 per share, when our Zacks Consensus Estimate called for $1.06 per share. On top of that, Visteon’s quarterly revenue slipped from $814 million in the year-ago period to $737 million. The company blamed the top-line drop on “unfavorable vehicle production volumes, customer pricing net of design changes, and unfavorable currency.” Meanwhile, executives said the margin crunch, which led to the big earning miss, was caused by “lower sales, launch challenges with a curved center information display, inefficiencies associated with a plant transfer in Mexico, and timing of engineering expense.”
Visteon CEO Sachin Lawande said he expects the operational challenges that hurt margins last quarter to diminish and be largely resolved in the second and third quarters. Despite the positivity from executives, Wall Street hasn’t been kind to VC stock. In fact, shares of Visteon have plummeted roughly 60% over the last 12 months, as part of a larger rollercoaster ride over the past five years. Visteon closed regular trading Tuesday at $54.79 per share.
Outlook & Earnings Trends
Looking ahead to Q2, the connected car tech firm’s revenue is projected to slip 3.3% from $758.00 million in the prior-year quarter to $732.72 million, based on our current Zacks Consensus Estimate. The company’s full-year fiscal 2019 revenue is projected to slip 1.8% to $2.93 billion.
Moving onto the bottom end of the income statement, the company’s adjusted second-quarter earnings are projected to decline roughly 71% from $1.37 in Q2 2018 to $0.40 per share. VC’s Q3 EPS figure is then expected to dip 1.8%. Overall, full-year earnings are projected to fall 38.5%, driven by Q1’s downturn and Q2’s projected decline.
Furthermore, the company’s earnings estimates have trended heavily in the wrong direction recently. More specifically, the company’s 2019, 2020, and 2021 earnings estimates have tumbled for some time now.
Bottom Line
Visteon’s negative earnings estimate revision picture helps the company earn a Zacks Rank #5 (Strong Sell) at the moment. VC also sports an “F” grade for Momentum in our Style Scores system. It is worth noting that the company is projected to rebound slightly on both the top and bottom lines in 2020 from the projected 2019 downturns. But until Visteon shows some signs of a turnaround, investors are probably best served to stay away.
Those still interested in Automotive – Original Equipment industry might instead take a look at #1 (Strong Buy)-ranked Allison Transmission Holdings, Inc. (ALSN) or #2 (Buy)-ranked Dana Incorporated (DAN).
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportVisteon Corporation (VC) : Free Stock Analysis ReportDana Incorporated (DAN) : Free Stock Analysis ReportAllison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
‘FUCT’ Case Opens Doors, but Brands May Still Walk the Line
Being able to trademark names like “FUCT” or “The Slants” is now the law of the land. But that doesn’t necessarily mean fashion brands and retailers will stampede to the U.S. Patent and Trademark office to register potentially offensive names. In Iancu v. Brunetti, the Supreme Court ruled on Monday that trademark registrations cannot be disqualified for being “immoral or scandalous.” The case involved graphic designer Erik Brunetti’s FUCT clothing line that’s been in business since 1990, and it built on the high court’s 2017 decision in another case which effectively said the patent office can’t block “disparaging” trademarks. In that case, Matal v. Tam, the Asian-American rock band “The Slants” had sought to trademark the name, saying their point was to reclaim the racial slur. Related stories Michael Kors, Timo Weiland Veterans Unveil New Collection Heidi Klum, Tim Gunn Shoot New Amazon Show Near Eiffel Tower Arianna Huffington's Thrive Global Taps Chief Operating Officer to Drive 'Massive Scale' These rulings together open the door to registering a variety of trademarks of four-letter words or sexual terms. But whether brands will leap at the chance isn’t just a matter of the law, but of intertwining cultural and business considerations — what trademarks have always been about, said intellectual property attorneys. “We’re talking about a really narrow subset of brand owners that are probably looking to do this,” said Joel MacMull, a member of Mandelbaum Salsburg P.C., who had previously represented The Slants’ lead singer Simon Tam before the Supreme Court. “We’re not going to be walking down a supermarket aisle any time soon with ‘FUCT’ toothpaste next to Crest,” he said. The cases certainly reflect a shift in the view of the place of legislation in American life. After all, it was common until recent decades for states to restrict shopping on Sundays through so-called religious Blue laws. For that matter, the provisions of the 1946 Lanham Act at issue in the FUCT and The Slants cases were baked in similar notions of morality. Story continues The Supreme Court has been signaling that this governance approach may not always be compatible with First Amendment free-speech protections, attorneys said. “The First Amendment has always protected people from having their opinions abridged, but this is a new thinking in some ways,” said Alan Behr, who chairs the Fashion Practice at Phillips Nizer LLP. “This ruling is effectively a shield against the use of a jurisprudential approach to morality.” In the FUCT case, the Supreme Court reiterated the principle that trademark examiners can’t reject a registration for expressing a viewpoint, an idea it had previously cemented in the Tam case. “In the Tam case, we took the position that the disparagement provision violates the first amendment, meaning that it’s viewpoint discriminatory,” said MacMull, who had represented Tam. “That the government doesn’t get to decide which statement it’s going to accept and which statement it would reject,” he said. “The notion of the government serving as a censor is not a regime we live under.” Monday’s FUCT ruling left room for Congress to get involved, and perhaps outline narrower limits than just the broad, subjective category restriction against “immoral or scandalous” trademarks. In his concurrence with Justice Elena Kagan’s opinion for the court, Justice Samuel Alito wrote that it was up to Congress, if it wants, to devise a “more carefully focused statute that precludes the registration of marks containing vulgar terms that play no real part in the expression of ideas.” “The ruling certainly suggested that Congress can narrow the statute so that not all obscene or vulgar trademarks can be registered, but until that fix is put in place, the door is open,” said Lucy Wheatley, a partner at McGuireWoods LLP who advises clients on intellectual property issues. The patent office can still reject applications for trademarks that don’t meet other criteria, such as being too similar to existing applications or marks. But in the end, the question for brands wielding trademarks is also one of building an identity and reputation among their consumers in a way that gives them staying power. “Even though the court has now allowed for the filing of any type of trademark which could be offensive to some, I don’t think you’re going to see a flood of new brands that would offend the sensibilities of the average American consumer,” said Jason Rosenberg, a partner at Alston & Bird, who works on trademark issues. “Trademarks embody consumer goodwill, and when you build up brand equity, it’s because of all of the years of customer interactions and product engagement,” he said. “And that takes a lot of work.” Sign up for WWD's Newsletter . For the latest news, follow us on Twitter , Facebook , and Instagram . |
Should You Be Impressed By Cub Energy Inc.'s (CVE:KUB) ROE?
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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 Cub Energy Inc. (CVE:KUB).
Cub Energy has a ROE of 33%, based on the last twelve months. That means that for every CA$1 worth of shareholders' equity, it generated CA$0.33 in profit.
Check out our latest analysis for Cub Energy
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Cub Energy:
33% = US$3.3m ÷ US$10m (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 earnings retained by the company, plus any capital paid in by shareholders. The easiest way to calculate shareholders' equity is to subtract the company's total liabilities from the total assets.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the amount earned after tax over the last twelve months. A higher profit will lead to a higher ROE. So, all else being equal,a high ROE is better than a low one. That means it can be interesting to compare the ROE of different companies.
By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. Pleasingly, Cub Energy has a superior ROE than the average (7.1%) company in the Oil and Gas industry.
That's what I like to see. I usually take a closer look when a company has a better ROE than industry peers. One data point to check is ifinsiders have bought shares recently.
Companies usually need to invest money to grow their profits. That cash can come from issuing shares, retained earnings, 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 used for growth will improve returns, but won't affect the total equity. That will make the ROE look better than if no debt was used.
While Cub Energy does have some debt, with debt to equity of just 0.75, we wouldn't say debt is excessive. The combination of modest debt and a very impressive ROE does suggest that 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 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 ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. It is important to consider other factors, such as future profit growth -- and how much investment is required going forward. So I think it may be worth checking thisfreethisdetailed graphof past earnings, revenue and cash flow.
But note:Cub Energy may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with 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. |
5 creepy ways billionaires are investing in immortality
Paypal co-founder and venture capitalist Peter Thiel. Photo: USA TODAY Network/SIPA USA/PA Images When they arent investing in space shuttles and sprawling tech campuses, the super-rich are looking at mind-blowing methods to increase their lifespan. Analysis by commercial finance experts ABC Finance has revealed some of the strangest and most extravagant approaches billionaires have turned to in their quest for immortality. Young blood transfusions The first on the list is straight out of a sci-fi blockbuster. Believe it or not, there are currently three US companies conducting trials into the effects of transfusing blood from young, healthy people mostly aged 16 to 25 into those who are getting on in years. In case this all still sounds a little bit far-fetched, there has been enough progress made to prompt the US Food and Drug Administration (FDA) in February to issue a statement that the process has no proven clinical benefits and is potentially harmful. While trials on mice have shown younger blood invigorates older test subjects, human trials have been much less successful. READ MORE: Peter Thiel says higher education has brainwashed Silicon Valley This is unlikely to deter interest from those who have the cash for a pint or two of youthful plasma, though. As of the start of 2019, Alkahest, the Young Blood Institute and start-up Ambrosia offer trials of the service for £6,000 to £215,000. Billionaire PayPal co-founder turned venture capitalist Peter Thiel has made headlines over the past few years for his rumoured interest in this process. This isnt new ground for Thiel, who has made investments in several medical research start-ups looking at ways to extend life via his Breakout Labs fund. Cryonics If you had the chance to be preserved after death and resuscitated in a future where medical science is light-years ahead, would you take it? For some prominent billionaires, the answer is a resounding yes. One of the most famous people associated with cryonics is Walt Disney. Although the rumours of him being frozen after his death have been debunked, the process itself is very real. Story continues And Peter Thiel yes, him again is the most vocal in his endorsement of this process via substantial investments, proving that the mega-rich see some real potential in the method of life extension. READ MORE: No, you can't live forever. Here's the evidence Despite the huge amounts of money funnelled into it, though, the research community at large is known to view the method as pseudo-science. Regardless, those with the means may be happy to fork out £61,000 to freeze their head, or £152,000 for their whole body, at the Alcor Life Extension Foundation, the Cryonics Institute, Suspended Animation Inc. or KrioRus. Digital consciousness Would you consider uploading your brain to the cloud if it meant you could live forever? What if you knew to do so youd have to be euthanised as part of the procedure? Now weve really crossed the line into futurist fiction territory or, if MIT-backed research company Nectome is to be believed the next step in human consciousness. Its easy to laugh these ideas off as Silicon Valley gone mad, but theres actually some serious money being invested in this project about £1m in funding, and a £900,000 federal grant from the US National Institute of Mental Health. READ MORE: Billionaire pays $10,000 to digitally back-up his brain To even sign up for the waiting list at companies like Nectome and the Tarasem Movement Foundation, youre required to put down a deposit of £7,600. But thats the price you pay to live forever in digital form even if the process is 100% fatal and, as of yet, no successful trials have been completed. Apocalypse insurance The end of the world could take many forms. Perhaps the global economy will collapse and lead to a state of worldwide anarchy, maybe there will be a pandemic that will decimate the population thats not even going into risks posed by solar flares. If this is all starting to sound a little bit paranoid, you obviously arent sitting on billions. Reddits CEO Steve Huffman has provided the best insight into this mentality, claiming that he had corrective eye surgery and stockpiles weaponry, food and gold coins to make sure hes ready for a disaster scenario. If his case sounds like an anomaly, estimates from insiders suggest more than half of Silicon Valley billionaires, including Peter Thiel, Mark Zuckerberg, Larry Ellison and Steve Huffman, have some form of apocalypse insurance, ABC Finance said. READ MORE: Survive the apocalypse as nuclear spy base goes on sale Youll be looking at £10.5m to get yourself a secure New Zealand hideaway fit for a billionaire, or £76m to see out the apocalypse in a luxury Hawaii estate. Colonising space When youve accumulated all the money its possible to get your hands on here on earth, it makes sense that youd set your sights a bit further. Thats exactly what several super-rich individuals are currently doing with a billionaire space race now underway. As well as being a smart investment where tech development is concerned and the commercial aspects netting them some big revenue, theres a clear ulterior motive of hedging bets in case our planet suffers a crisis. After all, who doesnt dream of a nice holiday home on Mars? Elon Musks SpaceX plans to charge £44m per person to reach the International Space Station. However, if you just want a short trip to the stars it will cost between £57,000 via World View Enterprises, or £189,000 with Virgin Galactic. READ MORE: Elon Musk Jeff Bezos's plan to live in space 'makes no sense' Jeff Bezoss Blue Origin and Paul Allens Vulcan Aerospace also offer services. |
Latest Ethereum price and analysis (ETH to USD)
Ethereum (ETH) is currently trading at around $334 after a massive jump in price from last week. ETH was trading at around $260 last Wednesday, meaning today’s price represents a 22% move upwards in just one week. Most altcoins have experienced consolidation or stagnation over the last few days. However, it seems that as Bitcoin stabilises, more prominent altcoins such as Ethereum are pumping as investors shift profits from BTC to ETH. Let’s take a look at the chart. Looking at the chart above, we can clearly see a couple of interesting things. Firstly, the 20-day EMA has crossed the 50-day EMA, which is a very bullish signal. Price is also trading well above the 200-day EMA – another bullish signal. There was some resistance between the $300-$315 levels that has now become support, which I predicted could happen last week . These new support levels could help maintain the price in an ascending trajectory. Volume also shows there’s a thin line separating Ethereum from where it currently sits and the $500 level. Assuming the market remains positive, I expect ETH to power past $400 in a few days. At the moment, the correction that occurred earlier this month has seemingly finished, so I now expect ETH to rise again toward $400 and later $500. How long will it take? That I cannot say, but looking at the overall panorama, I would argue no longer than one to two weeks. Safe trades! Ethereum news If Ethereum is to become Web 3.0, it must have a good number of developers working on the infrastructure. In the best case scenario, the altcoin should have a large number of developers working on its core protocol (Ethereum) in addition to a number of developers contributing code to Ethereum’s repositories. Fortunately, Ethereum gives us the best of both worlds as it is ahead of all cryptocurrencies in both categories. Research of developer activity from January 2018 to February 2019 conducted by Electric Capital shows that Ethereum is king in terms of developer activity, with better results than Bitcoin. It has the largest developer team in the crypto space. Story continues On top of infrastructure developments, Ethereum is also making huge changes that will affect both miners and investors. On February 28 2019, Ethereum finally implemented the Constantinople hard fork which featured several improvements and changes to the core protocol. The most controversial change was the proposed shift from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) model. Constantinople introduces a proposed mining model change that not only reduces ETH supply in the market, but also makes the Ethereum network stronger. With a PoS implementation, we could see a greater incentive for ETH holders as well. The protocol implementation that will bring Casper (Ethereum’s PoS consensus mechanism) to life is currently being developed by two research projects: Casper the Friendly Finality Gadget (FFG) Casper the Friendly GHOST: Correct-by-Construction (CBC) The aim is to add a PoS system with the ability to shard, as in the ability to horizontally partition data within a database. More generally, the database is broken into little pieces called ‘shards’ that when aggregated together form the original database. In Ethereum’s case, the database is the main blockchain, and the shards are smaller blockchains (sidechains) connected to the main chain. If Ethereum continues to develop sidechain solutions around its main network, there could be limitless ways to scale. We should also remember Ethereum is currently the backbone of the DeFi movement (decentralised finance), which could help with future adoption. About Ethereum Ethereum was launched by Vitalik Buterin on July 30 2015. He was a researcher and programmer working on Bitcoin Magazine and he initially wrote a whitepaper in 2013 describing Ethereum. Buterin had proposed that Bitcoin needed a scripting language. He decided to develop a new platform with a more general scripting language when he couldn’t get buy in to his proposal. More Ethereum news and information If you want to find out more information about Ethereum or cryptocurrencies in general, then use the search box at the top of this page. Here’s an article to get you started: EXCLUSIVE: Ethereum co-founder Charles Hoskinson takes aim at Bitcoin maximalists By Oliver Knight – June 26, 2019 As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not. You may be interested in our range of cryptocurrency guides along with the latest cryptocurrency news . The post Latest Ethereum price and analysis (ETH to USD) appeared first on Coin Rivet . |
Aggressive Dealmaking Drives Europe's Most Expensive Stock
(Bloomberg) -- Combining two badly performing industries usually doesn’t make them any better. Yet that’s what’s underpinning Europe’s most expensive stock.
Spain’s Cellnex Telecom SA has become the highest-valued stock on the regional benchmark by serving as a landlord to the ailing telecom industry. While real estate and telecom are among the worst performers on the Stoxx 600 Index this year, Cellnex has soared after snapping up towers from carriers eager to convert their assets to cash, helping them keep up with network investments.
“They are in a very sweet spot,” Neil Campling, an analyst at Mirabaud, said by phone. “The only worry at the moment for me is that the stock has moved an awful long way in a very, very short space of time.”
The tower company model is fairly new to Europe, in contrast with the U.S., where American Tower Corp. and Crown Castle International Corp. began buying communication sites in the mid-1990s. Since its initial public offering in 2015, Cellnex has seized the relatively open field with aggressive dealmaking, spending 2.7 billion euros ($3.1 billion) just last month on more than 10,000 towers in Italy, France and Switzerland.
The company looks set to continue its acquisition spree -- it announced on Tuesday the issuance of as much as 850 million euros in a nine-year convertible bond to fund purchases. The company has increased the number of network infrastructure sites in its portfolio by six-fold to about 45,000 in the past 4.5 years, including ones it has agreements on building for clients.
Cellnex has gained nearly 60% in the first half, taking this year’s estimated price-to-earnings ratio to an eye-watering 131, according to data compiled by Bloomberg. That’s beyond such high-growth companies as the Dutch payments prodigy Adyen NA, or computer-games maker CD Projekt SA, which is about to publish its most-hyped title ever. Cellnex declined to comment on the valuation.
While Cellnex’s expected revenue growth is much slower than the other names at the top, the surveyed 12 analysts estimate its earnings per share to nearly double from 2019 to 2021. Tower stocks have showed up on investors’ radar thanks to their stable cash flows and good visibility: smaller Italian peer Inwit SpA has also had a good year with a 43% gain so far. Tower contracts are usually signed for a decade or two.
“There is a premium being paid for corporates that offer visibility,’’ Guy Peddy, an analyst at Macquarie, said by phone. “Cellnex is the only clear, European, free-from-ownership-issues, tower-focused operator.”
Cellnex’s biggest shareholder is Italy’s Benetton family, which owns about 30% of the stock via its investment company Edizione. The family is said to be backing former Telecom Italia SpA head Franco Bernabe to replace Marco Patuano as chairman, Bloomberg reported Monday, citing people familiar with the matter.
During the stellar run of the second quarter, Cellnex shares have mostly traded above the average price target, leaving analysts to play catch-up. The gap became the widest ever this week at 3 euros and currently implies a 4.8% downside to the stock, according to 27 estimates in a Bloomberg survey.
In Europe, the share of telecommunications infrastructure held by independent tower companies is low compared with other regions, according to an April report by accounting and consultancy firm EY and the European Wireless Infrastructure Association (EWIA). The share of independent tower firms was a mere 17% in 2017, compared with 67% in North America and 42% in the Caribbean and Latin America. Operators could free up 28 billion euros if that share grew to 50%, the report estimates.
Race to Buy
One risk to Cellnex’s tower campaign across Europe is competition for assets. The region’s emerging tower business is “not a one-horse race,” analysts at Kempen warned in a note last month, saying that Cellnex losing out on deals could lead to investor disappointment. In 2016, American Towers teamed up with Dutch pension fund PGGM Fondsenbeheer BV, beating Cellnex to win Antin Infrastructure Partners’ French phone towers.
While American Towers has been more focused on emerging markets since, there’s a possibility that a private equity firm such as KKR & Co. Inc. would join the party, Giles Thorne, an analyst at Jefferies said in a note on Tuesday, keeping his buy rating and raising his price target by more than 50%.
“The one candidate that has the assets and scope on paper to replicate Cellnex’s march across Europe is KKR,” Thorne said. “Its actions suggest it doesn’t see the regional synergy case for cross-border M&A. This may yet change.”
Additionally, some telecom carriers see network quality as an important competitive advantage and are reluctant to relinquish control of their top sites. Tim Hoettges, chief executive officer of Deutsche Telekom AG -- which is not a client of Cellnex -- has spoken of “golden sites” as a category of differentiating network infrastructure locations the company wouldn’t be willing to share.
Yet overall, tower companies are well placed to benefit from industry-specific drivers, including increased data consumption, Josh Sambrook-Smith, a thematic equity analyst at Sarasin & Partners, said by phone.
“You have all the other super exciting, long-term trends,” said Sambrook-Smith. “This is just a relatively safe way to play it.”
(Updates share prices from the 6th paragraph, chart)
To contact the reporter on this story: Kit Rees in London at krees1@bloomberg.net
To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, Kasper Viita, Celeste Perri
For more articles like this, please visit us atbloomberg.com
©2019 Bloomberg L.P. |
Will Asure Software Continue to Surge Higher?
As of late, it has definitely been a great time to be an investorAsure Software IncASUR. The stock has moved higher by 13.7% in the past month, while it is also above its 20 Day SMA too. This combination of strong price performance and favorable technical, could suggest that the stock may be on the right path.
We certainly think that this might be the case, particularly if you consider ASUR’s recent earnings estimate revision activity. From this look, the company’s future is quite favorable; as ASUR has earned itself a Zacks Rank #1 (Strong Buy), meaning that its recent run may continue for a bit longer, and that this isn’t the top for the in-focus company. You can seethe complete list of today’s Zacks #1 Rank stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.Click here for the 6 trades >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportAsure Software Inc (ASUR) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
Does TeraGo Inc.'s (TSE:TGO) CEO Pay Matter?
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Tony Ciciretto has been the CEO of TeraGo Inc. (TSE:TGO) since 2016. 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. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for TeraGo
Our data indicates that TeraGo Inc. is worth CA$176m, and total annual CEO compensation is CA$787k. (This figure is for the year to December 2018). That's below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at CA$450k. We took a group of companies with market capitalizations below CA$263m, and calculated the median CEO total compensation to be CA$152k.
Thus we can conclude that Tony Ciciretto receives more in total compensation than the median of a group of companies in the same market, and of similar size to TeraGo Inc.. 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.
The graphic below shows how CEO compensation at TeraGo has changed from year to year.
TeraGo Inc. has reduced its earnings per share by an average of 18% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down -3.5%.
Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. 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.
Boasting a total shareholder return of 116% over three years, TeraGo Inc. 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.
We examined the amount TeraGo Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
However, we can't argue with the strong returns to shareholders, over the same time period. Considering this, shareholders are probably not too worried about the CEO compensation. Whatever your view on compensation, you might want tocheck if insiders are buying or selling TeraGo shares (free trial).
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. |
Conatus' Emricasan Lags Primary Goal in Liver Function Study
Conatus Pharmaceuticals Inc.CNAT announced top-line results from a phase IIb ENCORE-LF study on its lead pipeline candidate, emricasan. The mid-stage study, which evaluated emricasan on patients with decompensated nonalcoholic steatohepatitis (NASH) cirrhosis failed to meet its primary endpoint. Consequently, the company has decided to discontinue further development of emricasan in the ENCORE-LF study.
Conatus also announced results from the phase IIb ENCORE-PH program, which evaluated emricasan for a 24-week extension period. Although, results were consistent from the initial 24-week treatment period, the study missed predefined objectives.
Shares of Conatus have plummeted 83.2% year to date against the industry’s increase of 16%.
Notably, in the second quarter of 2017, Conatus initiated the randomized, double-blind phase IIb ENCORE-LF analysis. In February 2019, the company completed enrolling patients in the study. Recruited subjects were randomized 1:1:1 to receive 5 mg of emricasan, 25 mg of emricasan or placebo twice daily for 48 weeks. The investigation was conducted across 73 sites in the United States.
The primary endpoint was event-free survival or ≥4 points advancement in Model for End-stage Liver Disease (MELD) score. However, the candidate fell short of its primary goal and did not show statistically significant differences in event rates between the treatment and placebo arms and failed to indicate any potential treatment effect.
Last December, Conatus announced top-line results from the ENCORE-PH probe. In the same, emricasan demonstrated clinically meaningful treatment effects on compensated NASH cirrhosis patients, who face the peril of passing to the decompensation state. However, the study failed to meet its primary endpoint. Following a post hoc analysis, emricasan showed a clinically meaningful treatment impact compared with placebo.
Per this press release, the outcomes following the 24-week extension period too did not show statistically significant differences between treatment and the placebo arm.
Earlier this March, Conatus announced that the ENCORE-NF study, which evaluated emricasan for treating patients with biopsy-confirmed NASH and liver fibrosis, could not achieve the primary goal as it lacked the desired effect on these earlier-stage NASH fibrosis patients. Shares of the company significantly dropped back then.
Failure of all these studies significantly hurt the stock as the shares have been persistently down for a considerable amount of time.
We would like to remind investors that Conatus acquired the worldwide rights to emricasan from Pfizer PFE in July 2010. In December 2016, Conatus signed an exclusive option, collaboration and license agreement with Novartis NVS for the worldwide development and commercialization of emricasan.
In a separate press release, the company announced that it is planning to explore and evaluate strategic alternatives to increase its shareholder value. The company has appointed an independent investment bank and financial services company — Oppenheimer & Co., Inc — as its financial advisor for assistance.
Conatus has also decided to slash staff headcount by almost 40% as part of its restructuring plan and suspend the development of its preclinical candidate — CTS-2090 — which was being assessed for treating autoinflammatory diseases. Conatus updated its financial guidance and now expects the 2019-end balance in the range of $10-$15 million.
Zacks Rank & Key Pick
Conatus currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is Acorda Therapeutics, Inc. ACOR, which sports a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Acorda’s loss per share estimates have been narrowed 6.5% for 2019 and 6.9% for 2020 over the past 60 days.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportPfizer Inc. (PFE) : Free Stock Analysis ReportNovartis AG (NVS) : Free Stock Analysis ReportConatus Pharmaceuticals Inc. (CNAT) : Free Stock Analysis ReportAcorda Therapeutics, Inc. (ACOR) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
If You Had Bought Tenth Avenue Petroleum (CVE:TPC) Stock Three Years Ago, You Could Pocket A 114% Gain Today
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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make muchmorethan 100% if the company does well. For instance theTenth Avenue Petroleum Corp.(CVE:TPC) share price is 114% higher than it was three years ago. That sort of return is as solid as granite. In the last week the share price is up 150%.
See our latest analysis for Tenth Avenue Petroleum
Tenth Avenue Petroleum recorded just CA$762,122 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. For example, they may be hoping that Tenth Avenue Petroleum finds fossil fuels with an exploration program, before it runs out of money.
Companies that lack both meaningful revenue and profits are usually considered high risk. 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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Tenth Avenue Petroleum has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
Tenth Avenue Petroleum had liabilities exceeding cash by CA$1,964,121 when it last reported in March 2019, according to our data. That puts it in the highest risk category, according to our analysis. So we're surprised to see the stock up 29% per year, over 3 years, but we're happy for holders. Investors must really like its potential. The image below shows how Tenth Avenue Petroleum's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much revenue or profit. However you can take a look at whether insiders have been buying up shares. It's usually a positive if they have, as it may indicate they see value in the stock. Luckily we are in a position to provide you with thisfreechart of insider buying (and selling).
It's good to see that Tenth Avenue Petroleum has rewarded shareholders with a total shareholder return of 88% in the last twelve months. Notably the five-year annualised TSR loss of 24% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. You could get a better understanding of Tenth Avenue Petroleum's growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
Of courseTenth Avenue Petroleum 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 CA 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. |
U.S. Dollar Index Futures (DX) Technical Analysis – June 26, 2019 Forecast
The U.S. Dollar is trading slightly higher against a basket of currencies on Wednesday, but inside yesterday’s range. The price action suggests investor indecision and impending volatility.
On Tuesday, the index formed a potentially bullish closing price reversal bottom. The catalyst behind the chart pattern was somewhat hawkish comments from Federal Reserve Chairman Jerome Powell. He shook up the markets yesterday when he failed to specifically say the Fed would be cutting rates in late July. This surprised traders who had priced in a 100% rate cut.
These traders need to learn that reading is a skill because last week, the Fed chair and his policymakers never said in their monetary policy statement the central bank would be cutting rates. Furthermore, Powell reiterated that the decision to cut rates would be data dependent, and this seemed to upside the short-sellers.
Powell created uncertain, giving short sellers an excuse to book profits and this reversed the index higher.
At 09:47 GMT,September U.S. Dollar Indexfutures are trading 95.750, up 0.070 or +0.08%.
The main trend is down according to the daily swing chart. However, yesterday’s closing price reversal bottom suggests momentum may be shifting to the upside.
A trade through 95.875 will confirm the closing price reversal bottom. This will also shift momentum to the upside. This could lead to a 2 to 3 day counter-trend rally with 96.315 to 96.540 the next likely upside target.
Taking out 95.365 will negate the closing price reversal bottom and signal a resumption of the uptrend.
The main range is 94.696 to 97.715. Its retracement zone at 95.850 to 96.205 is the first upside target zone, 96.315 to 96.540 is the next.
Based on the early price action and the current price at 95.670, the direction of the September U.S. Dollar Index futures contract on Wednesday is likely to be determined by trader reaction to a pair of Gann angles at 95.770 and 95.765.
A sustained move over 95.770 will indicate the presence of buyers. The first target is the main Fibonacci level at 95.850. This is followed closely by yesterday’s high at 95.875.
Taking out 95.875 will confirm the reversal bottom. This could trigger an acceleration to the upside with the next target a resistance cluster at 96.205 to 96.215.
A sustained move under 95.765 will signal the presence of sellers. This could trigger a break into 95.620, followed by 95.365.
If yesterday’s closing price reversal bottom represents an actual shift in investor sentiment then look for a breakout over 95.875. It would help if the EUR/USD followed through to the downside, following its closing price reversal top on Tuesday.
Thisarticlewas originally posted on FX Empire
• Markets provoke the Fed, Brent breaks away
• Natural Gas Price Forecast – Natural gas grinds higher
• E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – June 27, 2019 Forecast
• Gold Extends Decline and Tests the 1.400 Level Amid China-US Trade Truce Talks
• U.S. Dollar Index Futures (DX) Technical Analysis – Straddling Key Fibonacci Level at 95.850
• Ready for another Drop on the USD? |
Is Tenth Avenue Petroleum's (CVE:TPC) 114% Share Price Increase Well Justified?
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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you canmakemore than 100%. For example, theTenth Avenue Petroleum Corp.(CVE:TPC) share price has soared 114% in the last three years. How nice for those who held the stock! Meanwhile the share price is 150% higher than it was a week ago.
See our latest analysis for Tenth Avenue Petroleum
With just CA$762,122 worth of revenue in twelve months, we don't think the market considers Tenth Avenue Petroleum to have proven its business plan. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, they may be hoping that Tenth Avenue Petroleum finds fossil fuels with an exploration program, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Of course, if you time it right, high risk investments like this can really pay off, as Tenth Avenue Petroleum investors might know.
Our data indicates that Tenth Avenue Petroleum had CA$1,964,121 more in total liabilities than it had cash, when it last reported in March 2019. That makes it extremely high risk, in our view. So we're surprised to see the stock up 29% per year, over 3 years, but we're happy for holders. Investors must really like its potential. You can click on the image below to see (in greater detail) how Tenth Avenue Petroleum's cash levels have changed over time.
Of course, the truth is that it is hard to value companies without much revenue or profit. One thing you can do is check if company insiders are buying shares. If they are buying a significant amount of shares, that's certainly a good thing. You canclick here to see if there are insiders buying.
We're pleased to report that Tenth Avenue Petroleum shareholders have received a total shareholder return of 88% over one year. Notably the five-year annualised TSR loss of 24% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. You might want to assessthis data-rich visualizationof its earnings, revenue and cash flow.
Of courseTenth Avenue Petroleum 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 CA 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. |
Alex Rodriguez Has Backtracked On Comments He Made About Kylie Jenner At The Met Gala
Photo credit: Getty Images From ELLE In a very rapid turn of events, Alex Rodriguez has clarified comments he made inferring that Kylie Jenner was bragging about her wealth at this year's Met Gala. In a Sports Illustrated interview released on Tuesday, Rodriguez spoke about his evening, and the guests who joined he and Jennifer Lopez (his fiancée ), on his table. There was Idris Elba, Sabrina Dhowre, Donatella Versace and the two youngest members of the Kardashian-Jenner clan. 'We had Kylie and Kendall,' he told the magazine. 'Kylie was talking about Instagram, and her lipstick, and how rich she was.' Photo credit: Dimitrios Kambouris - Getty Images In March, Jenner was declared the world's youngest self-made billionaire by Forbes magazine due to the phenomenal success of her beauty empire ( Kylie Cosmetics is said to be worth at least $900 million). So, in all honesty, she is ridiculously rich. Photo credit: Dimitrios Kambouris - Getty Images However, Jenner remembers their conversation differently so after reading the quotes explained her recollection of events on Twitter: Umm no i didn’t. We only spoke about Game of Thrones 🤷🏻♀️🤦🏻♀️ https://t.co/EnItnYlq0R - Kylie Jenner (@KylieJenner) June 25, 2019 A mere matter of hours later, Rodriguez walked back on his earlier comments also taking to Twitter to say that rather than discussing how Jenner surpassed Facebook's Mark Zuckerberg's title on the rich list, they actually spoke about how much his daughters love Kylie's lip kits. OMG that’s right @KylieJenner !! It was me talking about you and your makeup line and how much my girls love you. #GOT #respect #alllove https://t.co/WjhoBMWeq6 - Alex Rodriguez (@AROD) June 26, 2019 So, we're guessing everything is cool with the pair. Some of the 43-year-old's followers, however, were a little confused by his switch in memory. Story continues pic.twitter.com/MUEaPUek9E - zaria. (@litxjlover) June 26, 2019 pic.twitter.com/2WjrZwb9q0 - Derriek (@Derriekk) June 26, 2019 pic.twitter.com/Tc5Mh8E4Cu - Michelle Swan (@CatherineSwan89) June 26, 2019 The former baseball player also agreed with Jenner that they did in fact talk about Game of Thrones, just like the entire world was back in May. So, it seems like that's all settled then? ('You Might Also Like',) Pyjamas You Can Wear All Day 10 Hand Soaps To Make Your Bathroom Feel Like A Fancy Hotel 8 Of The Best Natural Deodorants |
Nabriva Gets EMA Acceptance for Pneumonia Drug Lefamulin
Nabriva Therapeutics plcNBRV announced that the European Medicines Agency (EMA) has accepted its Marketing Authorization Application (MAA), seeking approval for both intravenous (IV) and oral formulations of lefamulin for the treatment of community-acquired pneumonia (CAP) in adult patients. This quick validation from the EMA confirms that the MAA submission is ready for the formal review process by the regulatory agency.
Nabvira expects a decision from the Committee on Human Medicinal Products in the next 12-15 months. Last month, the company submitted the MAA for both the IV and oral formulations of lefamulin for treating patients with CAP aged 18 years and above.
The company plans to enter into a commercial partnership to commercialize lefamulin across Europe for adult patients with CAP. If approved, lefamulin will be available across all the 28 member states of EU along with Norway, Liechtenstein and Iceland.
Shares of Nabvira have surged 44.5% so far this year, outperforming the industry’s increase of 4.2%.
Lefamulin is a potentially first-in-class, semi-synthetic pleuromutilin antibiotic available for oral as well as IV administration in humans to address community-acquired bacterial pneumonia (CABP).
Notably, last December, Nabvira submitted two new drug applications to the FDA for both the IV and oral formulations of lefamulin to treat CABP in the United States. The regulatory body has set an action date of Aug 19, 2019.
Apart from lefamulin, Nabvira has another candidate in its portfolio — Contepo — a potentially first-in-class epoxide intravenous antibiotic developed for treating adult patients with complicated urinary tract infection (cUTI).
Zacks Rank & Stocks to Consider
Nabvira currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the healthcare sector include Acorda Therapeutics, Inc. ACOR, Repligen Corporation RGEN and Merus N.V. MRUS, all sporting a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Acorda’s loss per share estimates have been narrowed 6.5% for 2019 and 6.9% for 2020 over the past 60 days.
Repligen’s earnings estimates have been revised 9.4% upward for 2019 and 9.8% upward for 2020 over the past 60 days. The stock has soared 52.6% year to date.
Merus’ loss per share estimates have been narrowed 22.2% for 2019 and 17.2% for 2020 over the past 60 days.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportAcorda Therapeutics, Inc. (ACOR) : Free Stock Analysis ReportMerus N.V. (MRUS) : Free Stock Analysis ReportRepligen Corporation (RGEN) : Free Stock Analysis ReportNabriva Therapeutics AG (NBRV) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
Edmunds: Best cars for today's youth sports families
Young athletes today compete year-round in a variety of clubs and travel to tournaments, usually with staggering amounts of equipment. Vehicle support is often key, and to that end, Edmunds has collected its picks for the best cars, trucks and SUVs for families with active young athletes. Space for passengers and cargo is paramount in this decision, especially if you'll also be shuttling some of your child's teammates. We've also considered comfort, fuel economy and safety features into our recommendations. Whether it's hockey, travel baseball or amateur motocross, one of our five vehicles should be suited to your needs. Note that we've listed a recommended trim level for each vehicle as well as its listed manufacturer suggested retail pricing (MSRP), which includes destination fees. Other current discounts or incentives might also be available in your area. All of the vehicles here would work well as a 2- or 3-year-old used vehicle. 2019 HONDA ODYSSEY Forget that minivans may project some notion of automotive uncoolness. For active youth sports families, few vehicles are more practical than the Odyssey. Eight-passenger seating means you can ferry your whole crew to weekend tournaments and still have 38 cubic feet of luggage space for gear more than double the trunk space of most sedans. A low floor and sliding doors make it easy for even your smallest goal-scorers to hop in and out. And with its strong V6 engine that returns an EPA-estimated 22 mpg in combined city/highway driving, the Odyssey is built for long hauls. It's also Edmunds' top-ranked minivan. Odyssey EX starting MSRP: $35,205 2019 CHEVROLET TRAVERSE Can't bring yourself to pilot a minivan? We get it. The next best thing is a three-row crossover SUV. The Chevrolet Traverse offers a roomy cabin and the largest cargo space in its class. Three kids or teens can sit in the spacious second row. And by folding down the third row, you've got 58 cubic feet of space for gear and equipment bags. The Traverse is a big SUV and feels like it behind the wheel, but its V6 engine is up to the task of getting you and your crew up to speed. It also gets 21 mpg in combined driving. Story continues Traverse FWD LT Cloth starting MSRP: $36,595 2019 VOLKSWAGEN GOLF SPORTWAGEN There are smaller alternatives if you don't want a minivan or an SUV. The VW Golf SportWagen strikes a good balance between big-car utility and small-car practicality. The SportWagen's 30 cubic feet of cargo space offers plenty of room for gear, and its rear-seat pass-through allows you to carry long objects think hockey or lacrosse sticks lengthwise while still keeping the rear seats upright for two passengers. The SportWagen won't dazzle you with power from its four-cylinder engine, but it does sip gas to the tune of 31 mpg combined. Golf SportWagen SE starting MSRP: $30,980 2019 RAM 1500 If your kids race bikes or karts, ride bulls or horses, or surf waves at the crack of dawn, you'll want a Ram 1500. It rides almost as serenely as a sedan thanks to a unique suspension design, and its quiet cabin offers plenty of space for passengers and multiple storage nooks (under the seat, for example). The Ram, one of the most capable towing rigs around, is available with a variety of engine, cab and bed length configurations. It's no surprise that the Ram 1500 is Edmunds' top-ranked light-duty pickup. Ram 1500 Big Horn Crew Cab 4x2 (with 5-foot-7-inch box) starting MSRP: $40,435 2019 FORD TRANSIT What happens when your requirements exceed what all of the above vehicles are capable of supporting? You go big. The Ford Transit can carry up to 15 passengers, making it easy to scoop up the whole softball team. Alternately, you can take out a couple of rows of seating and have a huge cargo area at your disposal. Other advantages include an optional high roof, which allows even lanky teens to stand up inside, and Ford's sophisticated Sync 3 infotainment system that can make long treks to distant tournaments more enjoyable. Transit XL starting MSRP: $37,335 EDMUNDS SAYS: With today's youth sports requiring ever more space for gear and distances to travel for competition, families have several good options for driving their young athletes. ___ Dan Frio is a reviews editor at Edmunds. This story was provided to The Associated Press by the automotive website Edmunds. Related links: 2019 HONDA ODYSSEY: https://www.edmunds.com/honda/odyssey/ 2019 CHEVROLET TRAVERSE: https://www.edmunds.com/chevrolet/traverse/ 2019 VOLKSWAGEN GOLF SPORTWAGEN: https://www.edmunds.com/volkswagen/golf-sportwagen/ 2019 RAM 1500: https://www.edmunds.com/ram/1500/ 2019 FORD TRANSIT: https://www.edmunds.com/ford/transit-passenger-van/ |
Update: Izotropic (CNSX:IZO) Stock Gained 12% In The Last Year
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Izotropic Corporation(CNSX:IZO) shareholders might be concerned after seeing the share price drop 12% in the last quarter. But that doesn't change the fact that the returns over the last year have been pleasing. Looking at the full year, the company has easily bested an index fund by gaining 12%.
See our latest analysis for Izotropic
With zero revenue generated over twelve months, we don't think that Izotropic has proved its business plan yet. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Izotropic will significantly advance the business plan before too long.
Companies that lack both meaningful revenue and profits are usually considered high risk. 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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing.
Izotropic had cash in excess of all liabilities of just CA$341k when it last reported (January 2019). So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. It's a testament to the popularity of the business plan that the share price gained 12% in the last year, despite the weak balance sheet. You can click on the image below to see (in greater detail) how Izotropic's cash levels have changed over time.
Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, many of the best investors like to check if insiders have been buying shares. It's often positive if so, assuming the buying is sustained and meaningful. You canclick here to see if there are insiders buying.
Izotropic shareholders should be happy with thetotalgain of 12% over the last twelve months. We regret to report that the share price is down 12% over ninety days. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. You could get a better understanding of Izotropic's growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
Of courseIzotropic 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 CA 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. |
Europe's Scorching Heatwave Forces Germany to Impose Autobahn Speed Limits
A blistering heatwave prompted Germany to impose speed restrictions on usually limit-free stretches of its high-speed motorways Wednesday, the latest sign of extreme weather events ruffling Europe’s largest economy.
State authorities are reducing speeds to as low as 100 kilometers per hour (62 miles per hour) on some stretches because of fears that the unusually high temperatures could create potentially deadly cracks on Autobahn surfaces, a highways agency spokesman said. Temperatures in Germany on Wednesday could surpass a June high of 38.2 degrees Celsius (101 Fahrenheit), according to the country’s DWD weather service. The all-time record of 40.3 degrees, set in July 2015, could also fall.
Meteorologists blame climate change for sending a blast of air from the Sahara desert into Western Europe. The sweltering heat echoes a sustained drought in 2018 across Germany that halted shipping on the Rhine River, hampered power generation, sparked forest fires and forced the country to import grain for the first time in 24 years. Rising temperatures are making violent convective storms more likely, mirroring a trend in the U.S. Midwest.
Changes to the jet stream, which would normally blow in cooler weather from the Atlantic Ocean, are contributing to “the build-up of hot and dry conditions over the continent, sometimes turning a few sunny days into dangerous heatwaves,” said Dim Coumou, a climatologist at the Vrije Universiteit Amsterdam.
The early summer heat has already sparked wildfires outside Berlin. In Paris, volunteers distributed water to homeless people after the French government closed schools and activated a contingency plan to protect residents. The Red Cross warned that excessive heat could cause dizziness, convulsions and hallucinations, especially for older people. Electricity prices across the continent surged on expectations Europeans would turn on fans and air conditioning units to keep cool.
Europe’s heat in June — part of a string of extraordinary weather patterns including temperatures of more than 50 degrees inIndiathat killed over 180 people — is the latest reminder of the tangible effects of climate change.
With those risks harder to ignore, environmental concerns have rocketed up the political agenda. Support for Germany’s Green Party has eclipsed Chancellor Angela Merkel’s Christian Democrats to become the country’sstrongest partyin some recent polls.
Political tensions are high. Over the weekend, German police forcibly removed protesters who stormed an open-pit coal mine owned by German utility RWE AG, Europe’s biggest corporate emitter of carbon dioxide. Demonstrators blocked railroads used to carry the fuel to nearby power plants over what they see as the slow pace of Germany’s plans to exit coal.
“Nothing less than our future is at stake,” saidNikeMalhaus, spokeswoman for protest group Ende Gelaende. “We are taking the coal phaseout into our own hands, because the government is failing to protect the climate.”
The heatwave is the second to hit Europe this year after a similar weather pattern pushed temperatures above 20 degrees for several days in February, sparking wildfires in northern England and the Alps.
Temperatures in Switzerland are about 10 degrees warmer than normal for this time of year, according to data compiled by Bloomberg. The high temperatures means glaciers will likely shrink further, increasing the likelihood that the Rhine will again be too shallow for shipping later this year, according to Switzerland’s federal weather agency.
Meanwhile, Europeans are adapting to this week’s heat in ways large and small. Brussels has suspended horse-and-carriage rides for tourists. The decision was taken out of respect for the animals’ welfare, said Fabian Maingain, the Belgian city’s chief for economic affairs, told Le Soir newspaper. Similar decisions have been taken by Antwerp and Ostend.
In Hemer — a town about 35 kilometers (22 miles) southwest of Dortmund — a man on Saturday took off his clothes in a supermarket’s frozen-food department to escape the heat that is predicted to peak on Wednesday. After customers alerted staff, he grabbed a banana and a can of beer before attempting to flee the store, local police said onTwitter. |
'This Morning' star denies calling for ITV to sack Amanda Holden after feud with Phillip Schofield
Amanda Holden (Credit: PA Images) This Morning star Sophie Prescott has denied that she called for Amanda Holden to be sacked from Britains Got Talent after her feud with Phillip Schofield. According to The Sun , Holden raised concerns to ITV bosses after she was apparently blocked by Schofield from co-presenting This Morning , while Holly Willoughby was in Australia for Im A Celebrity . The Mirror reported that Prescott jumped to Schofields defence and called for ITV to drop her from Britains Got Talent . However, Prescott has now denied making those claims, writing in an Instagram Story: "You may have seen some words in the press from me today and it's not true. I didn't speak those words, so please do not believe them." Keen crafter Sophie Prescott has appeared on 'This Morning' a number of times (ITV) Read more: Amanda Holden claims she tried to contact Phillip Schofield On working with Holden in a craft segment on This Morning , Prescott was previously reported as saying: "Amanda was all 'me, me, me. "I put on a brave happy face doing the show but Amanda was very off-putting during my live appearance, kept asking questions, kept interfering and I felt she was a very controlling person. "You'd think she owned the show the way she carried on and I never liked her from that moment on." "Whatever beef she has with Philip should be dealt with behind close doors." Phillip Schofield and Holly Willougby (Credit:David Jensen/EMPICS Entertainment/PA Images) Read more: Phillip Schofield branded 'arch manipulator' in thick of Amanda Holden feud She continued: "Who does Amanda think she is, marching into Kevin Lygo's office demanding answers on what she alleges that is supposed to have happened? "Amanda should be 'yellow-carded' and told to shut up or face getting the sack from Britain's Got Talent." Prescott was full of praise for Schofield, however, adding: "Philip has always offered me a warm welcome, he's a true gentleman who is very professional and genuinely cares about the people he works with on This Morning. "As far as I'm concerned, the picture she is painting of Philip of being ruthless and unkind is simply not true in my opinion." |
China's Didi expands partnership with automaker GAC Group
BEIJING (Reuters) - Chinese ride-hailing giant Didi Chuxing said on Wednesday it would expand its partnership with Guangzhou Automobile Group Co Ltd (GAC Group) to areas such as ride-hailing operations and autonomous driving.
China's largest ride-hailing firm and Guangzhou-based GAC Group will work on fleet expansion and management, development of new mobility products, and collaboration on smart driving, including autonomous driving technology, Didi said in a statement.
Didi has also invested in OnTime, a mobility platform newly-launched by GAC Group and will support the company with its data capabilities and operational expertise, it added.
GAC Group was among 31 automakers and parts suppliers that formed an alliance with Didi last year. Didi said at the time that it wanted to offer its customer and operational skills to automakers wanting to develop their own ride-sharing services in return for design expertise.
Didi has set up joint ventures with a unit of Chinese carmaker Beijing Automotive Group Co Ltd and Germany's Volkswagen as part of its goal to ultimately develop purpose-built cars for its services.
GAC sold over 2.1 million cars last year, including units made with Toyota, Honda and Mitsubishi.
(Reporting by Yilei Sun in Beijing and Brenda Goh in Shanghai; Editing by Himani Sarkar & Uttaresh.V) |
If You Had Bought Karmin Exploration (CVE:KAR) Shares Three Years Ago You'd Have Made 162%
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Karmin Exploration Inc.(CVE:KAR) shareholders might be concerned after seeing the share price drop 13% in the last quarter. But in three years the returns have been great. In three years the stock price has launched 162% higher: a great result. It's not uncommon to see a share price retrace a bit, after a big gain. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.
View our latest analysis for Karmin Exploration
Karmin Exploration didn't have any revenue in the last year, so it's fair to say it doesn't yet have a proven product (or at least not one people are paying for). 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 Karmin Exploration finds some valuable resources, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Some Karmin Exploration investors have already had a taste of the sweet taste stocks like this can leave in the mouth, as they gain popularity and attract speculative capital.
Our data indicates that Karmin Exploration had CA$2,511,142 more in total liabilities than it had cash, when it last reported in January 2019. That makes it extremely high risk, in our view. So the fact that the stock is up 38% per year, over 3 years shows that high risks can lead to high rewards, sometimes. Investors must really like its potential. The image below shows how Karmin Exploration's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much 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.
It's good to see that Karmin Exploration has rewarded shareholders with a total shareholder return of 23% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 20% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before spending more time on Karmin Explorationit might be wise to click here to see if insiders have been buying or selling shares.
We will like Karmin Exploration better if we see some big insider buys. While we wait, check out thisfreelist of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA 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. |
An Intrinsic Calculation For GasLog Ltd. (NYSE:GLOG) Suggests It's 36% Undervalued
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Today we'll do a simple run through of a valuation method used to estimate the attractiveness of GasLog Ltd. (NYSE:GLOG) as an investment opportunity by taking the foreast future cash flows of the company and discounting them back to today's 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. 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 GasLog
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. 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.
Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value:
[{"": "Levered FCF ($, Millions)", "2019": "$3.22", "2020": "$-457.02", "2021": "$191.39", "2022": "$254.90", "2023": "$316.20", "2024": "$372.01", "2025": "$421.02", "2026": "$463.30", "2027": "$499.66", "2028": "$531.20"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x1", "2020": "Analyst x3", "2021": "Analyst x2", "2022": "Est @ 33.18%", "2023": "Est @ 24.05%", "2024": "Est @ 17.65%", "2025": "Est @ 13.18%", "2026": "Est @ 10.04%", "2027": "Est @ 7.85%", "2028": "Est @ 6.31%"}, {"": "Present Value ($, Millions) Discounted @ 14.12%", "2019": "$2.83", "2020": "$-350.94", "2021": "$128.79", "2022": "$150.31", "2023": "$163.39", "2024": "$168.45", "2025": "$167.06", "2026": "$161.09", "2027": "$152.24", "2028": "$141.83"}]
Present Value of 10-year Cash Flow (PVCF)= $885.05m
"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 (2.7%) 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 14.1%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = US$531m × (1 + 2.7%) ÷ (14.1% – 2.7%) = US$4.8b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= $US$4.8b ÷ ( 1 + 14.1%)10= $1.28b
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is $2.16b. 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 $21.16. Compared to the current share price of $13.57, the company appears quite undervalued at a 36% discount to where the stock price trades currently. 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.
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. 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 GasLog 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 14.1%, which is based on a levered beta of 1.91. 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. What is the reason for the share price to differ from the intrinsic value? For GasLog, I've put together three further aspects you should further examine:
1. Financial Health: Does GLOG 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 GLOG'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 GLOG? 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 US 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. |
'End of an era': Bombardier sells regional jet business to Mitsubishi
Bombardier Inc. (BBD.TO) will sell its regional jet division to Japan’s Mitsubishi Heavy Industries Ltd. for US$550 million, marking the company’s exit from the commercial airline space.
The Quebec-based plane and train maker announced Tuesday that it has entered a definitive agreement with Mitsubishi to sell its CRJ aircraft program for US$550 million, as well as an assumption of US$200 million in liabilities.
Bombardier’s chief executive Alain Bellemare said in a statement that the sale represents the completion of the company’s aerospace transformation – one that has seen the company ditch its costly efforts to compete in the commercial aviation space against giants such as Boeing Co. and Airbus SE.
“With our aerospace transformation now behind us, we have a clear path forward and a powerful vision for the future,” Bellemare said.
“Our focus is on two strong growth pillars: Bombardier Transportation, our global rail business, and Bombardier Aviation, a world-class business jet franchise with market-defining products and an unmatched customer experience.”
Bombardier, which is approaching the tail end of Bellemare’s turnaround plan, has been exiting the commercial aerospace segment over the last two years as it searches for sustainable growth and profitability. The CRJ – once representing the significant chunk of Bombardier’s revenues but now unprofitable – was the last remaining aircraft in its Commercial Aircraft division.
Bellemare, who joined Bombardier in 2015, is streamlining operations at the company to focus on its more profitable rail and private jet business, two areas he has said will create the most value for shareholders.
The first major divestment came in October 2017, when Airbus acquired a majority stake in the company’s beleaguered CSeries program. Since then, Bombardier has sold its Q400 program and announced that it is looking to sell itsaerostructure businesses in Belfast and Morocco.
Bombardier has now transformed “from an aviation powerhouse to a much smaller and leaner player”, aviation analyst and Teal Group vice president Richard Aboulafia wrote in a note.
“New management, brought in after things got desperate in 2015, quickly realized that they were running a ship that had set a course for the nearest iceberg,” he wrote.
“Selling off much of the company is a drastic measure, but it’s hard to see any other course that could have saved Bombardier, and they deserve a lot of credit.”
RBC Capital Markets Walter Spracklin called the deal “the end of an era” in a note to clients Tuesday.
“The net proceeds to BBD of $150MM is roughly in line with our expectations, and has no significant impact on our estimates, but overall we expect the deal to be a modest positive for valuation as the deal marks progress for the company towards its transformation strategy,” Spracklin wrote.
Altacorp Capital analyst Chris Murray wrote in a note Tuesday that he expects that the company’s aerostructures business will likely be the next divestment.
“We believe the next asset to be sold will be the company’s aerostructures unit as the company continues to refine its business lines to business aircraft and transportation,” Murray wrote Tuesday.
The CRJ deal will see Mitsubishi take over maintenance, support, refurbishment, marketing and sales for the aircraft, which includes its operations in Montreal, Toronto, as well as service centres in West Virginia and Arizona. The deal is expected to close in the first half of 2020.
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Are Kelt Exploration Ltd. (TSE:KEL) Investors Paying Above The Intrinsic Value?
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Today we will run through one way of estimating the intrinsic value of Kelt Exploration Ltd. (TSE:KEL) by estimating the company's 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. Anyone interested in learning a bit more about intrinsic value should have a read of theSimply Wall St analysis model.
Check out our latest analysis for Kelt Exploration
We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. 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.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
[{"": "Levered FCF (CA$, Millions)", "2019": "CA$-29.00", "2020": "CA$-23.00", "2021": "CA$44.00", "2022": "CA$48.00", "2023": "CA$51.20", "2024": "CA$53.90", "2025": "CA$56.19", "2026": "CA$58.20", "2027": "CA$59.99", "2028": "CA$61.64"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x2", "2020": "Analyst x3", "2021": "Analyst x1", "2022": "Analyst x1", "2023": "Est @ 6.68%", "2024": "Est @ 5.26%", "2025": "Est @ 4.26%", "2026": "Est @ 3.57%", "2027": "Est @ 3.08%", "2028": "Est @ 2.74%"}, {"": "Present Value (CA$, Millions) Discounted @ 8.55%", "2019": "CA$-26.72", "2020": "CA$-19.52", "2021": "CA$34.40", "2022": "CA$34.57", "2023": "CA$33.97", "2024": "CA$32.94", "2025": "CA$31.64", "2026": "CA$30.18", "2027": "CA$28.66", "2028": "CA$27.13"}]
Present Value of 10-year Cash Flow (PVCF)= CA$207.26m
"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. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 10-year government bond rate of 1.9%. We discount the terminal cash flows to today's value at a cost of equity of 8.6%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = CA$62m × (1 + 1.9%) ÷ (8.6% – 1.9%) = CA$951m
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= CA$CA$951m ÷ ( 1 + 8.6%)10= CA$418.69m
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 CA$625.95m. 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 CA$3.4. Relative to the current share price of CA$4.13, the company appears slightly overvalued 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.
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. 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 Kelt Exploration 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 8.6%, which is based on a levered beta of 1.108. 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.
Although the valuation of a company is important, 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. What is the reason for the share price to differ from the intrinsic value? For Kelt Exploration, I've put together three fundamental factors you should further research:
1. Financial Health: Does KEL 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 KEL'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 KEL? 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 TSE 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. |
One Thing To Remember About The Golden Cariboo Resources Ltd. (CVE:GCC.H) Share Price
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If you own shares in Golden Cariboo Resources Ltd. (CVE:GCC.H) then it's worth thinking about how it contributes to the volatility of your portfolio, overall. In finance, Beta is a measure of volatility. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.
Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. A stock with a beta below one is either less volatile than the market, or more volatile but not corellated with the overall market. In comparison a stock with a beta of over one tends to be move in a similar direction to the market in the long term, but with greater changes in price.
See our latest analysis for Golden Cariboo Resources
Zooming in on Golden Cariboo Resources, we see it has a five year beta of 1.52. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market. If the past is any guide, we would expect that Golden Cariboo Resources shares will rise quicker than the markets in times of optimism, but fall faster in times of pessimism. Beta is worth considering, but it's also important to consider whether Golden Cariboo Resources is growing earnings and revenue. You can take a look for yourself, below.
Golden Cariboo Resources is a rather small company. It has a market capitalisation of CA$943k, which means it is probably under the radar of most investors. It takes less money to influence the share price of a very small company. This may explain the excess volatility implied by this beta value.
Beta only tells us that the Golden Cariboo Resources share price is sensitive to broader market movements. This could indicate that it is a high growth company, or is heavily influenced by sentiment because it is speculative. Alternatively, it could have operating leverage in its business model. Ultimately, beta is an interesting metric, but there's plenty more to learn. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Golden Cariboo Resources’s financial health and performance track record. I highly recommend you dive deeper by considering the following:
1. Financial Health: Are GCC.H’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.
2. Past Track Record: Has GCC.H been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look atthe free visual representations of GCC.H's historicalsfor 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. |
Mnuchin says U.S.-China trade deal is 90% done: Morning Brief
Wednesday, June 26, 2019
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Industrial giant FedEx (FDX) and chipmaker Micron (MU) reported quarterly results after the market close Tuesday. On one hand,FedEx warned that the trade war and weakness in global trade materially impacted their business. On the other hand, Micron surprised investors with stronger-than-expected results.
Meanwhile, the U.S. Census Bureau will be releasing May’s durable goods orders ahead of the opening bell. Durable goods orders declined for the past three consecutive months, and economists are expecting headline orders to have fallen again by 0.1% in May, up from the 2.1% drop in April, according to data compiled by Bloomberg. Durable goods excluding transportation are anticipated to have risen 0.3%.
On the corporate earnings side, General Mills (GIS) is scheduled to release results ahead of the market open, while Rite Aid (RAD) reports after the market close.
Read more
Mnuchin tells CNBC U.S.-China trade deal is 90% done: U.S. Treasury Secretary Steven Mnuchin said on Wednesday that the trade deal between the United States and China is "about 90%" complete, CNBC reported. "We were about 90% of the way there (with a deal) and I think there's a path to complete this," Mnuchin said in an interview to the news channel. [Reuters]
Fed is 'insulated' from short-term political pressure:Federal Reserve Chairman Jerome Powell said Tuesday afternoon that the Fed is “insulated” from short-term political pressure, warning that huge policy mistakes can happen when the Fed is influenced by the White House. [Yahoo Finance]
Tesla has enough orders to set delivery record, Musk writes:Tesla Inc. (TSLA) could be on the verge of a quarterly record for vehicle deliveries, though the electric carmaker will need to go “all out” in the last few days of the month, Chief Executive Officer Elon Musk wrote in an internal memo. [Bloomberg]
Illinois becomes the latest state to legalize marijuana:Illinois became the 11th state in the U.S. to legalize recreational marijuana on Tuesday after Governor J.B. Pritzker signed the regulatory bill legislators passed at the end of May. Legal recreational marijuana sales will begin in Illinois on January 1, 2020. Now which states will follow? [Yahoo Finance]
A super-short guide to the 24 Democrats running for president: Americans will finally see how a battalion of Democratic presidential candidates stack up head-to-head during this week’s debates.Ten Democrats, headlined by Elizabeth Warren and Beto O’Rourke, will debate on NBC, MSNBC and Telemundo today starting at 9 pm ET.Another 10, including Joe Biden and Kamala Harris, will lock horns the following night. [Yahoo Finance]
Amazon announced the date of Prime Day, and it sounds like Alibaba’s Singles Day
JPMorgan's Jamie Dimon: Student lending in the U.S. is a 'disgrace' and it's 'hurting America'
New AFL-CIO report shows pay disparity between CEOs, workers
Why politicians should not savage the $63 billion Abbvie-Allergan deal
Home price growth slows for the 13th straight month
What cannabis and fake meat have in common right now
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UPDATE 5-Tesla's senior production executive at Fremont facility quits - source
(Updates share price)
By Vibhuti Sharma
June 26 (Reuters) - Tesla Inc's vice president of production at its Fremont factory, Peter Hochholdinger, has left after three years with the electric-car maker, a source familiar with the matter told Reuters.
Hochholdinger, a former production executive at Volkswagen AG, is the latest high-profile executive to leave Tesla in the past two years as the automaker struggles to ramp up production of Model 3, which is seen as crucial for its long-term profitability.
He was tasked with improving production for Tesla's luxury Model S sedan and Model X sport utility vehicle as well as helping build a cost-effective manufacturing program for the Model 3 sedan, the company had said https://reut.rs/2KFSyd2 in his appointment memo.
At Volkswagen, Hochholdinger spent 22 years supervising the production of Audi A4, A5 and Q5 models. When Audi set up a new production facility in Mexico, he served as an adviser.
Both Tesla and Hochholdinger did not respond to requests for comment.
Demand for Tesla cars has been one of the major concerns of investors amid escalating U.S.-China trade tensions. The company reported a 31% fall in first-quarter deliveries and warned that profit would be delayed until the latter half of the year.
Chief Executive Officer Elon Musk, however, said last month that the company was on course to deliver a record number of cars in the second quarter.
Musk reiterated the claim on Tuesday after automotive news website Electrek reported that the company faces delivery bottlenecks at the close of the second quarter.
Electrek was also the first to report https://electrek.co/2019/06/26/tesla-loses-head-of-production on Hochholdinger's exit from Tesla.
Earlier on Wednesday, Wedbush analysts lowered their current quarter delivery forecast to 84,000 units from an earlier forecast of 88,000 units, adding that Tesla hitting its quarterly delivery target is an "unlikely event".
Shares of the company, which is expected to report its second-quarter delivery and production numbers in July, were down marginally at $218.65. (Reporting by Akanksha Rana and Vibhuti Sharma in Bengaluru; Editing by Arun Koyyur and Saumyadeb Chakrabarty) |
Does KeyCorp's (NYSE:KEY) P/E Ratio Signal A Buying Opportunity?
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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 KeyCorp's (NYSE:KEY) P/E ratio could help you assess the value on offer.KeyCorp has a price to earnings ratio of 9.86, based on the last twelve months. That means that at current prices, buyers pay $9.86 for every $1 in trailing yearly profits.
Check out our latest analysis for KeyCorp
Theformula for price to earningsis:
Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)
Or for KeyCorp:
P/E of 9.86 = $17.03 ÷ $1.73 (Based on the trailing twelve months to March 2019.)
A higher P/E ratio means that investors are payinga higher pricefor each $1 of company earnings. 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.'
Earnings growth rates have a big influence on P/E ratios. That's because companies that grow earnings per share quickly will rapidly increase the 'E' in the equation. Therefore, even if you pay a high multiple of earnings now, that multiple will become lower in the future. A lower P/E should indicate the stock is cheap relative to others -- and that may attract buyers.
Notably, KeyCorp grew EPS by a whopping 39% in the last year. And its annual EPS growth rate over 5 years is 12%. I'd therefore be a little surprised if its P/E ratio was not relatively high.
The P/E ratio essentially measures market expectations of a company. The image below shows that KeyCorp has a lower P/E than the average (12.6) P/E for companies in the banks industry.
This suggests that market participants think KeyCorp will underperform other companies in its industry. Since the market seems unimpressed with KeyCorp, it's quite possible it could surprise on the upside. You should delve deeper. I like to checkif company insiders have been buying or selling.
Don't forget that the P/E ratio considers market capitalization. That means it doesn't take debt or cash into account. Hypothetically, a company could reduce its future P/E ratio by spending its cash (or taking on debt) to achieve higher earnings.
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.
KeyCorp's net debt is 77% of its market cap. This is a reasonably significant level of debt -- all else being equal you'd expect a much lower P/E than if it had net cash.
KeyCorp has a P/E of 9.9. That's below the average in the US market, which is 17.8. While the EPS growth last year was strong, the significant debt levels reduce the number of options available to management. If it continues to grow, then the current low P/E may prove to be unjustified.
Investors have an opportunity when market expectations about a stock are wrong. 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. 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 KeyCorp. 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. |
Gilead Inks Deal With Carna Biosciences for Immuno-Oncology
Gilead Sciences, Inc.GILD entered a research and development collaboration with Japan-based biopharmaceutical company, Carna Biosciences Inc.
Both the companies have collaborated to develop and commercialize small molecule compounds in immuno-oncology.
The deal will also allow Gilead to access Carna’s proprietary lipid kinase drug discovery platform. Per the terms, the company will license worldwide rights to develop and commercialize inhibitors against an undisclosed immuno-oncology target from Carna.
In exchange, Carna will receive an upfront payment of $20 million and is eligible to receive up to an additional $450 million in milestone payments. Carna will also receive royalties on future net sales.
Gilead is currently making efforts to build a pipeline in immuno-oncology. In December 2018, it collaborated with Agenus AGEN for the development and commercialization of up to five novel immuno-oncology therapies.
Gilead’s stock has gained 9.5% in the year so far compared with the industry's growth of 4.2%.
Recently, the company collaborated with San Francisco-based Nurix Therapeutics, Inc. to discover, develop and commercialize a pipeline of innovative targeted protein degradation drugs for patients with cancer and other challenging diseases.
Earlier, Gilead also collaborated with Goldfinch Bio, Inc., a biotechnology company focused on developing precision therapies for patients with kidney diseases.
Given the persistent decline in HCV sales, stiff competition from the likes of Glaxo GSK and pricing pressure in the HIV market, the company is looking to newer avenues to boost the top line. Gilead has made quite a few collaborations, of late, to strengthen and diversify its pipeline.
The company is intending to foray into the inflammation market with late-stage candidate, filgotinib. It has collaborated with big pharma companies like Novo Nordisk NVO to develop treatments for non-alcoholic steatohepatitis (NASH).
Zacks Rank
Gilead currently carries a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.Click here for the 6 trades >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportGlaxoSmithKline plc (GSK) : Free Stock Analysis ReportNovo Nordisk A/S (NVO) : Free Stock Analysis ReportGilead Sciences, Inc. (GILD) : Free Stock Analysis ReportAgenus Inc. (AGEN) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research |
Read This Before You Buy KeyCorp (NYSE:KEY) Because Of Its 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 show how you can use KeyCorp's (NYSE:KEY) P/E ratio to inform your assessment of the investment opportunity.KeyCorp has a P/E ratio of 9.86, based on the last twelve months. In other words, at today's prices, investors are paying $9.86 for every $1 in prior year profit.
Check out our latest analysis for KeyCorp
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for KeyCorp:
P/E of 9.86 = $17.03 ÷ $1.73 (Based on the trailing twelve months to March 2019.)
A higher P/E ratio implies that investors paya higher pricefor the earning power of the business. 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.
Earnings growth rates have a big influence on P/E ratios. Earnings growth means that in the future the 'E' will be higher. That means unless the share price increases, the P/E will reduce in a few years. A lower P/E should indicate the stock is cheap relative to others -- and that may attract buyers.
It's nice to see that KeyCorp grew EPS by a stonking 39% in the last year. And earnings per share have improved by 12% annually, over the last five years. With that performance, I would expect it to have an above average P/E ratio.
The P/E ratio indicates whether the market has higher or lower expectations of a company. The image below shows that KeyCorp has a lower P/E than the average (12.6) P/E for companies in the banks industry.
Its relatively low P/E ratio indicates that KeyCorp shareholders think it will struggle to do as well as other companies in its industry classification. Since the market seems unimpressed with KeyCorp, it's quite possible it could surprise on the upside. If you consider the stock interesting, further research is recommended. For example, I often monitordirector buying and selling.
Don't forget that the P/E ratio considers market capitalization. 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.
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).
KeyCorp has net debt worth 77% of its market capitalization. This is enough debt that you'd have to make some adjustments before using the P/E ratio to compare it to a company with net cash.
KeyCorp trades on a P/E ratio of 9.9, which is below the US market average of 17.8. While the EPS growth last year was strong, the significant debt levels reduce the number of options available to management. If the company can continue to grow earnings, then the current P/E may be unjustifiably low.
Investors have an opportunity when market expectations about a stock are wrong. 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.' So thisfreereport on the analyst consensus forecastscould help you make amaster moveon this stock.
You might be able to find a better buy than KeyCorp. 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. |
Is Exponent, Inc. (NASDAQ:EXPO) Worth US$57.29 Based On Its Intrinsic Value?
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In this article we are going to estimate the intrinsic value of Exponent, Inc. (NASDAQ:EXPO) by taking the foreast future cash flows of the company and discounting them back to today's value. This is done using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. Anyone interested in learning a bit more about intrinsic value should have a read of theSimply Wall St analysis model.
View our latest analysis for Exponent
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we discount the value of these future cash flows to their estimated value in today's dollars:
[{"": "Levered FCF ($, Millions)", "2019": "$80.56", "2020": "$98.91", "2021": "$111.00", "2022": "$120.87", "2023": "$129.38", "2024": "$136.81", "2025": "$143.44", "2026": "$149.47", "2027": "$155.10", "2028": "$160.46"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x2", "2020": "Analyst x2", "2021": "Analyst x1", "2022": "Est @ 8.89%", "2023": "Est @ 7.04%", "2024": "Est @ 5.75%", "2025": "Est @ 4.84%", "2026": "Est @ 4.21%", "2027": "Est @ 3.77%", "2028": "Est @ 3.45%"}, {"": "Present Value ($, Millions) Discounted @ 8.13%", "2019": "$74.50", "2020": "$84.59", "2021": "$87.79", "2022": "$88.41", "2023": "$87.52", "2024": "$85.59", "2025": "$82.99", "2026": "$79.97", "2027": "$76.75", "2028": "$73.43"}]
Present Value of 10-year Cash Flow (PVCF)= $821.54m
"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. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 10-year government bond rate of 2.7%. We discount the terminal cash flows to today's value at a cost of equity of 8.1%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = US$160m × (1 + 2.7%) ÷ (8.1% – 2.7%) = US$3.1b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= $US$3.1b ÷ ( 1 + 8.1%)10= $1.40b
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 $2.22b. The last step is to then divide the equity value by the number of shares outstanding.This results in an intrinsic value estimate of $42.74. Relative to the current share price of $57.29, the company appears reasonably expensive 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.
We would point out that 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 Exponent 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 8.1%, which is based on a levered beta of 0.906. 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.
Whilst important, DCF calculation 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. What is the reason for the share price to differ from the intrinsic value? For Exponent, I've compiled three pertinent factors you should further examine:
1. Financial Health: Does EXPO 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 EXPO'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 EXPO? 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 US 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. |
No-deal Brexit could spark 'flurry of profit warnings' in UK
People cross the Millennium Bridge in front of the Shard, London. Photo: Hannah McKay/ Reuters A no-deal Brexit could cause a flurry of profit warnings by British companies and cut government tax revenue, according to chartered accountants in the UK. Such profit warnings by firms reliant on EU access could then trigger a systemic loss of confidence on the markets that could hurt the UK economy as a whole. The remarks by Martin Manuzi, European director at the Institute of Chartered Accountants in England and Wales (ICAEW), at a committee hearing in parliament sparked accusations of scare-mongering by MPs. Manuzi said he was not involved in Project Fear, and was only highlighting chartered accountants concerns about the firms they worked with. The ICEAW has more than 150,000 members. READ MORE: UK financial services have spent £4bn preparing for Brexit Businesses are increasingly alarmed by the economic rupture facing Britain if it leaves the EU without an agreement on 31 October, with time running out and few signs of a likely route to a deal by the legal deadline. Boris Johnson, the frontrunner to replace Theresa May as UK prime minister next month, said on Tuesday Britain would leave the EU come what may by November. Boris Johnson visits a butcher's shop in Oxshott, Surrey as part of his leadership bid. Photo: Peter Nicholls/ Reuters READ MORE: EU says next UK prime minister cannot re-open Brexit talks Manuzi told MPs the tremendous economic instability and uncertainty over Brexit was already creating the most challenging business environment his members had faced in many years. He said the ICEAW supported contingency planning for a no-deal Brexit, but said he wanted to put his organisations concerns on the record very clearly. Its likely we may well see after 1 November a flurry of profit warnings from companies finding themselves in completely unprecedented circumstances, he said. READ MORE: The big hole in Boris Johnsons Brexit plans He said companies with a large reliance on smooth EU trade would need to warn investors about the consequences of losing access overnight from a hard Brexit. Manuzi said the impact on market confidence was impossible to predict, but his organisation was looking at the cumulative effect on market confidence of a string of profit warnings. Story continues Were not here to do scaremongering or say the sky is falling in, but these are the things were thinking about, he said. A systemic loss of confidence can have macroeconomic impact. All of that can ultimately have an impact on the tax take. READ MORE: Major UK firm could slash thousands of jobs over Brexit But he added that his remarks were not a prediction, but a possible outcome for firms most reliant on the EU from a disorderly exit that caused real dislocation. He said the Bank of England had rightly carried out stress tests for UK banks, but asked: What about the wider impact on the economy? The comments sparked a backlash from several MPs on parliaments Brexit committee who were sceptical of his claims, with one calling it a chilling account. Democratic Unionist Party (DUP) MP Sammy Wilson said it was another piece of speculation, and suggested firms should have issued profit warnings already if they were suffering from Brexit. |
Does This Valuation Of Exponent, Inc. (NASDAQ:EXPO) Imply Investors Are Overpaying?
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In this article we are going to estimate the intrinsic value of Exponent, Inc. (NASDAQ:EXPO) by projecting its future cash flows and then discounting them to today's value. I will be using the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple!
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. 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.
View our latest analysis for Exponent
We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of 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 ($, Millions)", "2019": "$80.56", "2020": "$98.91", "2021": "$111.00", "2022": "$120.87", "2023": "$129.38", "2024": "$136.81", "2025": "$143.44", "2026": "$149.47", "2027": "$155.10", "2028": "$160.46"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x2", "2020": "Analyst x2", "2021": "Analyst x1", "2022": "Est @ 8.89%", "2023": "Est @ 7.04%", "2024": "Est @ 5.75%", "2025": "Est @ 4.84%", "2026": "Est @ 4.21%", "2027": "Est @ 3.77%", "2028": "Est @ 3.45%"}, {"": "Present Value ($, Millions) Discounted @ 8.13%", "2019": "$74.50", "2020": "$84.59", "2021": "$87.79", "2022": "$88.41", "2023": "$87.52", "2024": "$85.59", "2025": "$82.99", "2026": "$79.97", "2027": "$76.75", "2028": "$73.43"}]
Present Value of 10-year Cash Flow (PVCF)= $821.54m
"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 (2.7%) 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 8.1%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = US$160m × (1 + 2.7%) ÷ (8.1% – 2.7%) = US$3.1b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= $US$3.1b ÷ ( 1 + 8.1%)10= $1.40b
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 $2.22b. 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 $42.74. Relative to the current share price of $57.29, the company appears reasonably expensive at the time of writing. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. 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 Exponent 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 8.1%, which is based on a levered beta of 0.906. 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. What is the reason for the share price to differ from the intrinsic value? For Exponent, There are three fundamental aspects you should further examine:
1. Financial Health: Does EXPO 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 EXPO'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 EXPO? 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 US 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. |
Republican Senator Kevin Cramer Introduces New Pro-Life Bill
Washington — Today Senator Kevin Cramer (R., N.D.) will introduce the Patient Rights Act (PRA), a bill aimed at exposing the potential consequences of the logic behind permissive abortion laws. The legislation, cosponsored by Republican senators Steve Daines of Montana — who serves as the chair of the Senate’s first-ever Pro-Life Caucus, instituted earlier this year — and Marsha Blackburn of Tennessee, would place additional requirements on health-care providers that receive federal funding “ by recognizing the unborn as patients and restricting federal funding to any health care facility that does not protect the lives of all patients (from conception to natural death),” according to a summary of the bill provided exclusively to National Review . Its restrictions would apply to funding for Medicaid and Medicare, among other programs. “The unborn deserve the same rights as any other human being,” Cramer told National Review via email. “All patients — from the unborn to the elderly — are given the unalienable right to life, but our current system too often denies them of it. Organizations that do not honor the right to life at any of its stages do not deserve taxpayer funds, and this bill reflects that truth.” The PRA would mandate that health-care practitioners exercise “the same degree of professional skill, care, and diligence to preserve the life and health of any patient as a reasonably diligent and conscientious health care practitioner would render to a patient in a different state of functionality, development, or degree of dependence.” This language is similar to that of a bill introduced earlier this term by Senator Ben Sasse (R., Neb.), the Born-Alive Abortion Survivors Protection Act, which would’ve required doctors to give newborns that survived a botched abortion procedure “the same degree of care as reasonably provided to another child born alive at the same gestational age.” Sasse’s bill was defeated in February after 44 Democrats opposed it, claiming it was an unnecessary restriction on abortion — though none of the bill’s language limited abortion procedures or access. Story continues Like Sasse’s bill, this legislation is being introduced in part to draw attention to Democratic efforts to expand access to abortion, even late in pregnancy. Most Democratic politicians running for the 2020 presidential nomination have expressed opposition to abortion restrictions of any kind, and several voted earlier this year against Sasse’s born-alive bill. Meanwhile, in recent weeks, Democratic legislatures in states such as Vermont, Illinois, and Rhode Island have passed bills deeming abortion at any stage of pregnancy, and for any reason, a “fundamental right.” In some states, these bills explicitly provide that embryos and fetuses have no legal rights. In contrast, Cramer’s new legislation would define “patient” in line with the pro-life movement’s understanding, as persons who are “unborn, newly born, born prematurely, pregnant, elderly, mentally or physically disabled, terminally ill, in a persistent vegetative state, unresponsive or comatose, or otherwise incapable of self-advocacy.” The PRA mandates that doctors not intentionally end the life of any patient through physician-assisted suicide or abortion procedures, with an exception on the latter prohibition for instances when a mother’s life is in danger. It also forbids health-care practitioners from instituting “do-not-resuscitate orders” for patients without obtaining their consent or the consent of the patient’s authorized representative. To ensure enforcement, the bill would require the secretary of the Department of Health and Human Services to review federally funded health-care facilities every five years for compliance with the PRA’s provisions, establish a means for confidential reporting of violations, and create a public database so patients can research the record of health-care groups. The legislation also creates a right of civil action for patients and families to sue if a federally funded health-care group fails to respect a patient’s rights. Because of the complexities of medical care, the bill offers several exceptions. Its requirements do not apply to cases in which a physician withholds life-saving treatment, nutrition, or hydration, as long it isn’t intended to cause the patient’s death and the patient has given informed consent. It also allows for the use of pain-relieving drugs, even if they might increase the risk of death, and medical procedures to prevent the death of a pregnant woman or her unborn child. According to Cramer’s office, the proposed bill already has support from prominent pro-life lobbying groups the Susan B. Anthony List and the March for Life. It is unclear whether the bill will receive a vote this term, but Senate majority leader Mitch McConnell (R., Ky.) said in an interview earlier this month that he plans to bring a vote on legislation removing federal funding from Planned Parenthood, the nation’s largest abortion provider. He also suggested the possibility of a second vote on Sasse’s born-alive bill. More from National Review Senators, Pass the Ban on the Abortion of Fetuses Capable of Feeling Pain Roe v. Wade at 45: Most Americans Support Abortion Restrictions Pro-Choice Myths Are Perpetuated by a New York Times Fetal-Personhood Story |
The Lovesac (NASDAQ:LOVE) Share Price Has Gained 24% And Shareholders Are Hoping For More
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The Lovesac Company(NASDAQ:LOVE) shareholders might be concerned after seeing the share price drop 18% in the last month. But looking back over the last year, the returns have actually been rather pleasing! Looking at the full year, the company has easily bested an index fund by gaining 24%.
See our latest analysis for Lovesac
Given that Lovesac 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Lovesac grew its revenue by 62% last year. That's well above most other pre-profit companies. While the share price gain of 24% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. So quite frankly it could be a good time to investigate Lovesac in some detail. Since we evolved from monkeys, we think in linear terms by nature. So if growth goes exponential, opportunity may exist for the enlightened.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
You can see how its balance sheet has strengthened (or weakened) over time in thisfreeinteractive graphic.
It's nice to see that Lovesac shareholders have gained 24% over the last year. A substantial portion of that gain has come in the last three months, with the stock up 5.7% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. Shareholders might want to examinethis detailed historical graphof past earnings, revenue and cash flow.
We will like Lovesac better if we see some big insider buys. While we wait, check out thisfreelist of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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. |
Does Edison International (NYSE:EIX) Have A Place In Your Dividend Stock Portfolio?
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Could Edison International (NYSE:EIX) 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. Unfortunately, it's common for investors to be enticed in by the seemingly attractive yield, and lose money when the company has to cut its dividend payments.
In this case, Edison International likely looks attractive to investors, given its 3.8% dividend yield and a payment history of over ten years. We'd guess that plenty of investors have purchased it for the income. 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
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. While Edison International pays a dividend, it reported a loss over the last year. When a company recently reported a loss, we should investigate if its cash flows covered the dividend.
Unfortunately, while Edison International pays a dividend, it also reported negative free cash flow last year. While there may be a good reason for this, it's not ideal from a dividend perspective.
Given Edison International is paying a dividend but reported a loss over the past year, we need to check its balance sheet for signs of financial distress. A quick way to check a company's financial situation uses these two ratios: net debt divided by EBITDA (earnings before interest, tax, depreciation and amortisation), and 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 above 3x EBITDA, investors are starting to take on a meaningful amount of risk, should the business enter a downturn.
We calculated its interest cover by measuring its earnings before interest and tax (EBIT), and dividing this by the company's net interest expense. Interest cover of less than 5x its interest expense is starting to become a concern for Edison International, and be aware that lenders may place additional restrictions on the company as well.
Consider gettingour latest analysis on Edison International's financial position 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. For the purpose of this article, we only scrutinise the last decade of Edison International's dividend payments. During this period the dividend has been stable, which could imply the business could have relatively consistent earnings power. During the past ten-year period, the first annual payment was US$1.24 in 2009, compared to US$2.45 last year. Dividends per share have grown at approximately 7.0% per year over this time.
Businesses that can grow their dividends at a decent rate and maintain a stable payout can generate substantial wealth for shareholders over the long term.
Dividend payments have been consistent over the past few years, but we should always check if earnings per share (EPS) are growing, as this will help maintain the purchasing power of the dividend. In the last five years, Edison International's earnings per share have shrunk at approximately 26% per annum. 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. We're a bit uncomfortable with Edison International paying a dividend while loss-making, especially since the dividend was also not well covered by free cash flow. Second, earnings per share have actually shrunk, but at least the dividends have been relatively stable. There are a few too many issues for us to get comfortable with Edison International from a dividend perspective. Businesses can change, but we would struggle to identify why an investor should rely on this stock for their income.
Given that earnings are not growing, the dividend does not look nearly so attractive. See if the 13 analysts are forecasting a turnaround in ourfree collection of analyst estimates here.
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. |
Macron says France to be vigilant over Carlos Ghosn's rights
TOKYO, June 26 (Reuters) - President Emmanuel Macron said on Wednesday France would remain vigilant that Carlos Ghosn's presumption of innocence and the former Renault-Nissan leaders' rights to defend himself in a Japanese lawcase are respected.
"It's not up to the French president to interfere publicly in a judicial case," Macron said. "Japanese justice is independent."
"We will be vigilant, just like with all our citizens across the world who have to answer to the law, through consular activity, so that the defendent's rights and presumption of innocence are respected in that case." (Reporting by Chris Gallagher; writing by Michel Rose in Paris; Editing by Leigh Thomas) |
NRA shuts down production at TV channel amid leadership coup attempt and legal troubles
The National Rifle Association has shut down production at NRA TV. The NRA on Tuesday also severed all business with its estranged advertising firm, Ackerman McQueen, which operates NRA TV, the NRA’s live broadcasting media arm, according to interviews and documents reviewed by The New York Times . While NRA TV may continue to air past content, its live broadcasting will end and its on-air personalities – Ackerman employees who included Dana Loesch — will no longer be the public faces of the NRA. It remained unclear whether the NRA might try to hire some of those employees, but there was no indication it was negotiating to do so. The move comes amid a flurry of lawsuits between the NRA and Ackerman, and increasing acrimony that surfaced after two prominent NRA board members first criticised NRA TV in an article in The Times in March. The separation had become inevitable: The two sides said last month that they were ending their three-decade-plus partnership. “Many members expressed concern about the messaging on NRA TV becoming too far removed from our core mission: defending the Second Amendment ,” Wayne LaPierre , the NRA’s longtime chief executive, wrote in a message to members that was expected to be sent out by Wednesday. “So, after careful consideration, I am announcing that starting today, we are undergoing a significant change in our communications strategy. We are no longer airing ‘live TV’ programming.” In a notice to Ackerman’s chief executive, Revan McQueen, sent on Tuesday night, the NRA said it “regrets that a long-standing, formerly productive relationship comes to an end in this fashion.” Ackerman, in its own statement, said it was “not surprised that the NRA is unwilling to honour its agreement to end our contract and our long-standing relationship in an orderly and amicable manner.” “When given the opportunity to do the right thing, the NRA once again has taken action that we believe is intended to harm our company even at the expense of the NRA itself,” the company added. It said it “will continue to fight against the NRA’s repeated violations of its agreement with our company with every legal remedy available to us.” The development is the latest in what has been a tumultuous year for the NRA. It has struggled to right its finances; faced investigations in Congress and by Letitia James , the New York attorney general; and witnessed a leadership struggle that pitted Oliver North , the NRA’s former president, against Mr LaPierre. Last week, The Times reported that the NRA had suspended Christopher W Cox, its longtime second-in-command, after a legal filing by the NRA implicated him in a failed plot to oust Mr LaPierre. Mr Cox has strongly rejected such allegations. Story continues NRA officials had grown leery of the cost of creating so much live content for NRA TV, which was started in 2016, and wondered whether it was worth the return on its investment. The site’s web traffic was minuscule, with 49,000 unique visitors in January, according to a report provided by comScore. Some NRA board members and officials were also unnerved by the breadth of its content, which strayed far beyond gun rights and encompassed several right-wing talking points, including criticism of immigration and broadsides against the FBI . A show hosted by Ms Loesch that put Ku Klux Klan hoods on talking trains from the popular children’s programme Thomas & Friends drew outrage from some within the organisation. But the dispute between the NRA and Ackerman goes deeper than NRA TV. It has its origins in threats by Ms James last summer to investigate the NRA’s tax-exempt status. The NRA began an audit of its contractors, and has said that Ackerman, which was paid roughly $40m (£31.5m) annually by the NRA, refused to comply. Ackerman has disputed that allegation. Ackerman has assailed the role of the NRA’s outside attorney, William A Brewer III, over the size of his legal fees, and has seen him as its chief antagonist. The contention has a bitter family twist because Mr Brewer is the brother-in-law of Mr McQueen, Ackerman’s chief executive. The schism between the organisations has been shocking. They had a closely intertwined partnership going back to the “I’m the NRA” campaign in the 1980s, and Ackerman came to be known as the voice of the NRA. But by Tuesday night, splitting up was seen as inevitable. “This is just an affirmation of what we’ve known is going to happen,” said Joel Friedman, an NRA board member. The New York Times View comments |
Is Edison International (NYSE:EIX) A Good Dividend Stock?
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Could Edison International (NYSE:EIX) 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 the income from dividends, it's important to be a lot more stringent with your investments than the average punter.
With Edison International 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. There are a few simple ways to reduce the risks of buying Edison International for its dividend, and we'll go through these below.
Explore this interactive chart for our latest analysis on Edison International!
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. As a result, we should always investigate whether a company can afford its dividend, measured as a percentage of a company's net income after tax. While Edison International pays a dividend, it reported a loss over the last year. When a company recently reported a loss, we should investigate if its cash flows covered the dividend.
Last year, Edison International paid a dividend while reporting negative free cash flow. While there may be an explanation, we think this behaviour is generally not sustainable.
Given Edison International is paying a dividend but reported a loss over the past year, we need to check its balance sheet for signs of financial distress. A quick way to check a company's financial situation uses these two ratios: net debt divided by EBITDA (earnings before interest, tax, depreciation and amortisation), and 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 above 3x EBITDA, investors are starting to take on a meaningful amount of risk, should the business enter a downturn.
We calculated its interest cover by measuring its earnings before interest and tax (EBIT), and dividing this by the company's net interest expense. Interest cover of less than 5x its interest expense is starting to become a concern for Edison International, and be aware that lenders may place additional restrictions on the company as well.
Consider gettingour latest analysis on Edison International's financial position 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. Edison International has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of payments. During this period the dividend has been stable, which could imply the business could have relatively consistent earnings power. During the past ten-year period, the first annual payment was US$1.24 in 2009, compared to US$2.45 last year. Dividends per share have grown at approximately 7.0% per year over this time.
Companies like this, growing their dividend at a decent rate, can be very valuable over the long term, if the rate of growth can be maintained.
While dividend payments have been relatively reliable, it would also be nice if earnings per share (EPS) were growing, as this is essential to maintaining the dividend's purchasing power over the long term. In the last five years, Edison International's earnings per share have shrunk at approximately 26% per annum. 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.
Dividend investors should always want to know if a) a company's dividends are affordable, b) if there is a track record of consistent payments, and c) if the dividend is capable of growing. Edison International's dividend is not well covered by free cash flow, plus it paid a dividend while being unprofitable. Moreover, earnings have been shrinking. While the dividends have been fairly steady, we'd wonder for how much longer this will be sustainable if earnings continue to decline. Using these criteria, Edison International looks quite suboptimal from a dividend investment perspective.
Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from costs or inflation. See if the 13 analysts are forecasting a turnaround in ourfree collection of analyst estimates here.
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. |
Health Canada Just Failed the Marijuana Industry... Again
In terms of growth prospects, no industry is blazing a trail quite like legal marijuana. The newly released "State of the Legal Cannabis Markets" report from Arcview Market Research and BDS Analytics calls formore than $40 billion in global licensed-store revenueby 2024, up from just under $11 billion in 2018 (a compound annual growth rate of 24%). If these figures prove accurate, quite a few pot stocks should be rolling in the green, so to speak.
Even though the United States is viewed as the crown jewel of the cannabis movement, it's Canada that's led the way on the legalization front. In October, our neighbor to the north became the first industrialized country in the world, and only the second country worldwide behind Uruguay, to legalize recreational cannabis. Arcview and BDS foresee around $4.8 billion in yearly pot sales in Canada by 2024.
Image source: Getty Images.
While this might seem like the perfect recipe for success, the launch of legal weed hasn't exactly been a budding success in Canada. In January and February, licensed cannabis store sales in Canada actually declined, with February sales coming inabout 13% lower than where they were in December. That's a head-scratcher given the popularity surrounding marijuana and the favorability the public has toward legalization.
This sales weakness can be boiled down to a combination of three problems.
First, growers were unwilling to spend $100 million-plus on capacity expansion projects until they knew for certain that the Cannabis Act would become law. That didn't happen until late 2017/early 2018, which was less than a year before the official launch of adult-use marijuana. Nearly all growers are still in the process of building out their capacity, which has left supply far below actual domestic demand.
Second, most growers have also complained of compliant packaging shortages. Regulatory agency Health Canada laid out a series of guidelines that growers, processors, distributors, and retailers would need to follow if they wanted pot products to wind up on cannabis-store shelves. That's led to a shortage of compliant packaging in the early going, which in turn has kept unfinished cannabis sitting on the sidelines.
But the biggest problem of all has arguably been the regulatory red tape associated with Health Canada. As the agency tasked with reviewing and approving or denying cultivation, processing, distribution, and sales license applications, Health Canada was working witha backlog of more than 800 applicationsin January.
Image source: Getty Images.
As you can imagine, having such a large backlog has meant long wait times for applicants.Aphria, for example, has been waiting more than a year for an answer to its cultivation license application on Aphria Diamond, its joint venture with Double Diamond Farms that'll ultimately produce the bulk of its annual output (140,000 kilos of Aphria's projected 255,000 kilos at peak production).
Recently, Health Canada implemented what it believes will be a "fix" for this mess. Rather than having growers submit cultivation applications well in advance of actually beginning construction on their farms, Health Canada will nowrequire that grow facilities be complete prior to submitting applications. This should, in theory, remove a number of underfunded applicants, as well as prioritize those larger players that have completed their buildouts. Nevertheless, this workaround will take many quarters to play out, which could man extended wait times for cultivation and sales license approval for most Canadian pot stocks.
But this isn't the only time that Health Canada has failed the marijuana industry. Roughly two weeks ago, we learned that themost anticipated event in 2019-- the launch of derivative cannabis products (e.g., edibles, vapes, concentrates, topicals, and nonalcoholic infused beverages) -- would be delayed.
According to apress releasefrom Health Canada that finalized the regulations for the production and sale of cannabis extracts and topicals, amended regulations will go into effect by no later than the one-year anniversary of the launch of adult-use marijuana (Oct. 17, 2019). However, "it will take time, after that date, before new cannabis products become available for purchase," according to the release.
Image source: Getty Images.
Cannabis-store license holders are going to be required to give Health Canada notice 60 days prior to selling these new derivative products, with the regulatory agency not expecting alternative consumption options to go on sale until mid-December 2019, at the earliest. Additionally, as we saw with recreational dried flower, the uptick of supply in licensed dispensaries could be slow if supply chain issues persist.
In short, whereas pretty much all marijuana stocks and investors were looking toward October 17, at the latest, as the point where high-margin weed sales would kick in, there'll be a roughly two- to three-month gap now before high-margin derivative sales really take off. For investors, that means waiting until possibly April to June before we see a derivative-focused uptick in pot stock sales for the calendar year first quarter in 2020 (Jan. 1, 2020-March 31, 2020).
Even though all marijuana stocks are planning on incorporating derivatives into their portfolios, this Health Canada decision hurts more pot growers than it helps.
Aurora Cannabis(NYSE: ACB)is one such company that's not going to be pleased with this decision. Aurora's management team has been clear that themedical marijuana market is its focus. Medical cannabis patients tend to use pot products more frequently, buy more often, and are far more attracted to derivative products than dried flower. Although oils, sprays, and capsules are legal now, Aurora is counting a broader assortment of derivative production to drive its bottom line into the green. It looks like a tapered launch of derivatives may now push profitability for the company into 2021.
Image source: Getty Images.
The story is the same forCronos Group(NASDAQ: CRON), which is angling to be more of a cannabinoid company than dried flower producer. Following a$1.8 billion equity investmentfromAltria, it's expected that Cronos will work with its new partner to develop vape products in Canada. The launch of these vape products, and Cronos Group's ability to take advantage of its up to $100 million partnership with Ginkgo Bioworks to develop targeted cannabinoids, is now on hold for a few more months.
Quebec-basedHEXO(NYSEMKT: HEXO)shouldn't be a fan of this news, either. HEXO has more than 600,000 square feet set aside for manufacturing and processing cannabis, which is a fancy way of saying that it's set aside a lot of space to develop derivative products. Further, HEXO recentlysigned a two-year agreementwithValens GroWorksthat'll see Valens provide extraction services for at least 80,000 kilos (in aggregate) of hemp and cannabis biomass. HEXO's potential to turn a profit may also have been pushed back a quarter or two.
Maybe the only pot stock that could benefit from this delay is Ontario'sCannTrust Holdings(NYSE: CTST). In late March, CannTrust announced its intention to acquire up to 200 acres of land that'll beput to work for outdoor cannabis growing. Much of CannTrust's outdoor grow will be used for extraction purposes and the creation of derivative products. However, it's unlikely that we'd see this outdoor production hitting processors for extraction prior to first quarter of 2020, at the earliest. In other words, CannTrust's late play for added outdoor capacity means it won't fall too far behind the curve, if at all.
In sum, it's probably time to trim your near-term expectations for Canadian marijuana stocks.
More From The Motley Fool
• Beginner's Guide to Investing in Marijuana Stocks
• Marijuana Stocks Are Overhyped: 10 Better Buys for You Now
• Your 2019 Guide to Investing in Marijuana Stocks
Sean Williamsowns shares of CannTrust Holdings Inc. The Motley Fool recommends CannTrust Holdings Inc and HEXO. The Motley Fool has adisclosure policy. |
Where Amdocs Limited's (NASDAQ:DOX) Earnings Growth Stands Against Its 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 Amdocs Limited's (NASDAQ:DOX) 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.
See our latest analysis for Amdocs
DOX's trailing twelve-month earnings (from 31 March 2019) of US$362m has declined by -19% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -2.6%, indicating the rate at which DOX is growing has slowed down. What could be happening here? Let's examine what's transpiring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Amdocs has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 7.0% exceeds the US IT industry of 5.6%, indicating Amdocs has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Amdocs’s debt level, has increased over the past 3 years from 12% to 13%.
While past data is useful, it doesn’t tell the whole story. Usually companies that experience a prolonged period of diminishing earnings are undergoing some sort of reinvestment phase in order to keep up with the recent industry disruption and expansion. I suggest you continue to research Amdocs to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for DOX’s future growth? Take a look at ourfree research report of analyst consensusfor DOX’s outlook.
2. Financial Health: Are DOX’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. |
Are Investors Undervaluing Denbury Resources Inc. (NYSE:DNR) By 47%?
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Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Denbury Resources Inc. (NYSE:DNR) as an investment opportunity 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. Don't get put off by the jargon, the math behind it is actually quite straightforward.
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. Anyone interested in learning a bit more about intrinsic value should have a read of theSimply Wall St analysis model.
Check out our latest analysis for Denbury Resources
We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. 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.
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 ($, Millions)", "2019": "$227.93", "2020": "$209.26", "2021": "$158.00", "2022": "$128.40", "2023": "$112.61", "2024": "$103.84", "2025": "$99.03", "2026": "$96.63", "2027": "$95.78", "2028": "$95.98"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x5", "2020": "Analyst x4", "2021": "Analyst x1", "2022": "Est @ -18.74%", "2023": "Est @ -12.3%", "2024": "Est @ -7.79%", "2025": "Est @ -4.63%", "2026": "Est @ -2.42%", "2027": "Est @ -0.88%", "2028": "Est @ 0.2%"}, {"": "Present Value ($, Millions) Discounted @ 14.65%", "2019": "$198.80", "2020": "$159.20", "2021": "$104.84", "2022": "$74.31", "2023": "$56.85", "2024": "$45.72", "2025": "$38.03", "2026": "$32.37", "2027": "$27.98", "2028": "$24.46"}]
Present Value of 10-year Cash Flow (PVCF)= $762.57m
"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 (2.7%) 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 14.7%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = US$96m × (1 + 2.7%) ÷ (14.7% – 2.7%) = US$827m
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= $US$827m ÷ ( 1 + 14.7%)10= $210.79m
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is $973.35m. The last step is to then divide the equity value by the number of shares outstanding.This results in an intrinsic value estimate of $2.15. Compared to the current share price of $1.15, the company appears quite good value at a 47% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
We would point out that 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 Denbury Resources 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 14.7%, which is based on a levered beta of 2. 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.
Whilst important, DCF calculation 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. What is the reason for the share price to differ from the intrinsic value? For Denbury Resources, I've put together three relevant aspects you should further examine:
1. Financial Health: Does DNR 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 DNR'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 DNR? 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 US 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. |
Are Investors Undervaluing Denbury Resources Inc. (NYSE:DNR) By 47%?
Want to participate in ashort research study? Help shape the future of investing tools and you could win a $250 gift card!
How far off is Denbury Resources Inc. (NYSE:DNR) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. I will be using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.
Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in theSimply Wall St analysis model.
Check out our latest analysis for Denbury Resources
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars:
[{"": "Levered FCF ($, Millions)", "2019": "$227.93", "2020": "$209.26", "2021": "$158.00", "2022": "$128.40", "2023": "$112.61", "2024": "$103.84", "2025": "$99.03", "2026": "$96.63", "2027": "$95.78", "2028": "$95.98"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x5", "2020": "Analyst x4", "2021": "Analyst x1", "2022": "Est @ -18.74%", "2023": "Est @ -12.3%", "2024": "Est @ -7.79%", "2025": "Est @ -4.63%", "2026": "Est @ -2.42%", "2027": "Est @ -0.88%", "2028": "Est @ 0.2%"}, {"": "Present Value ($, Millions) Discounted @ 14.65%", "2019": "$198.80", "2020": "$159.20", "2021": "$104.84", "2022": "$74.31", "2023": "$56.85", "2024": "$45.72", "2025": "$38.03", "2026": "$32.37", "2027": "$27.98", "2028": "$24.46"}]
Present Value of 10-year Cash Flow (PVCF)= $762.57m
"Est" = FCF growth rate estimated by Simply Wall St
The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 10-year government bond rate of 2.7%. We discount the terminal cash flows to today's value at a cost of equity of 14.7%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = US$96m × (1 + 2.7%) ÷ (14.7% – 2.7%) = US$827m
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= $US$827m ÷ ( 1 + 14.7%)10= $210.79m
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is $973.35m. 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 $2.15. Relative to the current share price of $1.15, the company appears quite good value at a 47% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. 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 Denbury Resources 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 14.7%, which is based on a levered beta of 2. 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.
Although the valuation of a company is important, 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. What is the reason for the share price to differ from the intrinsic value? For Denbury Resources, I've compiled three further factors you should look at:
1. Financial Health: Does DNR 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 DNR'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 DNR? 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 NYSE 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. |
Opera’s Browser With Built-In Crypto Wallet Launches for iPhones
Users of Android phones and desktop computers have had the option to use Opera’s blockchain-friendly browser for months now, but iPhone owners have been left out of the fun.
That’s now changed with the launch of the latest version of Opera Touch for iOS.
As per ablog postfrom the firm, the new browser option is largely identical to the above-mentioned offerings, providing a built-in cryptocurrency wallet and the ability to run Web 3.0 and decentralized apps (dapps) without a third-party plugin.
Related:Why Ethereum’s Privacy Matters and What’s Being Built to Support It
Opera says:
“We believe that the Web of today will be the interface to the decentralized web of tomorrow (Web 3). With built-in Crypto Wallet, the browser has the potential to renew and extend its important role as a tool to access information, make transactions online and manage users’ online identities in a way that gives them more control.”
The wallet currently allows users to hold, transact and make payments in ethereum and all ERC-20 standard tokens and stablecoins, as well as collectibles such as CryptoKitties via the ERC-721 standard.
The Opera website says the wallet can automatically detect and list any ERC-20 tokens used in ethereum dapps, such as in-game currencies.
Related:Above $300: Ether Price Clocks 10-Month High
Dapps can be accessed by typing their address directly in the browser, avoiding the need to use third-party extensions
In order to start using dapps, users will need to purchase ethereum (ETH) and store it in the Opera wallet. Once there, a selection of dapps will be listed in the store in the app, the post says.
App image courtesy of Opera
• Ethereum Devs Approve First Code Changes for ‘Istanbul’ Hard Fork
• Meet Alternateth: A ‘Friendly Fork’ of the Ethereum Blockchain |
No recent contacts with Switzerland over stock exchanges - EU
BRUSSELS, June 26 (Reuters) - The European Commission has had no contacts with Switzerland in the past few days to avoid the expiration at the end of this week of the equivalence regime that allows Swiss stock exchanges to access the EU market, a spokeswoman said on Wednesday.
"There have not been any contact," the EU executive's spokeswoman told a news conference. She said there was no update from last week's meeting of the EU Commission that refrained from proposing an extension to the equivalence.
The spokeswoman added that the Commission remained open to finalise an overall partnership treaty with Bern by the end of October. (Reporting by Francesco Guarascio @fraguarascio; editing by Philip Blenkinsop) |
Boy, 12, arrested on suspicion of homophobic assault
A 12-year-old boy has been arrested on suspicion of a homophobic attack (PX Here/stock photo) Police have arrested a 12-year-old boy on suspicion of a homophobic attack in Liverpool on Saturday night. Merseyside Police said the boy was held on suspicion of homophobic aggravated assault following an attack on two men, in their 30s, in Anfield. The force said the men were walking down Manningham Road at about 9.20pm when they were approached by three male youths . Two men were assaulted on Manningham Road in Anfield on Saturday night (Google) The youths made homophobic insults before one of them produced a knife and assaulted the men. One of the victims sustained injuries to his head and neck, described as serious but non-life threatening, while the second sustained a minor hand injury. Both were taken to hospital for treatment and were left incredibly shaken by the incident, police said. Read more from Yahoo News UK: UK population hits 66.4 million as growth rate stalls More than 5,000 turtles seized in luggage at Malaysian airport Ian Brady had access to vulnerable teenagers in Wormwood Scrubs Detective Inspector Tara Denn said: "This was an appalling and unprovoked attack on two men simply making their way home and we are working tirelessly to locate those responsible. "Two men have been left with significant injuries tonight and the hate and violence that has been inflicted on them is simply unacceptable and won't be tolerated on the streets of Merseyside." |
Such Is Life: How Cypress Development (CVE:CYP) Shareholders Saw Their Shares Drop 53%
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While not a mind-blowing move, it is good to see that theCypress Development Corp.(CVE:CYP) share price has gained 12% in the last three months. But don't envy holders -- looking back over 5 years the returns have been really bad. In fact, the share price has declined rather badly, down some 53% in that time. So we're not so sure if the recent bounce should be celebrated. Of course, this could be the start of a turnaround.
Check out our latest analysis for Cypress Development
Cypress Development hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. You have to wonder why venture capitalists aren't funding it. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Cypress Development will find or develop a valuable new mine before too long.
We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. It certainly is a dangerous place to invest, as Cypress Development investors might realise.
Cypress Development had cash in excess of all liabilities of just CA$890k when it last reported (March 2019). So if it hasn't remedied the situation already, it will almost certainly have to raise more capital soon. That probably explains why the share price is down 14% per year, over 5 years. The image below shows how Cypress Development's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. Would it bother you if insiders were selling the stock? It would bother me, that's for sure. You canclick here to see if there are insiders selling.
Cypress Development shareholders are down 37% for the year, but the market itself is up 1.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 14% over the last half decade. 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. Most investors take the time to check the data on insider transactions. You canclick here to see if insiders have been buying or selling.
We will like Cypress Development better if we see some big insider buys. While we wait, check out thisfreelist of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA 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. |
Can GATT Article 24 ensure a hard Brexit?
Conservative party leadership candidate Boris Johnson. Photo: Ben Birchall/PA Wire/PA Images Prominent brexiteers, such as Conservative leadership frontrunner Boris Johnson, have highlighted the General Agreement on Tariffs and Trade (Gatt) Article 24 as a solution to the Brexit impasse. However, this has been hotly contested. International trade secretary Liam Fox debunked the claims in a recent article , fellow leadership rival Jeremy Hunt called Johnsons claims of a solution not true, and Bank of England governor Mark Carney said the process would not work unilaterally . What is Gatt Article 24? Gatt Article 24 outlines the criteria by which the WTO organise favourable treatment either bilaterally or multilaterally between trading nations. It is a pathway for exemption from the concept of most favoured nation (MFN) which ensures equal treatment between all trading nations. Gatt Article 24 says MFN can be suspended if it helps liberalise trade. Article 24 also outlines how equal treatment can be suspended - as a bilaterally agreed standstill agreement, while the schedule of a Free Trade Agreement or Customs Union Agreement between two parties is in the process of being finalised. Could this be used to soften a hard Brexit? This however, is not applicable to the UK-EU relationship. As the UK and EU already have a trade agreement, Article 24 is therefore not applicable as a deal between the UK and EU is not leading to further liberalisation of trade. Article 24 cannot be used unilaterally - a schedule of implementation for a trade agreement between two parties must be agreed beforehand. At this point, Article 24 can be invoked in advance, and while the two parties are waiting for, the agreement coming into effect. As this is being proposed by its proponents as a solution to soften no deal, it is not therefore a method of avoiding the backstop, given the requirement for Article 24 to be agreed bilaterally between the UK and EU. Gatt Article 24 has been designed specifically for parties who are in the process of liberalising trade between them and with a future trade agreement almost complete. The UK and EU are not liberalising trade between them, and Article 24 cannot exist as an alternate deal to the Withdrawal Agreement (WAB). Story continues In comparison to the elaborate WAB, Article 24 only covers trade in goods. Even if you consider it a workable alternative to the WAB, the ability of it to soften a no-deal Brexit is marginal at best. The EU have already been abundantly clear they would not agree to any Article 24-based deal. EU trade commissioner Cecilia Malstrom told Reuters in June: It is completely wrong...They will have to trade with us and other countries, until there are trade agreements - and we hope that will be a trade agreement - on the most favoured nation basis. And that will mean new tariffs. International Trade Secretary Liam Foxs former senior adviser David Henig noted that because of this, the EU would be unwilling to scrap the previously negotiated complex deal in favour of a basic tariff-free deal, as suggested by the supporters of a Gatt Article 24 exit. In an oddly contradictory way, the UK already has a standstill agreement in between a deal and the status quo - the implementation period, which has drawn harsh criticism from many of the supporters of an Article 24 exit, despite the fact that they share many similar aims. With complex solutions such as Article 24 falling flat, and the EU still willing to grant longer Article 50 extensions to the UK, it seems increasingly likely that the only way a no-deal Brexit can be obtained is via a general election and a manifesto commitment, which many Conservative MPs believe could spell disaster for their party. |
Did Changing Sentiment Drive Cameo Industries's (CVE:CRU) Share Price Down A Painful 86%?
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It's not possible to invest over long periods without making some bad investments. But you have a problem if you face massive losses more than once in a while. So take a moment to sympathize with the long term shareholders ofCameo Industries Corp.(CVE:CRU), who have seen the share price tank a massive 86% over a three year period. That would be a disturbing experience. The more recent news is of little comfort, with the share price down 76% in a year. Furthermore, it's down 54% in about a quarter. That's not much fun for holders.
We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
See our latest analysis for Cameo Industries
Cameo Industries didn't have any revenue in the last year, so it's fair to say it doesn't yet have a proven product (or at least not one people are paying for). This state of affairs suggests that venture capitalists won't provide funds on attractive terms. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. For example, investors may be hoping that Cameo Industries finds some valuable resources, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Cameo Industries has already given some investors a taste of the bitter losses that high risk investing can cause.
Our data indicates that Cameo Industries had CA$54,848 more in total liabilities than it had cash, when it last reported in January 2019. That makes it extremely high risk, in our view. But since the share price has dived -48% per year, over 3 years, it looks like some investors think it's time to abandon ship, so to speak. You can click on the image below to see (in greater detail) how Cameo Industries's cash levels have changed over time.
Of course, the truth is that it is hard to value companies without much revenue or profit. Would it bother you if insiders were selling the stock? I would feel more nervous about the company if that were so. It costs nothing but a moment of your time tosee if we are picking up on any insider selling.
While the broader market gained around 1.2% in the last year, Cameo Industries shareholders lost 76%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 29% over the last half decade. 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.
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 CA 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. |
With Prime Membership Saturating, Amazon Needs to Grow Spend Per Customer
It’s become increasingly evident thatAmazon.com’s(NASDAQ: AMZN)Prime membership in the United States isnear its saturation point. Prime membership growth has been a steady source for Amazon to grow its retail sales, as Prime members spend more, on average, than non-members.
But with membership growth slowing, Amazon is focusing on increasing spend per Prime member. It’s seen some success. Consumer Intelligence Research Partners pegs spend per Prime member at $1,400 per year. That’s up from $1,200 per year in late 2016.Evercore analysts estimate that Prime households spend an average of $2,500 per year, but it sees the potential for Amazon to increase that number to $4,000 in the future.(Note that CIRP’s estimate is based on individuals while Evercore’s numbers are based on households.)
Here’s how Amazon’s working to grow spend per customer.
Image source: Amazon.com.
CFO Brian Olsavsky told analysts the company was investing to evolve Prime two-day shipping to one-day shipping back in April. About a month later, the company announced that it already has10 million items available for one-day shippingfrom coast to coast. The company is also continuing to expand its Prime Now service, which delivers groceries and household items to members' doorsteps the same day they place an order.
One-day shipping will help Amazon win sales it would’ve lost to brick-and-mortar competitors such asWalmart(NYSE: WMT)orTarget(NYSE: TGT)for convenience items. Both companies have fought back against Amazon Prime, creating their own Prime Now-like services. Target acquired Shipt a few years ago and recentlyintegrated the same-day delivery servicewith its online store. Walmart recently launched its ownsame-day-delivery subscription serviceto capitalize on the popularity of its online grocery platform.
While Prime is more expensive than Target or Walmart’s service, it also offers a broader range of services and product selection. As long as Amazon can remain the most convenient option for Prime members, it ought to win additional sales and keep its subscribers from flocking to Walmart or Target’s subscription delivery options.
Amazon has made a push to offer more subscriptions to Prime members over the past few years. That includes both digital and physical goods. On the digital front, Amazon offers Music Unlimited and Kindle Unlimited for music and books, respectively. It also offers Prime Book Box for kids and several toy subscriptions.And it enables customers to subscribe to third-party subscription boxes.
Amazon also offers Prime Wardrobe, which is similar to a fashion subscription service likeStitch Fix(NASDAQ: SFIX). Amazon allows customers to load up a box of select fashion items and gives customers seven days to try them on at home. They can keep the ones they want and return the ones they don’t for free.
It’s easy to see Amazon turning Prime Wardrobe into a subscription service where it sends custom picks to customers just like Stitch Fix. For reference, Stitch Fix’s run rate last quarter was about $527 per client per year.That presents a massive opportunity for Amazon.
Amazon has also experimented with meal kits, and it might explore offering subscription meal kits in the future.
Continued investments in subscription products for Prime members will not only increase average customer spend but also make Prime membership stickier.
Subscriptions are as much about convenience as one-day shipping. The convenience of a subscription that selects items for you and delivers them automatically, or one that gives you unlimited access to everything, is unlike anything else. And for those items Amazon can’t curate, Prime members can order them and often receive them the next day. Continued investments in convenience ought to drive sales per member for the foreseeable future.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors.Adam Levyowns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and Stitch Fix. The Motley Fool has adisclosure policy. |
Slow pace of reforms spurring higher coal imports by Indian utilities
By Sudarshan Varadhan
NEW DELHI (Reuters) - Coal imports by Indian utilities are surging after the government failed to open the industry to competition, despite passing a liberalization policy 16 months ago, because of bureaucratic indecision and resistance from unions, industry and government officials said.
Utilities in India, which holds the world's fifth-largest reserves of the fuel, imported over 40% more coal during January to April compared with a year ago, data from the Central Electricity Authority showed.
The country's cabinet has approved policies opening coal mining to private miners and partially removing restrictions on the sale of coal produced at so-called captive mines but the reforms have not been implemented.
The government delays stem from bureaucratic disputes on how to implement the liberalization policies, such as the formulas for bidding on the blocks, said two sources, one with the government and the second at an industry group, who are familiar with the matter.
There was also a reluctance to introduce the changes before elections this past May, especially with the strong opposition from unions representing workers at state-run Coal India, the sources said.
"The delays could be due to reservations from trade unions and the government being in election mode till May. They could have also been spending time in planning, which might not be a bad thing given international experiences," said Satyadeep Jain, a global metals and mining equity consultant.
"This makes a well crafted policy by engaging all stakeholders very important."
India's surging imports offer an opportunity to miners like Indonesia's Adaro Energy, Adani Enterprises and Glencore that face a structural decline in coal demand. They also undercut efforts by Prime Minister Narendra Modi's government to cut imports and place additional burdens on India's debt-ridden thermal power sector.
Graphic: Key Asian coal supplies https://tmsnrt.rs/2KhGBcO
Within India, a fast rising population, strong economic growth, a government programme to electrify households as well as a lack of alternatives like natural gas have all contributed to a surge in thermal coal demand.
CARE Ratings in a note in May said it expects India's rural electrification to contribute to a 5%-6% rise in power demand in 2019-20, increasing demand for thermal coal imports.
Imports are also supported by a slump in thermal coal prices caused by ample supply and a global economic slowdown, as well as a push to use cleaner fuels in place of coal.
"India is lapping up that coal because of high demand for imported coal currently," said Puneet Gupta, founder of online coal marketplace CoalShastra.
Graphic: India's thermal coal production and imports https://tmsnrt.rs/2IdoMdg
POLICY PARALYSIS
India's cabinet approved a policy in February 2018 to auction coal blocks to private companies, giving them the freedom to sell and fix prices, ending Coal India's near monopoly along with state-run Singreni Collieries.
This past February, India approved the sale of up to 25% output of captive coal mines owned by consumers, mainly utilities and steel plants. However, bureaucratic disputes over implementation and the fear of a backlash from trade unions linked to political parties including Prime Minister Modi's Bharatiya Janata Party (BJP) have thwarted plans to lure foreign firms, said industry executives.
"One of the main reasons they didn't initiate commercial coal mining before the elections despite cabinet approval was protests from Coal India's unions," a senior executive from a Indian industry group familiar with the matter said.
Virjesh Upadhyay, secretary of the BJP-affiliated trade union Bharatiya Mazdoor Sangh (BMS), said it is against opening the coal sector. BMS claims to have the support of half of Coal India's 300,000 workers.
"We have made our view very clear - we are against privatisation of the country's coal resources," he said.
Coal India has missed its annual production target for the past seven years, despite raising output by 7% to 607 million tonnes in the 2018/19 fiscal year ending in March.
A Coal India spokesman declined to comment on the government's liberalization programme saying only that the company plans to produce 660 million tonnes of coal during the 2019/20 fiscal year.
"As long as the policy response of the government to scarcity of coal remains confined to asking Coal India to produce more, scarcity position is bound to stay," said Ashok Khurana, head of the Association Of Power Producers (APP), which represents Indian private utilities.
India's Ministry of Coal did not respond to a request seeking comment.
Graphic: Indian utilities' rising coal imports https://tmsnrt.rs/2RbErg9
The Tamil Nadu Generation and Distribution Corp (Tangedco), the utility for the southern Indian state, illustrates India's increasing reliance on coal imports. The company's imports more than doubled during the first four months of 2019, the Central Electricity Authority reported.
"Coal India and Indian Railways weren't able to keep up their commitments. Stock positions in our thermal plants fell to dangerous levels, and since then, we have been importing," said Tangedco's Chairman Vikram Kapur.
He expects imports to rise as the state will add 6,200 megawatts of new capacity through 2024.
"Imports will go up, going forward. From 2020-21, we have to go for more imports," he said.
(Reporting by Sudarshan Varadhan; Editing by Nidhi Verma and Christian Schmollinger) |
Does This Valuation Of Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) Imply Investors Are Overpaying?
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How far off is Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to today's value. I will use the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. 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.
View our latest analysis for Ollie's Bargain Outlet Holdings
We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. 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, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
[{"": "Levered FCF ($, Millions)", "2019": "$29.15", "2020": "$109.20", "2021": "$143.00", "2022": "$170.95", "2023": "$195.73", "2024": "$217.20", "2025": "$235.66", "2026": "$251.60", "2027": "$265.58", "2028": "$278.08"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x2", "2020": "Analyst x2", "2021": "Analyst x1", "2022": "Est @ 19.54%", "2023": "Est @ 14.5%", "2024": "Est @ 10.97%", "2025": "Est @ 8.5%", "2026": "Est @ 6.77%", "2027": "Est @ 5.56%", "2028": "Est @ 4.71%"}, {"": "Present Value ($, Millions) Discounted @ 7.5%", "2019": "$27.12", "2020": "$94.50", "2021": "$115.12", "2022": "$128.01", "2023": "$136.35", "2024": "$140.75", "2025": "$142.06", "2026": "$141.10", "2027": "$138.55", "2028": "$134.95"}]
Present Value of 10-year Cash Flow (PVCF)= $1.20b
"Est" = FCF growth rate estimated by Simply Wall St
The second stage is also known as Terminal Value, this is the business's cash flow after 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 (2.7%) 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 7.5%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = US$278m × (1 + 2.7%) ÷ (7.5% – 2.7%) = US$6.0b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= $US$6.0b ÷ ( 1 + 7.5%)10= $2.91b
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 $4.11b. 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 $64.68. Compared to the current share price of $86.56, the company appears reasonably expensive 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.
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. 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 Ollie's Bargain Outlet 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 7.5%, which is based on a levered beta of 0.800. 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.
Whilst important, DCF calculation 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. What is the reason for the share price to differ from the intrinsic value? For Ollie's Bargain Outlet Holdings, I've put together three fundamental aspects you should further examine:
1. Financial Health: Does OLLI 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 OLLI'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 OLLI? 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 NASDAQ 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. |
Bank of England's Carney has 'full confidence' in Fed's independence
Bank of England governor Mark Carney has “full confidence” in the independence of the US Federal Reserve, despite rising political pressure on the central bank. Carney appeared before the UK parliament’s Treasury Select Committee on Wednesday. He was asked by MPs whether he worried about the independence of the Fed and other central banks around the world. “I have full confidence in the case that you mentioned [the Fed] that they will conduct a policy that is, in their judgment, the best policy to achieve their dual mandate,” Carney said, “and the timing of any policy changes, or the degree of any policy changes, will be entirely determined by how they can, in their judgment, best achieve their dual mandate.” Carney said he had discussed the issue of central bank independence with colleagues but it has “not been a central issue to the credit of the system here.” “I don’t think monetary policy is being politicised here in the UK,” Carney said. Federal Reserve chairman Jerome Powell. Photo: Brendan McDermid/ Reuters The line of questioning comes after rising pressure on US Federal Reserve chairman Jerome Powell from US President Donald Trump. Trump has repeatedly criticised Powell for not lowering US interest rates and has reportedly looked into demoting him. Powell said Tuesday afternoon that the Fed is “insulated” from short-term political pressure . He said: “Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests.” Markets expect Powell to cut rates later this year. The Fed chairman warned on Tuesday that the global growth outlook had worsened since the last monetary policy update. ———— Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut . Read more: Andrew Bailey sails through Bank of England audition 'Perfect storm' blamed for scandals like London Capital Finance Star fund manager Neil Woodford 'sailed close to the wind' UBS on Facebook's Libra: 'We have more questions than answers' Facebook's 'significant' Libra under scrutiny from new UK task force |
Irish Central Bank fines JPMorgan €1.6m for 'serious failings'
JPMorgan Chase & Co. headquarters in New York Photo: AP Photo/Kathy Willens Ireland’s central bank on Wednesday said that it had reprimanded and fined an Irish subsidiary of US banking giant JPMorgan Chase ( JPM ) for “serious failings” relating to the firm’s fund administration activities. Though the €1.6m (£1.4m) penalty is small, it will be noted by the increasing number of financial services firms that have chosen Dublin as a post-Brexit location. The fine comes after the bank admitted to four breaches of regulations between July 2013 and June 2016, including failure to obtain prior approval from the central bank to outsource these activities. Irish-based fund administrators are entitled to use third parties to perform fund administration activities on their behalf, but only if they obtain permission from the bank. The subsidiary, JP Morgan Administration Services, also failed to introduce adequate control systems to ensure that it met the bank’s requirements for fund administrators. READ MORE: UK financial services firms have spent £4bn on Brexit preparations The appropriate fine, the central bank said, should have been €2.3m, but JPMorgan received a 30% reduction as part of one of its settlement discount schemes. Seána Cunningham, director of enforcement at the central bank, said that it was the first action taken against a fund administration firm in relation to outsourcing failures. “When firms outsource activities, they do not outsource their responsibilities,” Cunningham said. “It is important for firms to have strong controls in place around the governance and oversight of all outsourcing arrangements to ensure that they comply with all legal and regulatory requirements.” In a statement, a spokesperson for JPMorgan said that it had “cooperated fully” with the Irish central bank, and that it had already made adjustments to its controls procedures in Ireland. “At no point were our clients or the quality of the service we provide to them affected, and we continue to operate our fund administration business normally,” they said. JP Morgan Administration Services, which has been operating in Ireland since 1996, is a wholly owned subsidiary of JP Morgan’s Irish bank, which is itself an ultimate subsidiary of the US-based JP Morgan Chase. |
Estimating The Intrinsic Value Of Arco Platform Limited (NASDAQ:ARCE)
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In this article we are going to estimate the intrinsic value of Arco Platform Limited (NASDAQ:ARCE) by taking the expected future cash flows and discounting them to their present value. This is done using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.
We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. Anyone interested in learning a bit more about intrinsic value should have a read of theSimply Wall St analysis model.
See our latest analysis for Arco Platform
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. In the first stage we need to estimate the cash flows to the business over the next ten years. 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, so we discount the value of these future cash flows to their estimated value in today's dollars:
[{"": "Levered FCF (R$, Millions)", "2019": "R$51.00", "2020": "R$256.00", "2021": "R$315.00", "2022": "R$363.18", "2023": "R$405.03", "2024": "R$441.03", "2025": "R$472.07", "2026": "R$499.20", "2027": "R$523.37", "2028": "R$545.40"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x1", "2020": "Analyst x1", "2021": "Analyst x1", "2022": "Est @ 15.29%", "2023": "Est @ 11.53%", "2024": "Est @ 8.89%", "2025": "Est @ 7.04%", "2026": "Est @ 5.75%", "2027": "Est @ 4.84%", "2028": "Est @ 4.21%"}, {"": "Present Value (R$, Millions) Discounted @ 7.75%", "2019": "R$47.33", "2020": "R$220.49", "2021": "R$251.79", "2022": "R$269.41", "2023": "R$278.85", "2024": "R$281.78", "2025": "R$279.92", "2026": "R$274.71", "2027": "R$267.29", "2028": "R$258.50"}]
Present Value of 10-year Cash Flow (PVCF)= R$2.43b
"Est" = FCF growth rate estimated by Simply Wall St
The second stage is also known as Terminal Value, this is the business's cash flow after 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 (2.7%) 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 7.8%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = R$545m × (1 + 2.7%) ÷ (7.8% – 2.7%) = R$11b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= R$R$11b ÷ ( 1 + 7.8%)10= R$5.29b
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 R$7.72b. The last step is to then divide the equity value by the number of shares outstanding. This results in an intrinsic value estimate in the company’s reported currency of R$153.26. However, ARCE’s primary listing is in Brazil, and 1 share of ARCE in BRL represents 0.261 ( BRL/ USD) share of NasdaqGS:ARCE,so the intrinsic value per share in USD is $40.02.Compared to the current share price of $42.78, 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.
Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. 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 Arco Platform 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 7.8%, which is based on a levered beta of 0.843. 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.
Whilst important, DCF calculation 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 Arco Platform, I've compiled three further factors you should further research:
1. Financial Health: Does ARCE 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 ARCE'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 ARCE? 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 US 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. |
A Look At The Intrinsic Value Of Arco Platform Limited (NASDAQ:ARCE)
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Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Arco Platform Limited (NASDAQ:ARCE) as an investment opportunity by taking the expected future cash flows and discounting them to today's value. This is done using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.
Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. 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 Arco Platform
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. 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, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
[{"": "Levered FCF (R$, Millions)", "2019": "R$51.00", "2020": "R$256.00", "2021": "R$315.00", "2022": "R$363.18", "2023": "R$405.03", "2024": "R$441.03", "2025": "R$472.07", "2026": "R$499.20", "2027": "R$523.37", "2028": "R$545.40"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x1", "2020": "Analyst x1", "2021": "Analyst x1", "2022": "Est @ 15.29%", "2023": "Est @ 11.53%", "2024": "Est @ 8.89%", "2025": "Est @ 7.04%", "2026": "Est @ 5.75%", "2027": "Est @ 4.84%", "2028": "Est @ 4.21%"}, {"": "Present Value (R$, Millions) Discounted @ 7.75%", "2019": "R$47.33", "2020": "R$220.49", "2021": "R$251.79", "2022": "R$269.41", "2023": "R$278.85", "2024": "R$281.78", "2025": "R$279.92", "2026": "R$274.71", "2027": "R$267.29", "2028": "R$258.50"}]
Present Value of 10-year Cash Flow (PVCF)= R$2.43b
"Est" = FCF growth rate estimated by Simply Wall St
The second stage is also known as Terminal Value, this is the business's cash flow after 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 (2.7%) 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 7.8%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = R$545m × (1 + 2.7%) ÷ (7.8% – 2.7%) = R$11b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= R$R$11b ÷ ( 1 + 7.8%)10= R$5.29b
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is R$7.72b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. This results in an intrinsic value estimate in the company’s reported currency of R$153.26. However, ARCE’s primary listing is in Brazil, and 1 share of ARCE in BRL represents 0.261 ( BRL/ USD) share of NasdaqGS:ARCE,so the intrinsic value per share in USD is $40.02.Compared to the current share price of $42.78, the company appears around fair value at the time of writing. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. 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 Arco Platform 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 7.8%, which is based on a levered beta of 0.843. 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.
Although the valuation of a company is important, 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 Arco Platform, There are three pertinent aspects you should further research:
1. Financial Health: Does ARCE 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 ARCE'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 ARCE? 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 US 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. |
UAE says convincing evidence needed on Gulf tanker attacks
DUBAI (Reuters) - The United Arab Emirates said on Wednesday that clear and convincing evidence was needed to apportion blame for attacks last month on four oil tankers off its coast, and that tensions in the region needed to be dialled down. The United States and Saudi Arabia have publicly blamed Iran for that attack and a subsequent one on two vessels in the Gulf of Oman. Tehran has denied any involvement. The UAE has submitted the results of an investigation into the first attack, which showed that a state entity was behind them, without naming the country. If a country was to be identified, "this evidence must be clear and precise and scientific and convincing for the international community," UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan told a news conference in Moscow with his Russian counterpart Sergei Lavrov. The UAE also did not want "more turbulence and ... more worries" in the region. A war of words between Washington and Tehran has escalated over the tanker attacks and Iran's downing last week of an unmanned American drone. Sheikh Abdullah also said discussions were under way for a global coalition to protect oil shipping lanes in the region. That confirmed comments from a senior State Department official who said on Monday that the U.S. Navy was building a "proactive deterrence" programme that would see a coalition of nations provide both material and financial contributions. Sheikh Abdullah said the project would involved regional and other "(oil) exporting and importing" countries. (Reporting by Asma Alsharif and Sylvia Westall; Writing by Ghaida Ghantous; Editing by Toby Chopra and John Stonestreet) |
Why Armada Data Corporation's (CVE:ARD) CEO Pay Matters To You
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In 2000 R. Matthews was appointed CEO of Armada Data Corporation (CVE:ARD). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for Armada Data
According to our data, Armada Data Corporation has a market capitalization of CA$1.2m, and pays its CEO total annual compensation worth CA$135k. (This number is for the twelve months until May 2018). We think total compensation is more important but we note that the CEO salary is lower, at CA$102k. We examined a group of similar sized companies, with market capitalizations of below CA$263m. The median CEO total compensation in that group is CA$152k.
That means R. Matthews receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
You can see a visual representation of the CEO compensation at Armada Data, below.
Over the last three years Armada Data Corporation has shrunk its earnings per share by an average of 13% per year (measured with a line of best fit). In the last year, its revenue changed by just -0.2%.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
Since shareholders would have lost about 18% over three years, some Armada Data Corporation shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
Remuneration for R. Matthews is close enough to the median pay for a CEO of a similar sized company .
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Few would argue that it's wise for the company to pay any more, before returns improve. So you may want tocheck if insiders are buying Armada Data shares with their own money (free access).
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. |
Updates That Can Help You Fall in Love With Your Home All Over Again
Does your home rise to meet you at the end of a busy day? Is it time for a transformation? SEE ALSO: 11 Features That Will Sell Your Home Faster Over the years, a once-new home can become tired and have a dated appearance. Why wait until you decide to sell to make the necessary changes to potentially increase your home's value and bring your home up to date? By now you have created a home with many so memories stored in the rooms of your living space that you may not wish to sell. So why not freshen up, instead? Spending the money now instead of for a future sale will allow you to enjoy the improvements. There's a sense of renewal as you add fresh coats from a new color palette, lighting and improvements that express your lifestyle today. Make the smartest investment decisions Take an honest look at your home. How does it compare to other homes in the neighborhood? These will be your future real estate comps. Begin by knowing your home's value and how much you should reasonably spend in improvements and still get the best value at closing time. (See 10 Small Home Projects That Pay Off Big. ) Set a reasonable spending policy, and be cautious to keep emotions at bay. Consider the interior as well as the exterior for areas that you will get the best value for in resale. Keep in mind most buyers focus on kitchen and bathroom upgrades , as well as curb appeal when purchasing a home. With the correct spending policy and a plan on where to allocate your financial resources, you will enjoy the benefits and potentially improve the value of your home. Thus, making a sound investment decision. To regain that sense of renewal, follow the guidelines below for updates that will bear the most fruit. Interior improvements Take a look around. What looks tired and dated? Declutter and lighten the energy. Remember, the goal is to have your home rise up to meet you at the end of the day. A place of peace and refuge. Be mindful if your flooring colors will not change as you choose your new color palette. Story continues Change all flood or canned lighting to new LED daylight bulbs. The fluorescence of traditional lighting can be harsh on the paint and décor of a room. Make sure to match the color of the bulb throughout the home. Your home will have a clean look with the intended paint color shining through, unlike with warm bulbs that give off a yellow glow and can alter the appearance of your paint colors. Replace old kitchen lights with an inexpensive chandelier, which creates a perfect opportunity to add a dimmer switch. This is a great way to enhance the most utilized area in the kitchen, an elegant but casual feel when paired with a wood table. Paint freshens up interior walls. Agreeable Gray by Sherwin-Williams is the new neutral. It beautifully accompanies dark woods and white cabinets. Interior designer Alexis Rodgers loves this shade, as it, " makes your space appear neater by giving it airy, seamless transitions from one room to the next." For your kitchen and bathrooms, consider hiring a cabinetmaker to paint over darker cherrywood cabinets to a white, fresh look. Add new hardware to update the appearance. This is a much less expensive update than replacing everything with all-new cabinets. A new backsplash, refinishing cabinets, lighting and possibly conversion of countertops to a new lighter quartzite , will go a long way in adding value to your investment. In addition, assuring you will get much enjoyment over the years to come. See Also: Is a Rental Property the Best Way to Grow Your Wealth? Exterior improvements Curb appeal matters! Freshen up your home with new lighter contrasting colors by choosing three colors for an exterior. Use a darker trim while leaving the main body of the home a neutral, lighter color and adding a punch of color to garage doors to accent the home. As for the front door, is it time for paint or a new front door altogether? Consider a new style to let the light in or a move to glass from wood. When the light is allowed to flow transparently, it can change the feel inside and outside the home. It's the first and last thing to be touched on a home visit, so it makes an impression . New light fixtures make your exterior fresh and trendy, allowing you to add panache to your entrance. Add landscape lighting: Solar is an affordable, easy installation and saves money. Replace tired plants and add color and curb appeal near driveways and walkways. Sculpt and trim trees so that they don't appear overgrown. Add a water feature, such as a stand-alone fountain, for calming energy flow. Remodeling's annual Cost vs. Value Report of different renovation types for 2019 suggests that "for all projects, the overall cost-to-value ratio stands at 66.1%, slightly ahead of last year." Now is the time to make these changes. By considering these simple changes, you will create a fresh look and can enjoy the upgrades while potentially increasing the value of your home. Your newly remodeled home now rises up to you! See Also: How to Invest in Real Estate Without the Headaches Comments are suppressed in compliance with industry guidelines. Click here to learn more and read more articles from the author. This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA . EDITOR'S PICKS How to Use a Self-Directed IRA to Invest in Real Estate Is Paying off Your House the Right Move in Light of New Tax Law? Should You Give Your House Away? Copyright 2019 The Kiplinger Washington Editors |
Is Armada Data Corporation's (CVE:ARD) CEO Paid Enough Relative To Peers?
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R. Matthews became the CEO of Armada Data Corporation (CVE:ARD) in 2000. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for Armada Data
At the time of writing our data says that Armada Data Corporation has a market cap of CA$1.2m, and is paying total annual CEO compensation of CA$135k. (This is based on the year to May 2018). While we always look at total compensation first, we note that the salary component is less, at CA$102k. We took a group of companies with market capitalizations below CA$263m, and calculated the median CEO total compensation to be CA$152k.
That means R. Matthews receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Armada Data has changed from year to year.
Armada Data Corporation has reduced its earnings per share by an average of 13% a year, over the last three years (measured with a line of best fit). Revenue was pretty flat on last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, shareholders might want to examinethis detailed historical graphof earnings, revenue and cash flow.
Since shareholders would have lost about 18% over three years, some Armada Data Corporation shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
R. Matthews is paid around the same as most CEOs of similar size companies.
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Suffice it to say, we don't think the CEO is underpaid! Shareholders may want tocheck for free if Armada Data insiders are buying or selling shares.
If you want to buy a stock that is better than Armada Data, thisfreelist of high return, low debt companies is a great place to look.
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. |
At US$52.06, Is It Time To Put Popular, Inc. (NASDAQ:BPOP) On Your Watch List?
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Popular, Inc. (NASDAQ:BPOP), operating in the financial services industry based in United States, received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to $58.68 at one point, and dropping to the lows of $49.92. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Popular's current trading price of $52.06 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Popular’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Popular
Great news for investors – Popular is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $99.13, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Popular’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -14% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Popular. This certainty tips the risk-return scale towards higher risk.
Are you a shareholder?Although BPOP is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to BPOP, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor?If you’ve been keeping an eye on BPOP for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Popular. You can find everything you need to know about Popular inthe latest infographic research report. If you are no longer interested in Popular, 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. |
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