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Hedge Funds Have Never Been More Bullish On BBX Capital Corporation (BBX)
There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze BBX Capital Corporation (NYSE:BBX).
IsBBX Capital Corporation (NYSE:BBX)undervalued? Prominent investors are getting more bullish. The number of bullish hedge fund positions inched up by 1 in recent months. Our calculations also showed that bbx isn't among the30 most popular stocks among hedge funds.BBXwas in 16 hedge funds' portfolios at the end of March. There were 15 hedge funds in our database with BBX positions at the end of the previous quarter.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let's take a gander at the latest hedge fund action surrounding BBX Capital Corporation (NYSE:BBX).
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards BBX over the last 15 quarters. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, John M. Angelo and Michael L. Gordon'sAngelo Gordon & Cohas the biggest position in BBX Capital Corporation (NYSE:BBX), worth close to $13 million, accounting for 1.2% of its total 13F portfolio. On Angelo Gordon & Co's heels isRenaissance Technologies, managed by Jim Simons, which holds a $6.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish comprise Bradley LouisáRadoff'sFondren Management, Jeremy Carton and Gilbert Li'sAlta Fundamental Advisersand Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capital.
Now, key hedge funds were leading the bulls' herd.Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in BBX Capital Corporation (NYSE:BBX). Marshall Wace LLP had $0.4 million invested in the company at the end of the quarter. David Harding'sWinton Capital Managementalso initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is Gavin Saitowitz and Cisco J. del Valle'sSpringbok Capital.
Let's now review hedge fund activity in other stocks similar to BBX Capital Corporation (NYSE:BBX). These stocks are William Lyon Homes (NYSE:WLH), SunCoke Energy Partners LP (NYSE:SXCP), Calyxt, Inc. (NASDAQ:CLXT), and MYR Group Inc (NASDAQ:MYRG). This group of stocks' market values resemble BBX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WLH,23,139014,3 SXCP,5,5850,0 CLXT,3,13275,-2 MYRG,15,27561,3 Average,11.5,46425,1 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $43 million in BBX's case. William Lyon Homes (NYSE:WLH) is the most popular stock in this table. On the other hand Calyxt, Inc. (NASDAQ:CLXT) is the least popular one with only 3 bullish hedge fund positions. BBX Capital Corporation (NYSE:BBX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately BBX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BBX were disappointed as the stock returned -25.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Is Tailored Brands, Inc. (TLRD) A Good Stock To Buy ?
A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31, so let’s proceed with the discussion of the hedge fund sentiment on Tailored Brands, Inc. (NYSE:TLRD).
Hedge fund interest inTailored Brands, Inc. (NYSE:TLRD)shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare TLRD to other stocks including Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX), Golden Entertainment Inc (NASDAQ:GDEN), and Gores Metropoulos, Inc. (NASDAQ:GMHI) to get a better sense of its popularity.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to review the latest hedge fund action surrounding Tailored Brands, Inc. (NYSE:TLRD).
Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards TLRD over the last 15 quarters. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey,Millennium Management, managed by Israel Englander, holds the biggest position in Tailored Brands, Inc. (NYSE:TLRD). Millennium Management has a $9.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Michael Burry ofScion Asset Management, with a $6.8 million position; 6.9% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish consist of Ken Griffin'sCitadel Investment Group, Cliff Asness'sAQR Capital Managementand Jim Simons'sRenaissance Technologies.
Due to the fact that Tailored Brands, Inc. (NYSE:TLRD) has witnessed declining sentiment from the aggregate hedge fund industry, it's easy to see that there exists a select few funds that slashed their full holdings heading into Q3. Intriguingly, Ken Grossman and Glen Schneider'sSG Capital Managementdropped the largest position of the "upper crust" of funds followed by Insider Monkey, worth about $13 million in stock, and John W. Moon's Moon Capital was right behind this move, as the fund cut about $7.5 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Tailored Brands, Inc. (NYSE:TLRD) but similarly valued. These stocks are Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX), Golden Entertainment Inc (NASDAQ:GDEN), Gores Metropoulos, Inc. (NASDAQ:GMHI), and Bank First National Corporation (NASDAQ:BFC). This group of stocks' market caps resemble TLRD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PGNX,14,67529,1 GDEN,12,87918,0 GMHI,18,172284,18 BFC,4,4587,4 Average,12,83080,5.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $54 million in TLRD's case. Gores Metropoulos, Inc. (NASDAQ:GMHI) is the most popular stock in this table. On the other hand Bank First National Corporation (NASDAQ:BFC) is the least popular one with only 4 bullish hedge fund positions. Tailored Brands, Inc. (NYSE:TLRD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately TLRD wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TLRD were disappointed as the stock returned -28.9% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Here is What Hedge Funds Think About SpartanNash Company (SPTN)
The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards SpartanNash Company (NASDAQ:SPTN).
SpartanNash Company (NASDAQ:SPTN)shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 16 hedge funds' portfolios at the end of the first quarter of 2019. At the end of this article we will also compare SPTN to other stocks including Farmers & Merchants Bancorp (OTC:FMCB), Nexgen Energy Ltd. (NYSE:NXE), and BP Prudhoe Bay Royalty Trust (NYSE:BPT) to get a better sense of its popularity.
To the average investor there are plenty of tools stock traders put to use to appraise their holdings. A pair of the most under-the-radar tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outperform the broader indices by a superb amount (see the details here).
[caption id="attachment_30621" align="aligncenter" width="487"]
Cliff Asness of AQR Capital Management[/caption]
We're going to go over the fresh hedge fund action regarding SpartanNash Company (NASDAQ:SPTN).
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2018. On the other hand, there were a total of 13 hedge funds with a bullish position in SPTN a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
The largest stake in SpartanNash Company (NASDAQ:SPTN) was held byPrivate Capital Management, which reported holding $18.9 million worth of stock at the end of March. It was followed by AQR Capital Management with a $5.9 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and Renaissance Technologies.
Due to the fact that SpartanNash Company (NASDAQ:SPTN) has experienced falling interest from hedge fund managers, it's safe to say that there lies a certain "tier" of funds that elected to cut their entire stakes by the end of the third quarter. Interestingly, Minhua Zhang'sWeld Capital Managementdumped the biggest stake of all the hedgies tracked by Insider Monkey, worth about $0.2 million in stock. Paul Hondros's fund,AlphaOne Capital Partners, also said goodbye to its stock, about $0 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to SpartanNash Company (NASDAQ:SPTN). These stocks are Farmers & Merchants Bancorp (OTC:FMCB), Nexgen Energy Ltd. (NYSE:NXE), BP Prudhoe Bay Royalty Trust (NYSE:BPT), and Customers Bancorp Inc (NYSE:CUBI). This group of stocks' market valuations are similar to SPTN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FMCB,2,755,1 NXE,8,26022,1 BPT,4,8606,0 CUBI,13,39780,-2 Average,6.75,18791,0 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $43 million in SPTN's case. Customers Bancorp Inc (NYSE:CUBI) is the most popular stock in this table. On the other hand Farmers & Merchants Bancorp (OTC:FMCB) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks SpartanNash Company (NASDAQ:SPTN) is more popular among hedge funds. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SPTN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SPTN were disappointed as the stock returned -28% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Is Spirit Realty Capital Inc (SRC) A Good Stock To Buy ?
Is Spirit Realty Capital Inc (NYSE:SRC) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Spirit Realty Capital Inc (NYSE:SRC)was in 17 hedge funds' portfolios at the end of the first quarter of 2019. SRC investors should be aware of a decrease in activity from the world's largest hedge funds lately. There were 19 hedge funds in our database with SRC positions at the end of the previous quarter. Our calculations also showed that SRC isn't among the30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's analyze the new hedge fund action surrounding Spirit Realty Capital Inc (NYSE:SRC).
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SRC over the last 15 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey,Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, holds the number one position in Spirit Realty Capital Inc (NYSE:SRC). Scopia Capital has a $102.6 million position in the stock, comprising 3.8% of its 13F portfolio. The second most bullish fund manager isRenaissance Technologies, led by Jim Simons, holding a $67.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Greg Poole'sEcho Street Capital Management, Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capitaland John Khoury'sLong Pond Capital.
Because Spirit Realty Capital Inc (NYSE:SRC) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of money managers that decided to sell off their positions entirely in the third quarter. At the top of the heap, Eduardo Abush'sWaterfront Capital Partnerscut the biggest investment of the "upper crust" of funds followed by Insider Monkey, totaling an estimated $15.4 million in stock. Israel Englander's fund,Millennium Management, also said goodbye to its stock, about $12.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Spirit Realty Capital Inc (NYSE:SRC) but similarly valued. These stocks are FireEye Inc (NASDAQ:FEYE), Copa Holdings, S.A. (NYSE:CPA), Merit Medical Systems, Inc. (NASDAQ:MMSI), and TCF Financial Corporation (NYSE:TCF). All of these stocks' market caps are closest to SRC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FEYE,27,365577,-1 CPA,14,262939,-1 MMSI,17,244449,-1 TCF,22,245330,-1 Average,20,279574,-1 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $280 million. That figure was $301 million in SRC's case. FireEye Inc (NASDAQ:FEYE) is the most popular stock in this table. On the other hand Copa Holdings, S.A. (NYSE:CPA) is the least popular one with only 14 bullish hedge fund positions. Spirit Realty Capital Inc (NYSE:SRC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on SRC as the stock returned 12.8% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published atInsider Monkey.
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Is Frontier Communications Corporation (FTR) A Good Stock To Buy ?
The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Frontier Communications Corporation (NASDAQ:FTR).
Frontier Communications Corporation (NASDAQ:FTR)has seen an increase in enthusiasm from smart money in recent months. Our calculations also showed that FTR isn't among the30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's analyze the latest hedge fund action surrounding Frontier Communications Corporation (NASDAQ:FTR).
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in FTR a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons'sRenaissance Technologieshas the biggest position in Frontier Communications Corporation (NASDAQ:FTR), worth close to $9.6 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Michael Hintze ofCQS Cayman LP, with a $2.9 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism encompass Philippe Laffont'sCoatue Management, D. E. Shaw'sD E Shawand Israel Englander'sMillennium Management.
Consequently, specific money managers were breaking ground themselves.Coatue Management, managed by Philippe Laffont, initiated the biggest position in Frontier Communications Corporation (NASDAQ:FTR). Coatue Management had $1.7 million invested in the company at the end of the quarter. Joel Greenblatt'sGotham Asset Managementalso initiated a $0.3 million position during the quarter. The other funds with brand new FTR positions are Jon Bauer'sContrarian Capital, Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capital, and Michael Platt and William Reeves'sBlueCrest Capital Mgmt..
Let's go over hedge fund activity in other stocks similar to Frontier Communications Corporation (NASDAQ:FTR). We will take a look at Abraxas Petroleum Corp. (NASDAQ:AXAS), Avedro, Inc. (NASDAQ:AVDR), Northern Dynasty Minerals Ltd. (NYSEAMEX:NAK), and Spark Networks SE (NYSEAMEX:LOV). All of these stocks' market caps resemble FTR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AXAS,12,26998,1 AVDR,13,65244,13 NAK,8,12787,5 LOV,2,23628,0 Average,8.75,32164,4.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $20 million in FTR's case. Avedro, Inc. (NASDAQ:AVDR) is the most popular stock in this table. On the other hand Spark Networks SE (NYSEAMEX:LOV) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Frontier Communications Corporation (NASDAQ:FTR) is more popular among hedge funds. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately FTR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FTR were disappointed as the stock returned -39.2% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market in Q2.
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Is Forum Energy Technologies Inc (FET) A Good Stock To Buy ?
Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Forum Energy Technologies Inc (NYSE:FET) from the perspective of those elite funds.
Forum Energy Technologies Inc (NYSE:FET)was in 16 hedge funds' portfolios at the end of March. FET shareholders have witnessed an increase in hedge fund interest of late. There were 11 hedge funds in our database with FET holdings at the end of the previous quarter. Our calculations also showed that fet isn't among the30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a look at the latest hedge fund action encompassing Forum Energy Technologies Inc (NYSE:FET).
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 45% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards FET over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database,Millennium Management, managed by Israel Englander, holds the biggest position in Forum Energy Technologies Inc (NYSE:FET). Millennium Management has a $24.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Millennium Management's heels isCitadel Investment Group, managed by Ken Griffin, which holds a $10.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish comprise Jim Simons'sRenaissance Technologies, D. E. Shaw'sD E Shawand Chuck Royce'sRoyce & Associates.
As aggregate interest increased, specific money managers have jumped into Forum Energy Technologies Inc (NYSE:FET) headfirst.Blue Mountain Capital, managed by Andrew Feldstein and Stephen Siderow, assembled the biggest position in Forum Energy Technologies Inc (NYSE:FET). Blue Mountain Capital had $0.8 million invested in the company at the end of the quarter. Ben Gambill'sTiger Eye Capitalalso made a $0.5 million investment in the stock during the quarter. The following funds were also among the new FET investors: Paul Marshall and Ian Wace'sMarshall Wace LLP, Paul Tudor Jones'sTudor Investment Corp, and Hoon Kim'sQuantinno Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Forum Energy Technologies Inc (NYSE:FET) but similarly valued. We will take a look at Bank of Marin Bancorp (NASDAQ:BMRC), Stemline Therapeutics Inc (NASDAQ:STML), HarborOne Bancorp, Inc. (NASDAQ:HONE), and Ingles Markets, Incorporated (NASDAQ:IMKTA). All of these stocks' market caps are similar to FET's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BMRC,7,18453,1 STML,20,188610,5 HONE,4,7730,0 IMKTA,11,43072,1 Average,10.5,64466,1.75 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $49 million in FET's case. Stemline Therapeutics Inc (NASDAQ:STML) is the most popular stock in this table. On the other hand HarborOne Bancorp, Inc. (NASDAQ:HONE) is the least popular one with only 4 bullish hedge fund positions. Forum Energy Technologies Inc (NYSE:FET) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately FET wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FET were disappointed as the stock returned -29.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Hedge Funds Have Never Been More Bullish On Sierra Oncology, Inc. (SRRA)
You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Hedge fund interest inSierra Oncology, Inc. (NASDAQ:SRRA)shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Trinity Place Holdings Inc. (NYSE:TPHS), China Online Education Group (NYSE:COE), and Nymox Pharmaceutical Corporation (NASDAQ:NYMX) to gather more data points.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to review the key hedge fund action regarding Sierra Oncology, Inc. (NASDAQ:SRRA).
Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SRRA over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Alan Frazier'sFrazier Healthcare Partnershas the largest position in Sierra Oncology, Inc. (NASDAQ:SRRA), worth close to $13.9 million, amounting to 3.3% of its total 13F portfolio. Sitting at the No. 2 spot isBroadfin Capital, managed by Kevin Kotler, which holds a $8.3 million position; 1.7% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions comprise Nathaniel August'sMangrove Partners, Joseph Edelman'sPerceptive Advisorsand Lawrence Hawkins'sProsight Capital.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's go over hedge fund activity in other stocks similar to Sierra Oncology, Inc. (NASDAQ:SRRA). We will take a look at Trinity Place Holdings Inc. (NYSE:TPHS), China Online Education Group (NYSE:COE), Nymox Pharmaceutical Corporation (NASDAQ:NYMX), and Internap Corporation (NASDAQ:INAP). This group of stocks' market caps are similar to SRRA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TPHS,7,56619,0 COE,4,4404,1 NYMX,1,46,0 INAP,8,32109,-6 Average,5,23295,-1.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $61 million in SRRA's case. Internap Corporation (NASDAQ:INAP) is the most popular stock in this table. On the other hand Nymox Pharmaceutical Corporation (NASDAQ:NYMX) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Sierra Oncology, Inc. (NASDAQ:SRRA) is more popular among hedge funds. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SRRA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SRRA were disappointed as the stock returned -61.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Is Model N Inc (MODN) A Good Stock To Buy ?
With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was Model N Inc (NYSE:MODN).
Model N Inc (NYSE:MODN)investors should be aware of an increase in enthusiasm from smart money recently.MODNwas in 16 hedge funds' portfolios at the end of March. There were 14 hedge funds in our database with MODN holdings at the end of the previous quarter. Our calculations also showed that modn isn't among the30 most popular stocks among hedge funds.
If you'd ask most stock holders, hedge funds are seen as slow, old investment tools of years past. While there are more than 8000 funds in operation at the moment, We look at the crème de la crème of this club, around 750 funds. These hedge fund managers command most of the hedge fund industry's total asset base, and by tracking their highest performing picks, Insider Monkey has discovered various investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in ourlatest quarterly updateand they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let's take a look at the key hedge fund action regarding Model N Inc (NYSE:MODN).
Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the fourth quarter of 2018. By comparison, 13 hedge funds held shares or bullish call options in MODN a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Model N Inc (NYSE:MODN) was held byTrigran Investments, which reported holding $35.7 million worth of stock at the end of March. It was followed by Portolan Capital Management with a $20.5 million position. Other investors bullish on the company included Renaissance Technologies, D E Shaw, and Two Sigma Advisors.
As aggregate interest increased, key hedge funds were breaking ground themselves.Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Model N Inc (NYSE:MODN). Arrowstreet Capital had $2.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace'sMarshall Wace LLPalso made a $0.4 million investment in the stock during the quarter. The only other fund with a brand new MODN position is Jeffrey Talpins'sElement Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Model N Inc (NYSE:MODN) but similarly valued. We will take a look at SunCoke Energy, Inc (NYSE:SXC), The First of Long Island Corporation (NASDAQ:FLIC), Ribbon Communications Inc. (NASDAQ:RBBN), and Magenta Therapeutics, Inc. (NASDAQ:MGTA). This group of stocks' market valuations resemble MODN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SXC,21,96805,4 FLIC,9,37076,0 RBBN,12,37336,-3 MGTA,8,85467,0 Average,12.5,64171,0.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $101 million in MODN's case. SunCoke Energy, Inc (NYSE:SXC) is the most popular stock in this table. On the other hand Magenta Therapeutics, Inc. (NASDAQ:MGTA) is the least popular one with only 8 bullish hedge fund positions. Model N Inc (NYSE:MODN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on MODN as the stock returned 11.5% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published atInsider Monkey.
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Is Immersion Corporation (IMMR) A Good Stock To Buy ?
Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Immersion Corporation (NASDAQ:IMMR), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
IsImmersion Corporation (NASDAQ:IMMR)the right investment to pursue these days? Hedge funds are in a bullish mood. The number of bullish hedge fund positions rose by 3 lately. Our calculations also showed that immr isn't among the30 most popular stocks among hedge funds.
In the 21st century investor’s toolkit there are numerous signals market participants can use to assess their stock investments. A couple of the less utilized signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top hedge fund managers can beat the broader indices by a very impressive margin (see the details here).
We're going to view the new hedge fund action encompassing Immersion Corporation (NASDAQ:IMMR).
At Q1's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards IMMR over the last 15 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Immersion Corporation (NASDAQ:IMMR) was held byRaging Capital Management, which reported holding $40.3 million worth of stock at the end of March. It was followed by Shannon River Fund Management with a $12.4 million position. Other investors bullish on the company included VIEX Capital Advisors, GLG Partners, and AQR Capital Management.
With a general bullishness amongst the heavyweights, key money managers have jumped into Immersion Corporation (NASDAQ:IMMR) headfirst.Fondren Management, managed by Bradley Louis Radoff, initiated the most valuable position in Immersion Corporation (NASDAQ:IMMR). Fondren Management had $0.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell'sArrowstreet Capitalalso made a $0.2 million investment in the stock during the quarter. The other funds with brand new IMMR positions are Jeffrey Talpins'sElement Capital Management, Israel Englander'sMillennium Management, and Gavin Saitowitz and Cisco J. del Valle'sSpringbok Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Immersion Corporation (NASDAQ:IMMR) but similarly valued. We will take a look at Global Medical REIT Inc. (NYSE:GMRE), MutualFirst Financial, Inc. (NASDAQ:MFSF), PDL Community Bancorp (NASDAQ:PDLB), and Concrete Pumping Holdings, Inc. (NASDAQ:BBCP). All of these stocks' market caps resemble IMMR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GMRE,16,34770,7 MFSF,3,24850,0 PDLB,2,1874,0 BBCP,5,18461,-5 Average,6.5,19989,0.5 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $87 million in IMMR's case. Global Medical REIT Inc. (NYSE:GMRE) is the most popular stock in this table. On the other hand PDL Community Bancorp (NASDAQ:PDLB) is the least popular one with only 2 bullish hedge fund positions. Immersion Corporation (NASDAQ:IMMR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed thattop 20 most popular stocksamong hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately IMMR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on IMMR were disappointed as the stock returned -8.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out thetop 20 most popular stocksamong hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published atInsider Monkey.
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Is Firstsource Solutions Limited (NSE:FSL) Better Than Average At Deploying Capital?
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Today we are going to look at Firstsource Solutions Limited (NSE:FSL) to see whether it might be an attractive investment prospect. Specifically, we're going to calculate its Return On Capital Employed (ROCE), in the hopes of getting some insight into the business.
First up, we'll look at what ROCE is and how we calculate it. Then we'll compare its ROCE to similar companies. Last but not least, we'll look at what impact its current liabilities have on its ROCE.
ROCE measures the amount of pre-tax profits a company can generate from the capital employed in its business. Generally speaking a higher ROCE is better. In brief, it is a useful tool, but it is not without drawbacks. Author Edwin Whitingsaysto be careful when comparing the ROCE of different businesses, since 'No two businesses are exactly alike.'
Analysts use this formula to calculate return on capital employed:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
Or for Firstsource Solutions:
0.17 = ₹4.6b ÷ (₹37b - ₹8.9b) (Based on the trailing twelve months to March 2019.)
Therefore,Firstsource Solutions has an ROCE of 17%.
View our latest analysis for Firstsource Solutions
When making comparisons between similar businesses, investors may find ROCE useful. Using our data, Firstsource Solutions's ROCE appears to be around the 14% average of the IT industry. Separate from Firstsource Solutions's performance relative to its industry, its ROCE in absolute terms looks satisfactory, and it may be worth researching in more depth.
You can see in the image below how Firstsource Solutions's ROCE compares to its industry. Click to see more on past growth.
Remember that this metric is backwards looking - it shows what has happened in the past, and does not accurately predict the future. ROCE can be misleading for companies in cyclical industries, with returns looking impressive during the boom times, but very weak during the busts. This is because ROCE only looks at one year, instead of considering returns across a whole cycle. What happens in the future is pretty important for investors, so we have prepared afreereport on analyst forecasts for Firstsource Solutions.
Current liabilities include invoices, such as supplier payments, short-term debt, or a tax bill, that need to be paid within 12 months. The ROCE equation subtracts current liabilities from capital employed, so a company with a lot of current liabilities appears to have less capital employed, and a higher ROCE than otherwise. To counter this, investors can check if a company has high current liabilities relative to total assets.
Firstsource Solutions has total assets of ₹37b and current liabilities of ₹8.9b. As a result, its current liabilities are equal to approximately 24% of its total assets. Current liabilities are minimal, limiting the impact on ROCE.
Overall, Firstsource Solutions has a decent ROCE and could be worthy of further research. Firstsource Solutions looks strong on this analysis,but there are plenty of other companies that could be a good opportunity. Here is afree listof companies growing earnings rapidly.
If you like to buy stocks alongside management, then you might just love thisfreelist of companies. (Hint: insiders have been buying them).
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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China's factory activity shrinks as U.S. tariffs, slowdown hit orders
BEIJING (Reuters) - China's factory activity shrank more than expected in June, an official manufacturing survey showed, highlighting the need for more economic stimulus as U.S. tariffs and weaker domestic demand ramped up pressure on new orders for goods.
The Purchasing Managers' Index (PMI) stood at 49.4 in June, China's National Bureau of Statistics said on Sunday, unchanged from the previous month and below the 50-point mark that separates growth from contraction on a monthly basis. Analysts polled by Reuters predicted a reading of 49.5.
The weak manufacturing readings are likely to cast a shadow over the apparent progress U.S. and Chinese leaders made at the G20 summit in Japan over the weekend in restarting their troubled talks over tariffs amid a costly trade war.
They will also spark concerns about stalling growth in China and the risk of a global recession, despite slightly better-than-expected export and industrial profits data in May.
Many economists still expect the economy to face strong headwinds in coming months as domestic demand falters and external risks rise.
"Although the outcome of the G20 summit (in Osaka) might boost confidence for some entities, organic growth in the economy is still insufficient, and counter-cyclical stimulus policies need to be maintained," researchers at Huatai Securities wrote in a research note on Sunday.
"The PMI index continued to fall across the board this month, and only the raw material inventory sub-index was up due to weak demand," the research note read.
In June, China's factory output growth slowed, with the subindex falling to 51.3 from 51.7 in May while the contraction in total new orders accelerated to 49.6 from 49.8.
Export orders extended their decline with the sub-index falling to 46.3 from May's 46.5, suggesting a further weakening in global demand.
Import orders also worsened, reflecting softening demand at home despite a flurry of growth-supporting measures rolled out earlier this year.
Southwest Securities said weak new export orders reflected a fading of the front-loading effect, which had temporarily boosted exports as Chinese companies rushed to place orders before more tariffs took effect.
Presidents Donald Trump and Xi Jinping held ice-breaking talks at the G20 summit on Saturday. However, Chinese state media warned on Sunday Beijing and Washington will likely face a long road before the two countries could reach a deal.
Analysts at Nomura expect any gains achieved on a temporary trade deal between China and the United States would prove fleeting with a renewed escalation likely further down the road.
Trump has already imposed tariffs on $250 billion of Chinese goods and is threatening to extend those to another $300 billion, which would effectively cover all of China's exports to the United States. China has retaliated with tariffs on U.S. imports.
To deal with the economic challenges, policymakers have released a range of measures and are expected to launch more. Premier Li Keqiang last week pledged to cut real interest rates on financing for small and micro firms.
Goldman Sachs said the lack of any substantive progress in Sino-U.S. trade talks at the G20 over the weekend suggested stimulus, including cuts to banks' reserve requirements, was likely to be needed.
"We expect more policy easing (two more reserve requirement ratio cuts in 2H this year, more fiscal measures to support infrastructure investment) to come in the next few months," Goldman Sachs said in a note.
Manufacturers continued to cut jobs in June, with the employment sub-index falling to 46.9, compared with 47.0 in May, when it hit the lowest level seen since March 2009.
An official business survey showed activity in China's services sector held firm in June despite growing pressure on the broader economy from U.S. trade measures, with the official reading at 54.2 in June from 54.3 in May.
Beijing has been counting on a strong services sector to pick up the slack as it tries to shift the economy away from a dependence on heavy industry and manufacturing exports.
(Reporting by Yawen Chen, Yilei Sun and Norihiko Shirouzu; Writing by Yawen Chen; Editing by Sam Holmes)
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U.S Mortgage Rates – Mortgage Rates Slide Again as the FED Turns Dovish
Mortgage rates were back on the slide following the previous week’s 1strise in 7-weeks. In the week ending 27thJune, 30-year fixed rates fell by 11 basis points to 3.73% reversing a 2 basis point rise from the previous week. That left 30-year rates at the lowest level since late 2016 according to figures released byFreddie Mac.
Compared to this time last year, 30-year fixed rates were down by 82 basis points.
More significantly, 30-year fixed rates are down by 121 basis points since last November’s most recent peak of 4.94%.
Key stats out of the U.S through the 1sthalf of the week were on the lighter side.
Consumer confidence and durable goods orders figures provided direction on Tuesday and Wednesday.
A slide in consumer confidence and mixed durable goods orders figures supported the downward trend in mortgage rates on the week.
Outside of the numbers, market sentiment towards the G20 Summit also had an impact.
While Treasury yields were on the decline, FED Chair Powell failed to talk of a near-term rate cut on Tuesday suggesting that the FED may not be as dovish as the FOMC projections had suggested.
The G20 Summit and how talks between Trump and Xi progress will have a material influence on what lies ahead from a monetary policy perspective.
The weekly average rates for new mortgages as of 27thJune were quoted byFreddie Macto be:
• 30-year fixed rates decreased by 11 basis points to 3.73% in the week. Rates were down from 4.55% from a year ago. The average fee remained unchanged at 0.5 points.
• 15-year fixed rates fell by 9 basis point to 3.16% in the week. Rates were down from 4.04% from a year ago. The average fee rose from 0.4 points to 0.5 points.
• 5-year fixed rates fell by 9 basis points to 3.39% in the week. Rates were down by 48 basis points from last year’s 3.87%. The average fee held steady at 0.4 points.
According to Freddie Mac, home purchase applications found support over the last 2-months from falling mortgage rates. Through late June, home purchase applications rose by 5 percentage points compared with the previous month. Freddie Mac anticipates that the housing market will continue to improve from both a sales and price perspective.
For the week ending 21stJune,rateswere quoted to be:
• Average interest rates for 30-year fixed, backed by the FHA, decreased from 4.12% to 4.01%. Points decreased from 0.44 to 0.36 (incl. origination fee) for 80% LTV loans.
• Average interest rates for 30-year fixed with conforming loan balances decreased from 4.14% to 4.06%. Points decreased from 0.38 to 0.35 (incl. origination fee) for 80% LTV loans.
• Average 30-year rates for jumbo loan balances decreased from 4.04% to 4.00%. Points remained unchanged at 0.24 (incl. origination fee) for 80% LTV loans.
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, increased by 1.3% in the week ending 21stJune. The increase partially reversed a 3.4% fall in the week ending 14thJune.
The Refinance Index rose by 3% in the week ending 21stJune. The Index fell by 4% in the previous week ending 14thJune.
The share of refinance mortgage activity increased from 50.2% to 51.5%, following an increase from 49.8% to 50.2% in the week prior.
According to the MBA, market reaction to a more dovish FOMC statement and forecast weighed on Treasury yields and mortgage rates. The fall in rates led to an increase in refinancing activity, partly driven by a 9% surge in VA applications. Following the fall in the week of 21stJune, mortgage rates were at the lowest level since September 2017. In spite of the fall, however, purchase applications fell by 2%, whilst up by 9% compared with a year ago.
It’s a busy week ahead for the Greenback.
Key stats due out of the U.S through the 1sthalf of the week include private sector PMI numbers, factory orders, and trade data and ADP nonfarm employment change figures.
From the economic calendar, the ADP and ISM private-sector PMI survey figures will be the key driver.
While the stats will garner plenty of attention, market reaction to the G20 Summit will ultimately drive Treasury yields and ultimately mortgage rates.
From the previous week, the FED’s preferred inflation figures will also have an influence on yields. The core PCE Price Index rose by just 1.5% year-on-year, falling well short of the FED’s 2% target.
Thisarticlewas originally posted on FX Empire
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Mets list two living members of their 1969 team as dead
The New York Mets have been honoring the 50th anniversary of the 1969 World Series champion team over the week with a series of events. On Thursday, they renamed the street in front of Citi Field " Seaver Way ." At Saturday’s game, they honored more than a dozen members of the title-winning team . They even put together a touching montage for all the players who have died. Unfortunately, two of the players mentioned in memoriam are still very much alive: former outfielder Jim Gosger, 76, and 70-year-old left-hander Jesse Hudson. The Mets paid tribute to Jim Gosger and Jesse Hudson in their 1969 video. But both are alive. pic.twitter.com/egJNu2lzNG — Mike Mazzeo (@MazzYahoo) June 30, 2019 The Mets quickly figured out their mistake — let’s hope none of their family members were caught by surprise at the game — and apologized to Gosger. No word yet on if they reached Hudson . It also seems that Jim may have some Mets takes of his own. pic.twitter.com/sWwSUfqeKi — Hannah Keyser (@HannahRKeyser) June 30, 2019 Hopefully neither player was forgettable for the Mets, since they each only played one season in Queens. Gosger was acquired from the Seattle Pilots in July of 1969 as a player to be named later from a February trade, and he was dealt to the San Francisco Giants that December. Hudson, meanwhile, made just one start in the majors before returning to the minors and pitching one last season at Triple-A. Surely nothing was malicious about the mix-up, but sometimes when one thing goes badly , a whole host of other things spiral out of control. It’s just unfortunately typical for the Mets. The Mets lost track of who was still alive from their 1969 World Series champion team. (AP Photo/Frank Franklin II) More from Yahoo Sports: Why Alex Morgan was key to USWNT despite not scoring Report: Durant’s free agent wish list has four teams Rapinoe steals show as USWNT beats co-favorite France Report: Kawhi wants Magic involved in Lakers meeting
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Could EIH Limited (NSE:EIHOTEL) Have The Makings Of Another Dividend Aristocrat?
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Is EIH Limited (NSE:EIHOTEL) a good dividend stock? How can we tell? Dividend paying companies with growing earnings can be highly rewarding in the long term. 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.
While EIH's 0.5% dividend yield is not the highest, we think its lengthy payment history is quite interesting. Before you buy any stock for its dividend however, you should always remember Warren Buffett's two rules: 1) Don't lose money, and 2) Remember rule #1. We'll run through some checks below to help with this.
Explore this interactive chart for our latest analysis on EIH!
Dividends are usually paid out of company earnings. If a company is paying more than it earns, then the dividend might become unsustainable - hardly an ideal situation. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. Looking at the data, we can see that 39% of EIH's profits were paid out as dividends in the last 12 months. This is medium payout level that leaves enough capital in the business to fund opportunities that might arise, while also rewarding shareholders. One of the risks is that management reinvests the retained capital poorly instead of paying a higher dividend.
We update our data on EIH every 24 hours, so you can always getour latest analysis of its financial health, here.
From the perspective of an income investor who wants to earn dividends for many years, there is not much point buying a stock if its dividend is regularly cut or is not reliable. EIH has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of 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 ₹1.80 in 2009, compared to ₹0.90 last year. The dividend has shrunk at around 6.7% a year during that period. EIH's dividend hasn't shrunk linearly at 6.7% per annum, but the CAGR is a useful estimate of the historical rate of change.
A shrinking dividend over a ten-year period is not ideal, and we'd be concerned about investing in a dividend stock that lacks a solid record of growing dividends per share.
Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Earnings have grown at around 4.2% a year for the past five years, which is better than seeing them shrink! EIH is paying out less than half of its earnings, which we like. However, earnings per share are unfortunately not growing much. Might this suggest that the company should pay a higher dividend instead?
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. It's great to see that EIH is paying out a low percentage of its earnings and cash flow. Second, earnings growth has been ordinary, and its history of dividend payments is chequered - having cut its dividend at least once in the past. Overall we think EIH is an interesting dividend stock, although it could be better.
Are management backing themselves to deliver performance? Check their shareholdings in EIH inour latest insider ownership analysis.
Looking for more high-yielding dividend ideas? Try ourcurated list of dividend stocks with a yield above 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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How Much Of EIH Limited (NSE:EIHOTEL) Do Insiders Own?
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Every investor in EIH Limited (NSE:EIHOTEL) should be aware of the most powerful shareholder groups. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. 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 ₹105b, EIH is a decent size, so it is probably on the radar of institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholder can tell us about EIHOTEL.
Check out our latest analysis for EIH
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.
EIH already has institutions on the share registry. Indeed, they own 20% of the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see EIH's historic earnings and revenue, below, but keep in mind there's always more to the story.
EIH is not owned by hedge funds. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
I can report that insiders do own shares in EIH Limited. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around ₹5.5b worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checkingif those insiders have been selling.
The general public, with a 11% 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.
Our data indicates that Private Companies hold 30%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
It appears to us that public companies own 34% of EIHOTEL. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
I always like to check for ahistory of revenue growth. You can too, by accessing this free chart ofhistoric revenue and earnings in thisdetailed graph.
But ultimatelyit is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look atthis free report showing whether analysts are predicting a brighter future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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NBA Free Agency: Nikola Vucevic agrees to $100M deal with Magic
Nikola Vucevic will reportedly return to the Magic on a nine-figure contract. (AP Photo/John Raoux) Nikola Vucevic put together a monster 2018-19 season, and now he has a contract to match. The 7-foot center will reportedly land a four-year, $100 million deal to remain with the Orlando Magic when free agency opens on Sunday at 6 p.m. ET, according a report from The Athletic’s Shams Charania . Vucevic was one of five players who averaged at least 20 points and 12 rebounds last season, earning him his first All-Star bid at age 28. Those others? League MVP Giannis Antetokounmpo plus Joel Embiid, Anthony Davis and Karl-Anthony Towns. While Vucevic is not particularly talented on defense like those other four, he was still the most valuable — and longest-tenured — member of a Magic team that just made the postseason for the first time in seven seasons. How does Vucevic fit into Magic’s long-term plans? Vucevic has been a key cog for the Magic ever since they acquired him in the massive four-team, 12-player deal that sent Dwight Howard to the Los Angeles Lakers. However, it hasn’t been clear until now whether the Magic would shell out the cash necessary to keep him. The Magic have invested heavily in big men in the lottery, making Vucevic an odd fit. With Mo Bamba in 2018, Jonathan Isaac in 2017, and Aaron Gordon — now on a four-year, $80 million contract — in 2014, Vucevic was considered readily moveable. But when Orlando stayed in playoff contention, the Magic opted to keep their big man in town rather than deal him, and they wound up with the sixth seed in the East. Now those other forwards may become trade bait for backcourt help. Orlando had to fight off major suitors to retain Vucevic Vucevic’s reported quick decision to return to Orlando says a lot when considering what other teams were reportedly interested in signing him. The Boston Celtics reportedly made Vucevic one of their “ top priorities ” this offseason as a younger replacement for Al Horford. They appear in line to sign Kemba Walker instead, but any comparison to a five-time All-Star is quite the compliment. Story continues The Los Angeles Lakers were also considered in the running for Vucevic, and they had a local connection since he played college nearby at USC. He was more of a backup plan if their pursuit of Kawhi Leonard, Klay Thompson or Jimmy Butler fell through, but his ability to match with another star big like Davis — and improved three-point shot — goes to show how well suited he is for the modern NBA. More from Yahoo Sports: Why Alex Morgan was key to USWNT despite not scoring Report: Durant’s free agent wish list has four teams Rapinoe steals show as USWNT beats co-favorite France Report: Kawhi wants Magic involved in Lakers meeting
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UFC on ESPN 3 results: Francis Ngannou continues his reign over the heavyweight division
Francis Ngannou KOs Junior dos Santos at UFC on ESPN 3 Francis Ngannou made quick work of former champion Junior dos Santos at UFC on ESPN 3 on Saturday night in Minneapolis, Minn., cementing his claim to another shot at the UFC heavyweight championship. Ngannou started strong, landing a couple of hard leg kicks to dos Santos’ lead leg, but the Brazilian seemed to get back into the fight, briefly putting Ngannou on the canvas by clipping him with a low kick. As the tide tends to turn on the stop of a dime in the heavyweight division, it did in Minneapolis. Dos Santos moved in, but Ngannou caught him with a right hand that caused him to drop to the canvas. Ngannou followed him down, landing a hammerfist and followed with several more punches, forcing referee Herb Dean to step in and wave off the fight. And just like that, at 1:11 of the first round, Ngannou easily positioned himself as the only contender to the UFC heavyweight title, which is on the line at UFC 241 on Aug. 17 in Anaheim, Calif. While champion Daniel Cormier has hinted at finally walking away from the sport after his rematch with former champ Stipe Miocic at UFC 241, a showdown with Ngannou, whom he has never fought, might prove too tempting. “Of course, it gives me some confidence, but of course, I already had some confidence. I believe I am the best boxer in the UFC heavyweight division,” Ngannou said after the fight, calling for his shot at the belt. “I think the only thing left now is the winner of Stipe Miocic and DC. I deserve some respect. I deserve some respect.” https://twitter.com/ufc/status/1145174779869028358 Joseph Benavidez stops Jussier Formiga to regain top spot in the UFC flyweight division Joseph Benavidez regained his position as the top flyweight contender on Saturday, as he overcame a strong start by Jussier Formiga. While the two went toe-to-toe throughout their UFC on ESPN 3 co-main event, Formiga struck early, opening a cut around Benavidez’s left eye, forcing him to be distracted by the blood trickling down into his eye. Formiga took Benavidez’s back in the second frame, but there is a reason for the Joe Jitsu nickname. Benavidez escaped the position and unloaded on his feet, rocking Formiga and sending him reeling. Benanvidez continued to unload until the referee stepped in and called a halt to the fight. Formiga was the top 125-pounder without a belt coming into the fight, but Benavidez regained that designation, earning the TKO stoppage at 4:47 of the second round. https://twitter.com/ufc/status/1145169452545134592 TRENDING > Why is this a thing? Dana White is still talking about Tom Cruise vs. Justin Bieber (video) Demian Maia wins again, keeps setting records UFC welterweight Demian Maia maintained his position as the top grappler in the sport and one of the longest reigning contenders in the division. Story continues Maia out-grappled Anthony Rocco Martin in the first two rounds, but Martin rocked him in the third, staggering Maia with a right hand. The Brazilian again pulled the fight to the canvas, where he was able to finish the round without skipping a beat. Maia earned the majority decision, which put him in sole position of second place for most victories in UFC history with 21 victories, only two behind Donald “Cowboy” Cerrone. View comments
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Here's What You Should Know About The India Cements Limited's (NSE:INDIACEM) 0.8% Dividend Yield
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Could The India Cements Limited (NSE:INDIACEM) be an attractive dividend share to own for the long haul? Investors are often drawn to strong companies with the idea of reinvesting the dividends. Yet sometimes, investors buy a stock for its dividend and lose money because the share price falls by more than they earned in dividend payments.
A 0.8% yield is nothing to get excited about, but investors probably think the long payment history suggests India Cements has some staying power. When buying stocks for their dividends, you should always run through the checks below, to see if the dividend looks sustainable.
Click the interactive chart for our full dividend analysis
Dividends are usually paid out of company earnings. If a company is paying more than it earns, then the dividend might become unsustainable - hardly an ideal situation. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. Looking at the data, we can see that 38% of India Cements's profits were paid out as dividends in the last 12 months. This is medium payout level that leaves enough capital in the business to fund opportunities that might arise, while also rewarding shareholders. One of the risks is that management reinvests the retained capital poorly instead of paying a higher dividend.
As India Cements has a meaningful amount of debt, we need to check its balance sheet to see if the company might have debt risks. A rough way to check this is with these two simple ratios: a) net debt divided by EBITDA (earnings before interest, tax, depreciation and amortisation), and b) net interest cover. Net debt to EBITDA is a measure of a company's total debt. Net interest cover measures the ability to meet interest payments. Essentially we check that a) the company does not have too much debt, and b) that it can afford to pay the interest. With net debt of 4.68 times its EBITDA, investors are starting to take on a meaningful amount of risk, should the business enter a downturn.
Net interest cover can be calculated by dividing earnings before interest and tax (EBIT) by the company's net interest expense. Interest cover of 1.03 times its interest expense is starting to become a concern for India Cements, and be aware that lenders may place additional restrictions on the company as well.
Consider gettingour latest analysis on India Cements'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 India Cements's dividend payments. This dividend has been unstable, which we define as having fallen by at least 20% one or more times over this time. During the past ten-year period, the first annual payment was ₹2.00 in 2009, compared to ₹0.80 last year. This works out to be a decline of approximately 8.8% per year over that time. India Cements's dividend hasn't shrunk linearly at 8.8% per annum, but the CAGR is a useful estimate of the historical rate of change.
We struggle to make a case for buying India Cements for its dividend, given that payments have shrunk over the past ten years.
Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. India Cements's earnings per share are down -18% over the past year. While this is not ideal, one year is a short time in business, and we wouldn't want to get too hung up on this. We do note though, one year is too short a time to be drawing strong conclusions about a company's future prospects.
To summarise, shareholders should always check that India Cements's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. Firstly, we like that India Cements has low and conservative payout ratios. 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 sum, we find it hard to get excited about India Cements from a dividend perspective. It's not that we think it's a bad business; just that there are other companies that perform better on these criteria.
Now, if you want to look closer, it would be worth checking out ourfreeresearch on India Cementsmanagement tenure, salary, and performance.
If you are a dividend investor, you might also want to look at ourcurated list of dividend stocks yielding above 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Francis Ngannou knocks out Junior Dos Santos in 71 seconds
(L-R) Francis Ngannou made quick work of Junior Dos Santos on Saturday at UFC Minneapolis. (Getty Images) There has never been a puncher quite like Francis Ngannou in the history of mixed martial arts. He doesn’t not have to connect clearly, and put his entire body behind a punch, to knock someone out. Trainers talk about fighters being in balance and having great timing and accuracy, but Ngannou doesn’t need those traits to knock an opponent out. He just needs to connect to the head and the end is coming quickly. He proved that yet again by crushing former heavyweight champion Junior Dos Santos, stopping him in 71 seconds Saturday at the Target Center in Minneapolis in what was touted as a matchup of the UFC’s best heavyweight boxers. Imagine Francis Ngannou chucking a train at your head while you're not looking. That's what happened to Junior dos Santos. 🚅 #UFCMinneapolis pic.twitter.com/Tqv3hmLXJ8 — Kyle Johnson (@VonPreux) June 30, 2019 It was, though, no contest. Dos Santos overcommitted and attempted to move away from Ngannou to reset. But though it’s a normal move that happens frequently in a fight, it’s a dangerous error against Ngannou. Ngannou threw a right hand from behind Dos Santos that landed on the chin. He fired a couple of other shots that felled the ex-champion and sent him to the canvas on all fours. A quick and powerful athlete at 6-foot-4 and more than 250 pounds, Ngannou did what he needed to do to earn a shot at the heavyweight title. Champion Daniel Cormier will defend the belt on Aug. 17 at the Honda Center in Anaheim, California, at UFC 241 against former champion Stipe Miocic. Miocic defeated Ngannou by a wide unanimous decision at UFC 220 in Boston last year to retain the championship. This, though, is a different Ngannou, who has needed a combined 2:22 to win his last three fights over Curtis Blaydes, Cain Velasquez and Dos Santos. Story continues Whether Ngannou gets a title shot next is up for debate and will likely depend upon who wins the Cormier-Miocic rematch. If Cormier wins, the UFC will try to book a fight with Cormier’s archrival Jon Jones, the UFC light heavyweight champion. Jones hasn’t been interested in going to heavyweight, but the UFC could make him an offer he couldn’t say no to, because it would be a huge match. If Miocic defeats Cormier, Ngannou would probably get his rematch, unless Cormier chooses to fight once more before retiring and the UFC makes a rubber match. “The only thing left is the winner of Stipe and DC,” Ngannou said. “I need some respect. I deserve it.” Ngannou came out kicking early, and said the goal was to limit Dos Santos’ movement and force him to stand and trade. That’s not a good option for anyone fighting Ngannou. Miocic used his wrestling to take him down and maul Ngannou, and tire him out, but Miocic, who was a Golden Gloves state champion boxer, wanted no part of slugging it out with Ngannou. He seems to have straightened out whatever it was that pushed him off track in his back-to-back losses in 2018, when he lost to Miocic and then was abysmal in a unanimous decision loss to Derrick Lewis. Since then, he blew out Blaydes in 45 seconds, needed only 26 seconds to stop Velasquez and then went just 1:11 with Dos Santos. He’s the most intimidating fighter in MMA, and the scary thing for any potential future opponents is that he’s only getting better. More from Yahoo Sports: Why Alex Morgan was key to USWNT despite not scoring Report: Durant’s free agent wish list has four teams Rapinoe steals show as USWNT beats co-favorite France Report: Kawhi wants Magic involved in Lakers meeting
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The Week Ahead: Market Reaction to the G20 Summit and Iran to Influence
It’s another busy while shortened week ahead for the Greenback.
June’s finalized Markit manufacturing PMI is due out ahead of the market’s preferred ISM manufacturing PMI.
A lack of stats on Tuesday shifts the focus to the more influential ISM non-manufacturing PMI and June’s ADP nonfarm employment change numbers, due out on Wednesday.
In a shortened session, factory orders and finalized Markit service sector numbers will also provide direction.
With the U.S on holiday on Thursday, the focus will then shift to June nonfarm payroll and wage growth figures. Another dire set of numbers could sink the Dollar…
Progress with China on trade could ease pressure on the FED to make a move, which would be Dollar positive.
The Dollar Spot Index ended the week down by 0.09% to $96.130.
It’s a relatively busy week ahead.
The week kicks off with finalized French, German and Eurozone manufacturing PMI numbers. Ahead of the finalized figures, Spain and Italy’s manufacturing PMIs will also provide direction.
German employment numbers will also be in focus on the day. The markets will be looking for better numbers following recently disappointing consumer sentiment surveys.
German retail sales figures will also provide direction on Tuesday ahead of service sector PMIs due out on Wednesday.
At the end of the week, German factory orders and industrial production figures will also influence.
Of less influence is the Eurozone’s retail sales figures due out on Thursday.
The EUR/USD ended the week up 0.04% to $1.1373.
It’s also a relatively quiet week ahead.
June manufacturing, construction and service sector PMI numbers are due out on Monday, Tuesday and Wednesday.
From the economic calendar, the service sector PMI will likely have the greatest influence.
Outside of the numbers, the leadership race continues and will provide further direction to the Pound.
The GBP/USD ended the week down 0.32% at $1.2696.
It’s a relatively busy and shorted week ahead.
The markets will need to wait until Wednesday for May trade figures that are due out ahead of employment and Ivey PMI numbers on Friday.
We can expect the Loonie to be sensitive to the numbers and risk sentiment in general in the wake of the G20 Summit.
Chatter from OPEC will also need to be considered in the week.
The Loonie ended the week up 0.96% to C$1.3095 against the U.S Dollar.
It’s a relatively quiet week ahead. Key stats include manufacturing figures on Monday, building approvals on Wednesday and retail sales figures on Thursday.
On the data front, manufacturing and retail sales will be the key drivers.
Monetary policy will also be in focus, however, with the RBA delivering its July interest rate decision. The RBA talked of the need for further support at the last meet. Progress alone on the U.S – China trade talks may not be enough to see the RBA reverse its outlook.
Expect some influence from the G20 Summit, however…
The Aussie Dollar ended the week up 1.36% to $0.7020.
It’s a busy week ahead.
Key stats due out of Japan include 2ndquarter Tankan numbers on Monday. Household spending figures will provide direction at the end of the week.
While we would expect the figures to have some influence, there’s very little that will likely shift the BoJ’s mood near-term.
The outcome of the G20 Summit will likely be the key driver in the first half of the week.
The Japanese Yen ended the week down 0.49% to ¥107.85 against the U.S Dollar.
It’s a particularly quiet week ahead.
Economic data is limited to building consent figures due out on Tuesday.
The lack of stats will leave the Kiwi Dollar exposed to the market reaction to the G20 Summit that concluded on Saturday.
We have heard from the RBNZ who has talked of more rate cuts to come.
The Kiwi Dollar ended the week up 1.96% to $0.6718.
While trade talks from the G20 Summit will be the key driver, manufacturing and service sector PMI numbers will also be of influence on Monday and Wednesday.
The markets will get a sense of how resilient has the Chinese economy been as the 2ndquarter comes to an end?
Trade Wars: The G20 Summit delivered some good news ahead of the market open tomorrow. President Trump and China Premier Xi agreed to get trade negotiations moving again. While there were some mixed messages, talk of China agreeing to beef up its imports of Agri goods was positive. Huawei is now also allowed to purchase from U.S companies. While talks are now back on track, it will come down to how much progress is made in the weeks ahead.
UK Politics: The Leadership Race has been heating up as Johnson and Hunt battle it out for the top spot. Expect more chatter to influence the Pound.
Iran: While news from the G20 Summit in Japan was positive, rising tension in the Middle East is not. News hit the wires over the weekend that the U.S has deployed stealth fighters to the Middle East. With the U.S armed and ready and Iran unlikely to back down, the prospect of another conflict in the region would not be good for the financial markets.
Monetary Policy:
For the Aussie Dollar: The RBA delivers its July monetary policy decision on Tuesday. As the first central bank to have an opportunity to respond to updates from the G20 Summit, the RBA could set the tone for the month…
Thisarticlewas originally posted on FX Empire
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With EPS Growth And More, Kamdhenu (NSE:KAMDHENU) Is Interesting
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For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
In contrast to all that, I prefer to spend time on companies likeKamdhenu(NSE:KAMDHENU), which has not only revenues, but also profits. While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
View our latest analysis for Kamdhenu
As one of my mentors once told me, share price follows earnings per share (EPS). It's no surprise, then, that I like to invest in companies with EPS growth. I, for one, am blown away by the fact that Kamdhenu has grown EPS by 37% per year, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches my attention; like a glint in the eye of my lover.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Kamdhenu maintained stable EBIT margins over the last year, all while growing revenue 4.5% to ₹12b. That's progress.
In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.
Since Kamdhenu is no giant, with a market capitalization of ₹4.0b, so you shoulddefinitely check its cash and debtbeforegetting too excited about its prospects.
Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
The good news is that Kamdhenu insiders spent a whopping ₹100m on stock in just one year, and I didn't see any selling. As if for a flower bud approaching bloom, I become an expectant observer, anticipating with hope, that something splendid is coming. It is also worth noting that it was Whole Time Director Sunil Agarwal who made the biggest single purchase, worth ₹50m, paying ₹100.00 per share.
On top of the insider buying, we can also see that Kamdhenu insiders own a large chunk of the company. Actually, with 46% of the company to their names, insiders are profoundly invested in the business. I'm reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. With that sort of holding, insiders have about ₹1.8b riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!
Kamdhenu's earnings have taken off like any random crypto-currency did, back in 2017. Growth investors should find it difficult to look past that strong EPS move. And in fact, it could well signal a fundamental shift in the business economics. If that's the case, you may regret neglecting to put Kamdhenu on your watchlist. Now, you could try to make up your mind on Kamdhenu by focusing on just these factors,oryou couldalsoconsider how its price-to-earnings ratio compares to other companies in its industry.
As a growth investor I do like to see insider buying. But Kamdhenu isn't the only one. You can see aa free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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I Built A List Of Growing Companies And HDFC Bank (NSE:HDFCBANK) Made The Cut
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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. And in their study titledWho Falls Prey to the Wolf of Wall Street?'Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.
So if you're like me, you might be more interested in profitable, growing companies, likeHDFC Bank(NSE:HDFCBANK). While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
See our latest analysis for HDFC Bank
The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That means EPS growth is considered a real positive by most successful long-term investors. Impressively, HDFC Bank has grown EPS by 18% per year, compound, in the last three years. As a general rule, we'd say that if a company can keep upthatsort of growth, shareholders will be smiling.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. I note that HDFC Bank's revenuefrom operationswas lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While we note HDFC Bank's EBIT margins were flat over the last year, revenue grew by a solid 18% to ₹620b. That's progress.
In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.
In investing, as in life, the future matters more than the past. So why not check out thisfreeinteractive visualization of HDFC Bank'sforecastprofits?
We would not expect to see insiders owning a large percentage of a ₹6.7t company like HDFC Bank. But we do take comfort from the fact that they are investors in the company. Indeed, they have a glittering mountain of wealth invested in it, currently valued at ₹73b. I would find that kind of skin in the game quite encouraging, if I owned shares, since it would ensure that the leaders of the company would also experience my success, or failure, with the stock.
Given my belief that share price follows earnings per share you can easily imagine how I feel about HDFC Bank's strong EPS growth. I think that EPS growth is something to boast of, and it doesn't surprise me that insiders are holding on to a considerable chunk of shares. Fast growth and confident insiders should be enough to warrant further research. So the answer is that I do think this is a good stock to follow along with. Now, you could try to make up your mind on HDFC Bank by focusing on just these factors,oryou couldalsoconsider how its price-to-earnings ratio compares to other companies in its industry.
You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here isa list of companies with insider buying in the last three months.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Is KEC International Limited's (NSE:KEC) ROE Of 20% Impressive?
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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 KEC International Limited (NSE:KEC).
KEC International has a ROE of 20%, based on the last twelve months. That means that for every ₹1 worth of shareholders' equity, it generated ₹0.20 in profit.
Check out our latest analysis for KEC International
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for KEC International:
20% = ₹4.9b ÷ ₹24b (Based on the trailing twelve months to March 2019.)
Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. It is all the money paid into the company from shareholders, plus any earnings retained. You can calculate shareholders' equity by subtracting the company's total liabilities from its total assets.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the profit 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. As is clear from the image below, KEC International has a better ROE than the average (8.7%) in the Construction industry.
That's what I like to see. We think a high ROE, alone, is usually enough to justify further research into a company. For example,I often check if insiders have been buying shares.
Virtually all companies need money to invest in the business, to grow profits. That cash can come from issuing shares, retained earnings, or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.
KEC International has a debt to equity ratio of 0.76, which is far from excessive. The combination of modest debt and a very respectable ROE suggests this is a business worth watching. Careful use of debt to boost returns is often very good for shareholders. However, it could reduce the company's ability to take advantage of future opportunities.
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.
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. 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. So I think it may be worth checking thisfreereport on analyst forecasts for the company.
Of courseKEC International 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.
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Can KEC International Limited (NSE:KEC) Maintain Its Strong Returns?
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One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. We'll use ROE to examine KEC International Limited (NSE:KEC), by way of a worked example.
KEC International has a ROE of 20%, based on the last twelve months. One way to conceptualize this, is that for each ₹1 of shareholders' equity it has, the company made ₹0.20 in profit.
Check out our latest analysis for KEC International
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for KEC International:
20% = ₹4.9b ÷ ₹24b (Based on the trailing twelve months to March 2019.)
It's easy to understand the 'net profit' part of that equation, but 'shareholders' equity' requires further explanation. It is all earnings retained by the company, plus any capital paid in by shareholders. You can calculate shareholders' equity by subtracting the company's total liabilities from its total assets.
ROE measures a company's profitability against the profit it retains, and any outside investments. The 'return' is the yearly profit. That means that the higher the ROE, the more profitable the company is. So, all else being equal,a high ROE is better than a low one. That means ROE can be used to compare two businesses.
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. As is clear from the image below, KEC International has a better ROE than the average (8.7%) in the Construction industry.
That is a good sign. We think a high ROE, alone, is usually enough to justify further research into a company. One data point to check is ifinsiders have bought shares recently.
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 first two cases, the ROE will capture this use of capital to grow. In the latter case, the use of debt will improve the returns, but will not change the equity. That will make the ROE look better than if no debt was used.
While KEC International does have some debt, with debt to equity of just 0.76, 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 a useful indicator of the ability of a business to generate profits and return them to shareholders. 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. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. So I think it may be worth checking thisfreereport on analyst forecasts for the company.
Of courseKEC International 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.
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How Lincoln's disdain for demagogues pricks Trump's Fourth of July pomposity
Photograph: Evan Vucci/AP Donald Trump is orchestrating his Fourth of July extravaganza to be his most spectacular act of self-flattery, his first appearance on the National Mall since his inauguration but before a certifiably larger crowd and ending with a burst of fireworks. He has always given careful thought to his staging. His introduction to The Apprentice , driven to the thumping beat of For the Love of Money, showed the master of the universe striding from a limousine at Trump Tower, riding in a Trump helicopter and climbing the ramp of a Trump airplane. Now, however, he will display himself on the steps of the Lincoln Memorial. With the illuminated statue of the 16th president as his backdrop, Trump will highlight the magnitude of his own greatness by standing in reflected glory. Or maybe Trump thinks it’s the other way around and he, not Lincoln, will be the radiant one. Since becoming president, Trump’s estimation of Lincoln has declined even as his estimation of himself has inflated. In 2017, Trump was willing to concede that Lincoln was the greatest president, saying : “With the exception of the late, great Abraham Lincoln, I can be more presidential than any president that’s ever held this office.” By the next year, he had eclipsed Lincoln in his mind, proclaiming : “You know, a poll just came out that I am the most popular person in the history of the Republican party. Beating Lincoln. I beat our Honest Abe.” (Of course, there were no polls in the 19th century.) Then, this year, bringing the Boston Red Sox into the Lincoln Bedroom, according to the Red Sox chairman, Tom Werner, Trump “was talking about Abraham Lincoln losing the war, and he said I know you guys lost a game or two but this was a war”. As Trump’s defense of Confederate monuments since Charlottesville has risen, his opinion of Lincoln has fallen Lincoln? Loser. Trump’s most recent reflection on his competition with Lincoln came in his interview with George Stephanopoulos, broadcast on 16 June on ABC News, in which he blurted : “If you can believe it, Abraham Lincoln was treated supposedly very badly, but nobody’s been treated badly like me.” Just two weeks earlier, on 2 June, he had delivered a brief speech written for him at the gala of Ford’s Theatre, praising Lincoln’s “eternal legacy”. Left to his own devices, demoting the “supposedly” tragic event at that theater, Trump rated himself superior as a martyr. On 4 July, while Trump mugs on the Mall, the marble Lincoln will maintain a dignified silence. Many have wondered what Lincoln might say if confronted by the people and events of their time. In 1914, at the beginning of the first world war, the poet Vachel Lindsay, in Abraham Lincoln Walks at Midnight , portrayed a ghostly Lincoln deploring the conflagration. But we do not have to wonder what Lincoln might say about demagogic exploitation of the Fourth of July or hypocritical displays about the ideals of the Declaration of Independence. His statements on the subject were voluminous, plain and scathing. Story continues Here is a small sample: To a friend, 15 August 1855 : On the question of liberty, as a principle, we are not what we have been. When we were the political slaves of King George, and wanted to be free, we called the maxim that ‘all men are created equal,’ a self-evident truth; but now when we have grown fat, and have lost all dread of being slaves ourselves, we have become so greedy to be masters that we call the same maxim ‘a self-evident lie.’ The Fourth of July has not quite dwindled away; it is still a great day – for burning fire-crackers!!! More than the expropriation of Independence Day to justify slavery agitated Lincoln. A week later, on 24 August , he wrote his close friend Joshua Speed to complain about the rising anti-immigrant, nativist and super-patriotic Know Nothing party as a duplicitous mockery of the Declaration of Independence: As a nation, we began by declaring that ‘ all men are created equal .’ We now practically read it ‘all men are created equal, except negroes .’ When the Know-Nothings get control, it will read ‘all men are created equal, except negroes, and foreigners, and Catholics .’ When it comes to this I should prefer emigrating to some country where they make no pretense of loving liberty – to Russia, for instance, where despotism can be taken pure, and without the base alloy of hypocrisy. During his famous debates with the racist demagogue Stephen A Douglas in 1858, Lincoln ridiculed Douglas’s denial that the Declaration stood for human equality. In notes preparing for those debates, Lincoln spelled out what both supporters of slavery and those calculatingly indifferent to it were doing, which was: … to subvert, in the public mind, and in practical administration, our old and only standard of free government, that ‘all men are created equal,’ and to substitute for it some different standard. What that substitute is to be is not difficult to perceive. It is to deny the equality of men, and to assert the natural, moral, and religious right of one class to enslave another.” In February 1861, after his election as president, on his way to Washington, Lincoln spoke at Independence Hall in Philadelphia, and declared : I have never had a feeling politically that did not spring from the sentiments embodied in the Declaration of Independence … If [the country] can’t be saved upon that principle, it will be truly awful. But, if this country cannot be saved without giving up that principle – I was about to say I would rather be assassinated on this spot than to surrender it. Lincoln looks on as Donald Trump presents a table full of fast food in the State Dining Room of the White House, in January. Photograph: Susan Walsh/AP It should not be surprising that as the emotional intensity of Trump’s defense of Confederate monuments since Charlottesville has risen, his opinion of Lincoln has fallen. The man who boasts he has never read a biography of a president actually shows a rudimentary if warped sense of history. But Lincoln had more than a little to say about the cause of the Confederacy, which was slavery: I hate it because it deprives our republican example of its just influence in the world – enables the enemies of free institutions, with plausibility, to taunt us as hypocrites – causes the real friends of freedom to doubt our sincerity, and especially because it forces so many really good men amongst ourselves into an open war with the very fundamental principles of civil liberty – criticizing the Declaration of Independence, and insisting that there is no right principle of action but self-interest . Next year, Trump should simply reserve his Fourth of July festivity to the Trump hotel or the Russian embassy. In such settings he can celebrate himself, as Lincoln said, “without the base alloy of hypocrisy”. Sidney Blumenthal is the author of All the Powers of Earth 1856-1860 , the third of his five-volume biography, The Political Life of Abraham Lincoln, to be published in September by Simon & Schuster View comments
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Here's What We Think About UPM-Kymmene Oyj's (HEL:UPM) CEO Pay
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Jussi Pesonen has been the CEO of UPM-Kymmene Oyj (HEL:UPM) since 2004. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for UPM-Kymmene Oyj
Our data indicates that UPM-Kymmene Oyj is worth €12b, and total annual CEO compensation is €6.0m. (This figure is for the year to December 2018). That's a notable increase of 13% on last year. We think total compensation is more important but we note that the CEO salary is lower, at €1.1m. When we examined a group of companies with market caps over €7.0b, we found that their median CEO total compensation was €1.5m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
As you can see, Jussi Pesonen is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean UPM-Kymmene Oyj is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at UPM-Kymmene Oyj has changed over time.
Over the last three years UPM-Kymmene Oyj has grown its earnings per share (EPS) by an average of 16% per year (using a line of best fit). It achieved revenue growth of 6.2% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested inthisfreevisualization of analyst forecasts.
Most shareholders would probably be pleased with UPM-Kymmene Oyj for providing a total return of 54% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared total CEO remuneration at UPM-Kymmene Oyj with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. So you may want tocheck if insiders are buying UPM-Kymmene Oyj shares with their own money (free access).
Important note:UPM-Kymmene Oyj may not be the best stock to buy. You might find somethingbetterinthis list 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.
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UFC on ESPN 3 bonuses: Francis Ngannou and Joseph Benavidez close with bonus winners
Joseph Benavidez lands kick on Jussier Formiga at UFC on ESPN 3 The Ultimate Fighting Championship returned to Minneapolis, Minn., on Saturday, where several of the top fighters on the roster shined, claiming Performance of the Night bonuses, with no single fight standing out for an award. Francis Ngannou continued his Mike-Tyson-like performances in the heavyweight division by stopping former UFC heavyweight champion Junior dos Santos at 1:11 of the first round of their headlining bout. Ngannou stumbled in a shot at the belt when he fought Stipe Miocic and then lost to Derrick Lewis, but has since been back on form, adding dos Santos to his streak of wins over Curtis Blaydes and Cain Velasquez. The quick knockout of dos Santos not only earned a $50,000 bonus for his efforts, but likely positioned him for another shot at the belt following Daniel Cormier's defense against Stipe Miocic on Aug. 17 at UFC 241. Not to be outdone by the main event, Joseph Benavidez reclaimed his spot as the top contender in the UFC flyweight division by finishing Jussier Formiga late in the second round of their co-main event rematch. Benavidez had to overcome adversity in the first round, suffering a cut around his eye, to earn the stoppage and a Performance of the Night bonus at 4:47 of round two. Alonzo Menifield opened the main card on ESPN with a first-round knockout of Paul Craig. Eryk Anders also scored a quick knockout of Vinicius Moreira on the prelims. Menifield and Anders each went home with an additional $50,000 for their Performance of the Night efforts in Minneapolis. TRENDING > UFC on ESPN 3 results: Francis Ngannou continues his reign over the heavyweight division UFC on ESPN 3 Performance of the Night Bonuses Francis Ngannou Joseph Benavidez Alonzo Menifield Eryk Anders UFC on ESPN 3 Gate and Attendance Gate – $952,204.77 Attendance – 10,123
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China eases foreign investment curbs amid cooling trade tensions
BEIJING (Reuters) - China's state planning agency on Sunday said it has cut the number of sectors subject to foreign investment restrictions, as Beijing moved to fulfill its promise to open major industries.
The loosening in curbs, though widely anticipated, comes after the United States and China agreed on the weekend to restart trade talks with U.S. President Donald Trump offering concessions on tariffs and an easing of restrictions on tech company Huawei.
The National Development and Reform Commission (NDRC) said it has eased foreign investment curbs on sectors including petroleum and gas exploration and widened access to agriculture, mining and manufacturing.
NDRC published on its website the new, shorter so-called negative list that sets out industries where foreign investment is limited or prohibited.
The number of sectors and subsectors on the negative list was cut to 40 from 48 in the previous version, which was published in June last year. The new list takes effect on July 30.
The NDRC document said domestic shipping agencies, gas and heat pipelines in cities with more than 500,000 people, cinemas and performance agencies no longer needed to be controlled by Chinese entities. It also widened access to petroleum and gas exploration, agriculture and some metals resources exploration.
China has repeatedly promised to further open its markets to foreign investment, but has stressed such decisions would be based on the economy's own needs and not due to external pressure.
It shortened the negative list last year, easing curbs on sectors including banking, the automotive and heavy industries, while also allowing 100% foreign ownership in some industries where ownership caps previously applied.
Foreign investment in China was previously assessed on a case-by-case basis with approval granted by the local branch of the commerce ministry. Under the negative list system, only investments in industries specified in the list are prohibited or subject to review.
Despite the reforms of recent years, foreign businesses say progress has been slow with foreign investment in many industries still restricted while fresh promises of greater access do little more that repeat earlier pledges.
(Reporting by Yilei Sun and Norihiko Shirouzu; Writing by Yawen Chen in Beijing; Editing by Sam Holmes)
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Japan's Abe offers Saudi crown prince help in reducing oil dependency
OSAKA (Reuters) - Japanese Prime Minister Shinzo Abe on Sunday praised Saudi Arabia's efforts to reduce its dependence on oil and promised Crown Prince Mohammed bin Salman that Japan will help the kingdom with a sweeping reform plan.
"Saudi Arabia's 'Vision 2030' is an unprecedented major reform aimed at shifting away from dependence on oil and at diversifying industry, under your majesty's initiative," Abe told the crown prince at the beginning of a bilateral meeting after a summit of Group of 20 leaders in the city of Osaka.
"Japan will continue its utmost efforts by government and the private sector to help achieve its success," Abe said.
Riyadh announced the reform plan in 2016, with goals ranging from overhauling its state-owned Public Investment Fund to increasing visits of Muslim pilgrims and encouraging more Saudis to play sports.
Despite last October's murder of Saudi journalist Jamal Khashoggi at the hands of Saudi agents, big investors are pushing ahead with deals and pouring money back into its stock market as well as Vision 2030 projects that aim to diversify the economy of the world’s top oil exporter and create jobs.
"Saudi wants to do the utmost to continue our old - but new - strong partnership with Japan," the crown prince told Abe through an interpreter.
(Reporting by Tetsushi Kajimoto; Editing by William Mallard, Robert Birsel)
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Facebook, Twitter Pledge Australia Action on Extreme Content
(Bloomberg) -- Facebook Inc. and Twitter Inc. and other social media platforms agreed to take further steps to stop the spread of violent extremist content in Australia as global pressure increases following the live-streaming of the New Zealand massacre in March.
An Australian taskforce that also includes YouTube and Australia’s biggest mobile-phone operators on Sunday released a report with nine areas for action, including efforts to prevent, detect and remove such material.
The group, officially named The Australian Taskforce to Combat Terrorist and Extreme Violent Material Online, recommended enacting a simulated event as soon as this year to assess the response of the industry and the government.
Fifty-one people died in the Christchurch attacks, a mass murder that could be viewed on Facebook, and the company came under criticism for not taking down the material fast enough. G-20 leaders meeting in Osaka this weekend called for online platforms to do more to prevent and detect such content.
The G-20 statement was “a clear warning from global leaders,” Australian Prime Minister Scott Morrison said in a statement. “Social media companies are on notice.”
In a statement, Facebook said it’s been reviewing what more it can do “to limit our services from being used to cause harm or spread hate” since the New Zealand attacks. The company said it has restricted who can use its live-streaming service and co-developed the nine-point action plan.
“We welcome the Australian government’s announcement of the Taskforce report,” Facebook said.
Australia passed legislation in April aimed at stopping violent crime and acts of extremism from being live-streamed online. That law carries penalties of up to 10% of a company’s annual turnover, and potential prison terms of up to three years for executives of social media companies.
(Updates with comment from Facebook in the sixth paragraph.)
To contact the reporter on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net
To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Stanley James
For more articles like this, please visit us atbloomberg.com
©2019 Bloomberg L.P.
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Should You Be Concerned About YIT Oyj's (HEL:YIT) Historical Volatility?
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If you own shares in YIT Oyj (HEL:YIT) 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. The first category is company specific volatility. This can be dealt with by limiting your exposure to any particular stock. The second sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.
Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). While we should keep in mind that Warren Buffett has cautioned that 'Volatility is far from synonymous with risk', beta is still a useful factor to consider. To make good use of it you must first know that the beta of the overall market is 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.
View our latest analysis for YIT Oyj
YIT Oyj has a five-year beta of 0.95. This is reasonably close to the market beta of 1, so the stock has in the past displayed similar levels of volatility to the overall market. If the future looks like the past, we could therefore consider it likely that the stock price will experience share price volatility that is roughly similar to the overall market. Many would argue that beta is useful in position sizing, but fundamental metrics such as revenue and earnings are more important overall. You can see YIT Oyj's revenue and earnings in the image below.
YIT Oyj is a small company, but not tiny and little known. It has a market capitalisation of €1.1b, which means it would be on the radar of intstitutional investors. Small companies often have a high beta value because the stock price can move on relatively low capital flows. So it's interesting to note that this stock historically has a beta value quite close to one.
YIT Oyj has a beta value quite close to that of the overall market. That doesn't tell us much on its own, so it is probably worth considering whether the company is growing, if you're looking for stocks that will go up more than the overall market. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as YIT Oyj’s financial health and performance track record. I highly recommend you dive deeper by considering the following:
1. Future Outlook: What are well-informed industry analysts predicting for YIT’s future growth? Take a look at ourfree research report of analyst consensusfor YIT’s outlook.
2. Past Track Record: Has YIT 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 YIT's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how YIT measures up against other companies on valuation. You could start with thisfree list of prospective options.
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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Altcoins Weekly Analysis – BNB, EOS and ETH – 30/06/19
Binance Coin fell by 6.28% in the week ending 29thJune. Partially reversing a 14.8% rally from the previous week, Binance Coin ended the week at $35.38.
A bearish start to the week saw Binance Coin fall from a Sunday high $40.89 to a Wednesday low $32.77 before finding support.
3-days in the red out of 4 saw Binance Coin fall through the 23.6% FIB of $34, whilst steering clear of the major support levels.
On a particularly choppy Wednesday, Binance Coin struck an intraweek high $42.91, while also falling to sub-$30 levels. Falling short of the first major resistance level at $43.48, Binance Coin slipped through the first major support level at $31.79.
In almost a repeat, Binance Coin returned to $42 levels on Thursday before falling to an intraweek low $27.03.
Binance Coin fell back through the 23.6% FIB and first major support level before finding support. Two consecutive days in the green at the end of the week led to a move back through the 23.6% FIB to $35 levels.
A move back through to $35 levels would support a run at the first major resistance level at $43.18.
Binance Coin would need support from the broader market, however, to break through to $40 levels.
Barring a broad-based crypto rally, last week’s high $42.91 would likely pin Binance Coin back on the week.
Failure to move back through to $35 levels could see Binance Coin give up more ground in the week.
A fall through to $31 levels would bring the first major support level at $27.30 into play before any recovery.
Barring a broad-based crypto sell-off through the week, Binance Coin should steer clear of sub-$20 support levels.
At the time of writing, Binance Coin was down by 1.69% to $34.78.
EOS tumbled by 15.65% in the week ending 29thJune. Reversing an 8.59% rally form the previous week, EOS ended the week at $6.3347.
Bearish through most of the week, EOS fell from a Sunday intraweek high $7.6435 to a Thursday intraweek low $5.5500.
Falling short of the major resistance levels, Binance Coin slid through the first major support level at $6.8957 and second major support level at $6.2813.
Of greater significance was a fall through the 23.6% FIB to visit sub-$6.00 levels for the first time since 6thJune.
Partially reversing five consecutive days in the red, EOS saw green for the final 2-days of the week to return to $6.3 levels.
EOS would need to move through to $6.50 levels to support a partial recovery of last week’s losses. A move through the 23.6% FIB of $6.62 to $6.80 levels would support a run at the first major resistance at $7.4688.
EOS would need the support of the broader market, however, to break out from the 23.6% FIB of $6.62.
Failure to move through to $6.50 levels could see EOS fall deeper into the red. A slide through to sub-$6.00 levels would bring the first major support level at $5.3753 into play.
Barring another crypto meltdown, however, EOS should steer clear of sub-$4.00 support levels on the week.
At the time of writing, EOS was down by 0.96% to $6.2739.
Ethereum rose by 2.76% in the week ending 29thJune. Following on from a 14.57% rally on from the previous week, Ethereum ended the week at $317.00.
A bearish start to the week left Ethereum in the red on Sunday, 23rdJune before making a move. Steering well clear of the major support levels, Ethereum rallied to a Wednesday intraweek high $364.49.
The rally saw Ethereum break through the first major resistance level at $329.02 and second major resistance level at $349.55.
Falling short of the 38.2% FIB of $367, Ethereum joined the rest of the majors in the red on Thursday. Ethereum pulled back through the resistance levels to an intraweek low $273.5.
Steering clear of the first major support level at $272.17, Ethereum found support from the broader market to recover to $300 levels.
A move through to $318 levels would support further upside in the week ahead.
Ethereum would need to move through to $340 levels, however, to take a run at the first major resistance level at $363.16.
Barring a broad-based crypto rally, last week’s high $364.49 and the first major resistance level would likely cap any upside on the week.
In the event of a broad-based crypto rally, Ethereum could break through the 38.2% FIB of $367 to bring $400 levels into range.
Failure to move through to $318 levels could see Ethereum hit reverse. A fall through to sub-$300 levels would bring the first major support level at $272.17 into play before any recovery.
Barring a Bitcoin meltdown, Ethereum should steer clear of the 23.6% FIB of $257.
At the time of writing, Ethereum was down by 0.04% to $316.86.
Thisarticlewas originally posted on FX Empire
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Introducing Fresenius Medical Care KGaA (ETR:FME), A Stock That Climbed 38% In The Last Five Years
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Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. To wit, the Fresenius Medical Care KGaA share price has climbed 38% in five years, easily topping the market return of 8.2% (ignoring dividends).
View our latest analysis for Fresenius Medical Care KGaA
In his essayThe Superinvestors of Graham-and-DoddsvilleWarren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Over half a decade, Fresenius Medical Care KGaA managed to grow its earnings per share at 20% a year. This EPS growth is higher than the 6.6% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company. The reasonably low P/E ratio of 10.72 also suggests market apprehension.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that Fresenius Medical Care KGaA has improved its bottom line lately, but is it going to grow revenue? Thisfreereport showing analyst revenue forecastsshould help you figure out if the EPS growth can be sustained.
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Fresenius Medical Care KGaA, it has a TSR of 46% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
We regret to report that Fresenius Medical Care KGaA shareholders are down 19% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 1.5%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 7.9%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Is Fresenius Medical Care KGaA cheap compared to other companies? These3 valuation measuresmight help you decide.
For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on DE exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Bergman & Beving (STO:BERG B) Shareholders Received A Total Return Of -0.3% In The Last Three Years
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In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer termBergman & Beving AB(STO:BERG B) shareholders, since the share price is down 40% in the last three years, falling well short of the market return of around 38%. It's up 3.3% in the last seven days.
Check out our latest analysis for Bergman & Beving
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the three years that the share price fell, Bergman & Beving's earnings per share (EPS) dropped by 21% each year. This fall in the EPS is worse than the 16% compound annual share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Bergman & Beving has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Bergman & Beving willgrow revenue in the future.
When looking at investment returns, it is important to consider the difference betweentotal shareholder return(TSR) andshare price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Bergman & Beving, it has a TSR of -0.3% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted thetotalshareholder return.
Bergman & Beving provided a TSR of 9.1% over the last twelve months. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 1.4% per year over five year. This suggests the company might be improving over time. If you would like to research Bergman & Beving in more detail then you might want totake a look at whether insiders have been buying or selling shares in the company.
But note:Bergman & Beving may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SE 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.
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Does Fresenius Medical Care AG & Co. KGaA's (ETR:FME) Debt Level Pose A Problem?
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! Investors pursuing a solid, dependable stock investment can often be led to Fresenius Medical Care AG & Co. KGaA ( ETR:FME ), a large-cap worth €21b. Big corporations are much sought after by risk-averse investors who find diversified revenue streams and strong capital returns attractive. But, its financial health remains the key to continued success. I will provide an overview of Fresenius Medical Care KGaA’s financial liquidity and leverage to give you an idea of Fresenius Medical Care KGaA’s position to take advantage of potential acquisitions or comfortably endure future downturns. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself into FME here . View our latest analysis for Fresenius Medical Care KGaA FME’s Debt (And Cash Flows) FME's debt levels surged from €7.7b to €13b over the last 12 months , which accounts for long term debt. With this increase in debt, the current cash and short-term investment levels stands at €959m , ready to be used for running the business. Additionally, FME has produced €2.2b in operating cash flow in the last twelve months, leading to an operating cash to total debt ratio of 16%, indicating that FME’s debt is not covered by operating cash. Can FME pay its short-term liabilities? With current liabilities at €7.4b, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 1.02x. The current ratio is the number you get when you divide current assets by current liabilities. For Healthcare companies, this ratio is within a sensible range as there's enough of a cash buffer without holding too much capital in low return investments. XTRA:FME Historical Debt, June 30th 2019 Is FME’s debt level acceptable? With a debt-to-equity ratio of 65%, FME can be considered as an above-average leveraged company. This is not unusual for large-caps since debt tends to be less expensive than equity because interest payments are tax deductible. Since large-caps are seen as safer than their smaller constituents, they tend to enjoy lower cost of capital. We can assess the sustainability of FME’s debt levels to the test by looking at how well interest payments are covered by earnings. As a rule of thumb, a company should have earnings before interest and tax (EBIT) of at least three times the size of net interest. For FME, the ratio of 6.69x suggests that interest is well-covered. It is considered a responsible and reassuring practice to maintain high interest coverage, which makes FME and other large-cap investments thought to be safe. Story continues Next Steps: FME’s debt and cash flow levels indicate room for improvement. Its cash flow coverage of less than a quarter of debt means that operating efficiency could be an issue. However, the company exhibits an ability to meet its near-term obligations, which isn't a big surprise for a large-cap. I admit this is a fairly basic analysis for FME's financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Fresenius Medical Care KGaA to get a more holistic view of the stock by looking at: Future Outlook : What are well-informed industry analysts predicting for FME’s future growth? Take a look at our free research report of analyst consensus for FME’s outlook. Valuation : What is FME worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FME is currently mispriced by the market. Other High-Performing Stocks : Are there other stocks that provide better prospects with proven track records? Explore our free 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 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.
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Goldman Sachs: 5 Special Value Stocks To Buy Now
Now may be the time to re-evaluate your trading strategy, says Goldman Sachs. Even though value stocks have under-performed recently- especially in comparison to growth stocks- the firm sees an opportunity to make a meaningful profit.
That’s because value stocks are now looking particularly cheap compared with the rest of the market. According to Goldman Sachs, value stocks now show a whopping 65% discount to expensive stocks based on price-to-earnings ratios.
“A wide distribution of price-to-earnings multiples has historically presaged strong value returns,” says the firm’s chief US equity strategist David Kostin.
At the same time “a rotation into value stocks would [also] require a sustained improvement in investor economic growth expectations, potentially driven by global monetary policy easing.” That’s good news given the expected upcoming interest rate cuts by the Fed.
So for those investors who believe value stocks could make a comeback, check out the following names recommended by the firm. Not only do these cheap stocks show the highest expected returns relative to their six-month implied volatilities, but they also passed a "quality" screen for healthy balance sheet stocks.
The best part: Kostin forecasts that the median stock in this basket will deliver triple the returns of the "typical" S&P 500 company with similar implied volatility. Let’s take a closer look at 5 of these names now:
Salesforce is one of the most promising stocks highlighted by Goldman Sachs. In May the company announced that it will snap up Tableau Software (DATA) in a massive $15.7 billion deal. "We are bringing together the world's #1 CRM with the #1 analytics platform," explained Salesforce CEO Marc Benioff. "Tableau helps people see and understand data, and Salesforce helps people engage and understand customers."
The deal certainly has the Street’s seal of approval. Five-star KeyBanc analystBrent Bracelinnotes that data has increasing value as enterprises adopt cloud and digital best practices, yet >90% of the $41B data management and analytics software market is still made up of traditional data software tools designed 30+ years ago. Now with DATA under its belt, Salesforce can move to capitalize on this lucrative data modernization opportunity.
“We raised numbers on Tableau Software last week and remain bullish on the prospects for 30%+ ARR growth under Salesforce that could further elevate Tableau from a pioneer of self-service visualization into a broader analytics platform that can replace legacy business insider tools” writes Bracelin. He reiterated his buy rating and $180 price target in June, while describing Salesforce as a core, large-cap growth holding.
Overall Salesforce boasts a notably positive outlook from the Street. Its ‘Strong Buy’ consensus comes from 24 recent buy ratings, vs just 1 hold rating. Meanwhile the average analyst price target of $183 indicates upside potential of 23% from the current share price.
Facebook is another mega-cap tech stock pinpointed by Goldman Sachs. And like CRM, FB is buzzing right now. The company has just launched its new Libra cryptocurrency payment platform. Several leading financial tech and consumer services have collaborated on this revolutionary crypto platform, including Uber (UBER), Mastercard (MA) and Visa (V). The result: FB is set to become a major participant in the $1.4 trillion e-commerce marketplace
Following the launch, five-star Tigress Financial analystIvan Feinsethreiterated his ‘Strong Buy’ FB rating. “Libra will be a major game changer as it creates new ways to further engage with FB’s over 2.7 billion membership base” comments Feinseth.
“FB’s creation of a unified payment system for its user base will drive new business partnerships and long-term growth as it penetrates the e-commerce marketplace and further advances its ability to provide access for advertisers and additional business services” the analyst adds. Although Feinseth doesn’t publish a FB price target, he does write that “significant upside exists from current levels and [we] continue to recommend purchase.”
A similar message comes from RBC Capital’sMark Mahaney. This five-star analyst believes that Facebook's introduction of the Libra currency marks a potential watershed moment for the company. “With 1B+ user bases across each of its Messenger and WhatsApp platforms, we believe Facebook has the potential to be a material disruptor and innovator in the payments space, especially in Emerging Markets” the analyst tells investors.
In total, 35 analysts have published buy ratings on FB in the last three months, while only 3 analysts are staying sidelined. The average analyst price target of $220 indicates 17% upside potential from current levels.
MPC is one of the largest U.S. fuels refiners while also boasting retail and midstream segments. The company’s huge $23.3 billion merger with Andeavor in late 2018 turned it into a top five global refiner with throughput capacity of more than 3 million barrels per day.
Even though the company reported weak first quarter results post the merger, analysts are staying firmly on side. MPC shows a Strong Buy Street consensus, with upside potential of over 30% to its $71 average price target. Indeed JP Morgan has just hosted its annual energy conference, and MPC was one of the participating companies. Following the event the firm’sPhil Greshnoted that:
“Management believes the industry has largely worked through the inventory problems seen in 1Q, where a better-than-expected 4Q had led to running at too high of a level of utilization. With inventories cleaning up in the April-May time period, MPC is bullish on the remainder of 2019.”
Refining indicators appear positive through to May, while 2Q retail should be strong, driven by margin uplift from falling crude prices throughout the quarter. Plus the company remains confident that Andeavor synergies are well on track. “Bottom line, we do not expect a repeat of the 1Q negative surprise” sums up Gresh.
Also in the stock’s favor comes the recent promotion of Don Templin to CFO (and EVP) from July 1. “With the announcement, we believe MPC is looking to address the need for continued transparency and guidance improvements - a key investor concern. With Mr. Templin's prior CFO experience, and having led various business units, we see the announcement as a signal of commitment to further improve disclosure” cheers Morgan Stanley’sBenny Wong.
Semiconductor stock Qualcomm also features on the Goldman list. Although the stock has had a rocky time recently, most analysts are staying onboard. The Street consensus works out at a cautiously optimistic Moderate Buy, with an average price target of $85.
Most notably, Qualcomm and Apple (AAPL) settled their long running dispute back in April- earning Qualcomm an impressive $4.5 billion. Shares jumped 23% on the news. The company also secured the right to supply modem chips to Apple for future devices. However, the celebrations ended abruptly when the FTC determined that Qualcomm’s royalty structures violated antitrust laws. Qualcomm is now appealing the decision at the U.S. Ninth Circuit Court of Appeals.
In response to the whole saga, Morgan Stanley analystJames Faucette said being a Qualcomm shareholder has "always required a bit more mettle" but at current levels the stock is "still worth the noise." Indeed, his $95 price target indicates upside potential of 27%.
Meanwhile, Cowen & Co analystMatt Ramsaylowered his price target on QCOM from $100 to $80- but maintained his buy rating. Ramsay remains confident about Qualcomm's IP leadership into 5G, but does note that the FTC ruling raises questions about QCOM’s monetizing ability.
On the more cautious side, comesTimothy Arcuriof UBS. He has a Hold rating on the stock but writes: "We emerge confident about our $80 PT (~20% upside from current levels). Given solid 5G leadership + expanding silicon TAM (especially RF), we can envision a path for this to ultimately prove conservative, but it is still hard to get comfortable around potential near- or medium-term EPS impact from the range of legal outcomes – even as QCOM is confident about its legal strategy.”
Our last stock pinpointed by Goldman Sachs is Halliburton, one of the world's largest oil field service companies with operations in over 70 countries. In the last three months, six analysts have rated HAL a buy vs just 1 hold rating. What’s more the $41 average price target suggests shares can surge by 75%.
"We view Halliburton as the having the highest leverage to the growing commodity upcycle among large-cap peers and remains our highest-conviction large cap name” enthuses Raymond James analystPraveen Narra. The analyst has a ‘Strong Buy’ rating on the stock, and sees prices almost doubling from current levels.
According to Narra, investors should have confidence that results will improve in 2H19 and into 2020. He believes that the North American business has troughed, and that international is undergoing a long-term recovery. As a result, the analyst sees significant positive pricing coming Halliburton’s way, with better utilization of under-absorbed capacity boosting margins.
Notably Morgan Stanley’sConnor Lynaghoffers a similar message, telling investors that profitability should improve through the rest of the year. With this in mind, Lynagh upwardly revised the EBIT forecasts significantly for both Halliburton's North American-heavy Completion and Production business and its Drilling & Exploration business.
Discover more top stock ideas from best-performing analysts here
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What Should We Expect From THQ Nordic AB (publ)'s (STO:THQN B) Earnings In The Next 12 Months?
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In March 2019, THQ Nordic AB (publ) (STO:THQN B) released its earnings update. Generally, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 39% in the upcoming year, though this is comparatively lower than the previous 5-year average earnings growth of 46%. By 2020, we can expect THQ Nordic’s bottom line to reach kr410m, a jump from the current trailing-twelve-month of kr294m. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures shouldresearch its fundamentals here.
See our latest analysis for THQ Nordic
The longer term view from the 6 analysts covering THQN B is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, THQN B's earnings should reach kr657m, from current levels of kr294m, resulting in an annual growth rate of 24%. This leads to an EPS of SEK5.96 in the final year of projections relative to the current EPS of SEK3.5. Margins are currently sitting at 6.6%, which is expected to expand to 13% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For THQ Nordic, I've put together three key aspects you should look at:
1. Financial Health: Does it have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Valuation: What is THQ Nordic worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether THQ Nordic is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of THQ Nordic? Exploreour interactive list of stocks with large growth potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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3 Small Cap Stocks with Potential for Big Profit
In the past 12 months, small cap stocks did not perform well. All in all, the S&P SmallCap 600 lost 9% of its value (for the sake of comparison, the S&P 500 was able to climb by 10%). Microcaps have encountered greater difficulties and declined by 22%.
True, as data shows, small stocks tend to be volatile, but they have their merits. They are relatively cheap to buy, and they have great potential for growth. The following three stocks shouldn’t be left unnoticed by investors as they provide excellent opportunities for future returns.
Most people today follow a conventional work pattern. They wake up early in the morning, commute to work and return home in the evening. Upwork (NASDAQ:UPWK) strives to change that. It has built an online platform where freelancers working from home at their own free time offer their services to individuals or companies seeking different types of products from content and programming to financial or legal counseling.
This new type of flexible work, referred to as the "gig economy", is still in its infancy in the United States with a market cap of a little more than $1.5 billion, but it is expected to rise exponentially in the future. Upwork is leading the way.
Since is public debut in the autumn of 2018, Upwork stock lost 25% of its value. As alarming as this may sound, the stock has great potential. So far, Upwork has not been profitable, but there is room for optimism. In 2019 Q1, its revenue went higher by 16% year over year to $68.9 million.
The analysts show the company’s stock ungrudging courtesy. On June 26,Brent Hillfrom Jefferies upgraded it from hold to buy with a price target of $23 from real price value of $15. Average analysts’ price target stands at $22.75 (43% upside ). This positive assessment is derived from Upwork’s growth potential in the freelance market.
HEXO Corp (TSE:HEXO) is a Canadian company that produces and distributes cannabis for medical and recreational uses in the Canada. It deploys innovative cannabinoid isolation technology with its 1.8 million sq. ft of facilities located in Quebec, Ontario and Greece (indicating the company’s intentions to penetrate the Eurozone).
HEXO’s production stood at 9,804 kilos in Q1 2019, nearly 100% higher quarter over quarter. Production forecast for fiscal 2020 issued by the company’s management revolves around 150,000 kilos, which is expected to increase annual revenues from approximately C$64 million at present to a whopping $400 million.
Wall Street analysts are fully aware of HEXO’s potential.Russel Stanleyfrom Beacon reiterated his buy recommendation for the company on June 13 setting a 12-month target price of $14 with a particularly big upside of 111 %. On June 12, the company released its third quarter fiscal 2019 (July 31 fiscal year end) financials showing gross and net revenue of $15.9 million and $13.0 million, respectively. Both were ahead of Stanley’s forecast of $12.3 million and $10.2 million, respectively.
Having said that, one should bear in mind that high profit potential also entails risk.Owen Bennettfrom Jefferies has recently reiterated his assessment of the company’s stock to sell. He is concerned about HEXO’s earnings latest earnings release for the quarter ending January 31. The company reported a quarterly GAAP net loss of C$4.33 million. In comparison, last year the company had a GAAP net loss of C$1.97 million. This calls for a bit of caution before deciding to invest.
5G technology is almost here and Inseego (NASDAQ:INSG) positions itself to be at its forefront by upgrading its already existing 4G cloud and networking solutions to the new generation.
Despite currently being unprofitable, analysts expect the company to increase its annual revenues by 20% in the next 5 years. If that happens, its stock will most likely soar by around 80 % above its current price ($4.27 as of June 27).
Michael Latimorefrom Northland Securities has recently reiterated his buy recommendation for the stock setting a price target of $6 (current stock value as of June 27 stands at $4.29) with an upside of 39.86%. In the last 3 months, Inseego insiders bought the company shares at a total worth $10.64 million and that is a good sign.
Some small cap stocks have great profit potential and it is crucial to be able to identify them. But as shown above, the greater the prospects for profit, the greater the risk. One of the major disadvantages of small stocks is their tendency to be volatile. Therefore, it is highly advised to closely monitor their performances over time, go over analysts’ assessments and, most of all, always stay alert to new developments that may change the overall picture.
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Why Scandic Hotels Group AB (publ) (STO:SHOT) Could Be Worth Watching
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Scandic Hotels Group AB (publ) (STO:SHOT), which is in the hospitality business, and is based in Sweden, saw significant share price movement during recent months on the OM, rising to highs of SEK92.25 and falling to the lows of SEK75.3. 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 Scandic Hotels Group's current trading price of SEK81.85 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Scandic Hotels Group’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 Scandic Hotels Group
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 9.88x is currently trading slightly below its industry peers’ ratio of 13.53x, which means if you buy Scandic Hotels Group today, you’d be paying a fair price for it. And if you believe that Scandic Hotels Group should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Scandic Hotels Group’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -19% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Scandic Hotels Group. This certainty tips the risk-return scale towards higher risk.
Are you a shareholder?Currently, SHOT appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on SHOT, take a look at whether its fundamentals have changed.
Are you a potential investor?If you’ve been keeping an eye on SHOT for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on SHOT should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Scandic Hotels Group. You can find everything you need to know about Scandic Hotels Group inthe latest infographic research report. If you are no longer interested in Scandic Hotels Group, 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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Estimating The Intrinsic Value Of Komax Holding AG (VTX:KOMN)
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In this article we are going to estimate the intrinsic value of Komax Holding AG (VTX:KOMN) 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!
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.
View our latest analysis for Komax Holding
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value:
[{"": "Levered FCF (CHF, Millions)", "2019": "CHF-10.03", "2020": "CHF42.13", "2021": "CHF42.03", "2022": "CHF54.10", "2023": "CHF58.90", "2024": "CHF62.98", "2025": "CHF66.66", "2026": "CHF70.04", "2027": "CHF73.21", "2028": "CHF76.25"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x4", "2020": "Analyst x4", "2021": "Analyst x4", "2022": "Analyst x1", "2023": "Analyst x1", "2024": "Est @ 6.93%", "2025": "Est @ 5.84%", "2026": "Est @ 5.07%", "2027": "Est @ 4.53%", "2028": "Est @ 4.15%"}, {"": "Present Value (CHF, Millions) Discounted @ 9.9%", "2019": "CHF-9.12", "2020": "CHF34.88", "2021": "CHF31.66", "2022": "CHF37.08", "2023": "CHF36.73", "2024": "CHF35.74", "2025": "CHF34.42", "2026": "CHF32.90", "2027": "CHF31.29", "2028": "CHF29.66"}]
Present Value of 10-year Cash Flow (PVCF)= CHF295.24m
"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 3.3%. We discount the terminal cash flows to today's value at a cost of equity of 9.9%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = CHF76m × (1 + 3.3%) ÷ (9.9% – 3.3%) = CHF1.2b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= CHFCHF1.2b ÷ ( 1 + 9.9%)10= CHF462.06m
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is CHF757.30m. In the final step we divide the equity value by the number of shares outstanding.This results in an intrinsic value estimate of CHF197.18. Relative to the current share price of CHF217, the company appears around fair value at the time of writing. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind.
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 Komax Holding as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 9.9%, which is based on a levered beta of 1.112. 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 Komax Holding, There are three pertinent factors you should further research:
1. Financial Health: Does KOMN 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 KOMN'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 KOMN? 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 CH 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.
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With 7.9% Earnings Growth, Did Bertrandt Aktiengesellschaft (FRA:BDT) Outperform The Industry?
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Investors with a long-term horizong may find it valuable to assess Bertrandt Aktiengesellschaft's (FRA:BDT) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Bertrandt is currently performing.
Check out our latest analysis for Bertrandt
BDT's trailing twelve-month earnings (from 31 March 2019) of €47m has increased by 7.9% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -7.5%, indicating the rate at which BDT is growing has accelerated. What's the driver of this growth? Let's see if it is solely due to industry tailwinds, or if Bertrandt has experienced some company-specific growth.
In terms of returns from investment, Bertrandt has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 6.5% is below the DE Professional Services industry of 6.7%, indicating Bertrandt's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Bertrandt’s debt level, has declined over the past 3 years from 16% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.03% to 54% over the past 5 years.
While past data is useful, it doesn’t tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. There may be factors that are influencing the industry as a whole, thus the high industry growth rate over the same time period. I suggest you continue to research Bertrandt to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for BDT’s future growth? Take a look at ourfree research report of analyst consensusfor BDT’s outlook.
2. Financial Health: Are BDT’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.
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Lingotes Especiales, S.A. (BME:LGT) Earns A Nice Return On Capital Employed
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Today we'll look at Lingotes Especiales, S.A. (BME:LGT) and reflect on its potential as an investment. Specifically, we're going to calculate its Return On Capital Employed (ROCE), in the hopes of getting some insight into the business.
First, we'll go over how we calculate ROCE. Then we'll compare its ROCE to similar companies. Last but not least, we'll look at what impact its current liabilities have on its ROCE.
ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. In general, businesses with a higher ROCE are usually better quality. Ultimately, it is a useful but imperfect metric. Author Edwin Whitingsaysto be careful when comparing the ROCE of different businesses, since 'No two businesses are exactly alike.'
Analysts use this formula to calculate return on capital employed:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
Or for Lingotes Especiales:
0.19 = €12m ÷ (€92m - €27m) (Based on the trailing twelve months to December 2018.)
So,Lingotes Especiales has an ROCE of 19%.
See our latest analysis for Lingotes Especiales
ROCE can be useful when making comparisons, such as between similar companies. Lingotes Especiales's ROCE appears to be substantially greater than the 10% average in the Auto Components industry. We consider this a positive sign, because it suggests it uses capital more efficiently than similar companies. Regardless of where Lingotes Especiales sits next to its industry, its ROCE in absolute terms appears satisfactory, and this company could be worth a closer look.
You can click on the image below to see (in greater detail) how Lingotes Especiales's past growth compares to other companies.
Remember that this metric is backwards looking - it shows what has happened in the past, and does not accurately predict the future. ROCE can be deceptive for cyclical businesses, as returns can look incredible in boom times, and terribly low in downturns. ROCE is only a point-in-time measure. Since the future is so important for investors, you should check out ourfreereport on analyst forecasts for Lingotes Especiales.
Current liabilities include invoices, such as supplier payments, short-term debt, or a tax bill, that need to be paid within 12 months. Due to the way ROCE is calculated, a high level of current liabilities makes a company look as though it has less capital employed, and thus can (sometimes unfairly) boost the ROCE. To counter this, investors can check if a company has high current liabilities relative to total assets.
Lingotes Especiales has total assets of €92m and current liabilities of €27m. Therefore its current liabilities are equivalent to approximately 29% of its total assets. A fairly low level of current liabilities is not influencing the ROCE too much.
Overall, Lingotes Especiales has a decent ROCE and could be worthy of further research. Lingotes Especiales looks strong on this analysis,but there are plenty of other companies that could be a good opportunity. Here is afree listof companies growing earnings rapidly.
I will like Lingotes Especiales better if I see some big insider buys. While we wait, check out thisfreelist of growing companies with considerable, recent, insider buying.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Several Injured As Antifa, Proud Boys Clash In Downtown Portland
Several people were hurt Saturday in violent clashes in downtown Portland, Oregon, between far-right Proud Boys demonstrators and anti-fascist counter protesters. Skirmishes erupted as some people had taken to the streets to wave rainbow flags commemorating Pride Month while Proud Boys and members of the #HimToo movement held aloft banners and signs touting President Donald Trump . Some protesters hurled “vegan” milkshakes while others threw “milkshakes” with water and quick-drying cement, according to local police. Several demonstrators were also throwing eggs and water bottles. Police said in a statement that “there were multiple assaults reported, as well as projectiles thrown at demonstrators and officers. There were also reports of pepper spray and bear spray being used by people in the crowd.” Milkshakes for protesters at Sixth and Morrison. pic.twitter.com/ZWkuBzf1TF — Jim Ryan (@Jimryan015) June 29, 2019 This right-wing demonstrator is blocking and threatening others with a club, attracting a crowd. pic.twitter.com/6IfZbQw5hk — Molly Young (@mollykyoung) June 29, 2019 Emergency medical technician Jessyca Jones, 29, told ABC News she was protesting the “alt right ― the ones that say they aren’t fascists or Nazis, but have proved themselves otherwise.” “And I like throwing milkshakes at bigots,” she added. Crowd surrounded a group near 6th/Morrison and several fights broke out. pic.twitter.com/1AVFJoZdxs — Everton Bailey Jr. (@EvertonBailey) June 29, 2019 Hundreds of the opposing protesters began to face off shortly after noon. As violence erupted police declared the gatherings a “civil disturbance,” ordered people to leave and shut down streets. Story continues Police in riot gear used pepper spray to quell clashes. Authorities asked anyone who witnessed assaults — especially those with video of incidents — to come forward. Among those injured were two police officers who were pepper sprayed, as well as punched in an arm and one struck in the head with a “projectile.” Three civilians were “assaulted with weapons,” though police did not identify the weapons. One victim was conservative journalist Andy Ngo, whose attack was captured here on video: In the ER. pic.twitter.com/spe5N4nzVl — Andy Ngo (@MrAndyNgo) June 29, 2019 Several people hit with bear spray, another person being hit over the head. #pdxprotest pic.twitter.com/YbWqM0Z9oJ — Everton Bailey Jr. (@EvertonBailey) June 29, 2019 Police on bikes broke up opposing protesters at Broadway and Morrison. pic.twitter.com/jIvsgntH4d — Jim Ryan (@Jimryan015) June 29, 2019 Left-wing protesters moved to the side of the street with right-wing protesters. Saw some scattered “milkshaking,” this is the police pushback. pic.twitter.com/Rn4voZOGMP — McKenna Ross (@mckenna_ross_) June 29, 2019 Large group of anti-fascists arrived and briefly engaged remaining right-wing group. Police quickly separated groups and are now blocking access to 6th and Morrison once again pic.twitter.com/su0lHIV8Oo — Dave Killen (@killendave) June 29, 2019 The crowd surrounded some people, at least 1 milkshake was thrown. Another person jumped onto the grounds of the Pioneer Courthouse and yelled at by police to get away. pic.twitter.com/a8OSAXyLa3 — Everton Bailey Jr. (@EvertonBailey) June 29, 2019 Police are continuing to investigate the violence. “We are actively investigating these incidents to hold those responsible accountable,” Assistant Police Chief Chris Davis said. The violence erupted nearly a year to the day after Patriot Prayer and anti-fascist activists clashed in the city, noted Oregon Live. Portland police declared that clash a riot. Love HuffPost? Become a founding member of HuffPost Plus today. Police have received information that some of the milkshakes thrown today during the demonstration contained quick-drying cement. We are encouraging anyone hit with a substance today to report it to police. — Portland Police (@PortlandPolice) June 29, 2019 Also on HuffPost This article originally appeared on HuffPost .
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Should You Consider Huntsworth plc (LON:HNT)?
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Huntsworth plc (LON:HNT) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of HNT, it is a company with a a great track record of performance, trading at a great value. Below, I've touched on some key aspects you should know on a high level. If you're interested in understanding beyond my broad commentary, take a look at thereport on Huntsworth here.
HNT has a strong track record of performance. In the previous year, HNT delivered an impressive double-digit return of 5.8% Unsurprisingly, HNT surpassed the industry return of 5.4%, which gives us more confidence of the company's capacity to drive earnings going forward. HNT's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of HNT's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, HNT's share price is trading below the group's average. This further reaffirms that HNT is potentially undervalued.
For Huntsworth, I've put together three key aspects you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for HNT’s future growth? Take a look at ourfree research report of analyst consensusfor HNT’s outlook.
2. Financial Health: Are HNT’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 Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of HNT? 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.
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What Do Analysts Think About The Future Of NMC Health Plc's (LON:NMC)?
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Looking at NMC Health Plc's (LON:NMC) earnings update in December 2018, analyst consensus outlook appear cautiously optimistic, with earnings growth rate expected to be 28% next year, which is within range of the past five-year average earnings growth of 28%. By 2020, we can expect NMC Health’s bottom line to reach US$319m, a jump from the current trailing-twelve-month of US$249m. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures shouldresearch its fundamentals here.
See our latest analysis for NMC Health
The longer term view from the 10 analysts covering NMC is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for NMC, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$249m and the final forecast of US$472m by 2022, the annual rate of growth for NMC’s earnings is 18%. This leads to an EPS of $2.28 in the final year of projections relative to the current EPS of $1.2. With a current profit margin of 12%, this movement will result in a margin of 15% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For NMC Health, there are three relevant aspects you should further examine:
1. Financial Health: Does it have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Valuation: What is NMC Health worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether NMC Health is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NMC Health? Exploreour interactive list of stocks with large growth potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Stranger Things Review: Season 3 Just Might Be the Series' Best Yet
Click here to read the full article. It takes a couple of episodes to really get going, but ultimately, Season 3 of the Duffer Brothers’ Stranger Things is so awesome that it would’ve been worth the wait even if that wait had begun all the way back in 1985, the year in which it’s set. Heck, the premiere alone delivers chills (seriously — actual goosebump-inducing chills), laughs aplenty (especially as Hopper attempts to parent a teenager in love) and harbingers of heartache (as the kids begin to find out that the worst kinds of growing pains aren’t physical). stranger-things-review-season-3-netflix From there, Season 3 toggles between tubular and, like, totally tubular, its emotional developments coming off every bit as life-or-death as its eye-popping action sequences. Among the highlights (and there are many!): The evolution of Joyce and Hopper’s relationship is alternately adorable, frustrating and poignant; new hurdles in Nancy and Jonathan’s romance take it deeper than their initial pretty girl/weird guy obstacle ever could have; Maya Hawke’s Robin (an insta-fave) makes a hilarious third wheel in Steve and Dustin’s ongoing bromance; and Priah Ferguson gets a lot more scenes to steal as Lucas’ snarky sister Erica. Related stories TVLine Items: Aziz Ansari's Stand-Up Teaser, Chris Klein's Sweet Gig & More Haunting of Hill House Creators' Horror Series Midnight Mass Greenlit at Netflix Neil Gaiman's Sandman Officially Receives Series Order at Netflix There’s also a shopping spree at the Starcourt Mall that’s so joyful, it’s likely to give you Night of the Comet flashbacks; Cary Elwes going so sleazetastic as Mayor Kline, you’ll never watch The Princess Bride the same way again; and the near-unthinkable: moments when you’ll feel more than loathing for narcissistic bully Billy. (I know it’s hard to believe.) If there are quibbles to be had with Season 3, the biggie is probably that initially the central plot hinges on characters for whom we don’t care nearly as much as we did poor, beleaguered Will in Seasons 1 and 2 (and that’s if we care for them at all). So the stakes feel, at least at first, unusually low. We don’t worry that good won’t defeat evil in the end, and we aren’t concerned about the characters in the eye of the storm. The size of the cast is also an issue. You get some of everybody, sure, but when you’re done with your Season 3 binge, you’re likely to be left thinking, “Huh, there sure wasn’t a whole lot of [spoiler] or [spoiler] this season.” Story continues But again, those are quibbles. Mainly what you’ll be doing when you’ve finished your binge is trying to catch your breath (the finale is epic with a capital E, P, I and C), drying your eyes (it’ll also give you feels that you never even knew were feels) and wondering whether you’ll remain on the edge of your seat all the way until Season 4. THE TVLINE BOTTOM LINE: Season 3 of Stranger Things is a thrill ride that you won’t want to end. Launch Gallery: <i>Stranger Things</i> Season 3 Photos Sign up for TVLine's Newsletter . For the latest news, follow us on Facebook , Twitter , and Instagram . View comments
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At UK£2.29, Is It Time To Put Trifast plc (LON:TRI) On Your Watch List?
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Trifast plc (LON:TRI), which is in the machinery business, and is based in United Kingdom, saw a significant share price rise of over 20% in the past couple of months on the LSE. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Trifast’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for Trifast
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 10.76% above my intrinsic value, which means if you buy Trifast today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is £2.07, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Trifast’s low beta implies that the stock is less volatile than the wider market.
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Trifast’s earnings over the next few years are expected to increase by 25%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
Are you a shareholder?It seems like the market has already priced in TRI’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? 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 TRI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining 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 Trifast. You can find everything you need to know about Trifast inthe latest infographic research report. If you are no longer interested in Trifast, 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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Baby delivered at crime scene as pregnant woman fatally stabbed in London
Police at the scene in Raymead Avenue, Thornton Heath, Croydon where a women who was around eight months pregnant has been stabbed to death and her baby is critically ill in hospital A newborn baby is fighting for life after being delivered at the crime scene where their mother died. The woman, Kelly-Mary Fauvrelle, who was around eight months pregnant was stabbed to death in what senior detectives have described as a “horrific incident”. The Metropolitan Police has launched a murder probe in south London after the death of the 26-year-old died of stab wounds - on the same day a man in his 20s was stabbed to death in East London . And an 18-year-old admitted himself to a South London hospital with stab wounds in the early hours of Sunday, later dying. The force said officers were called to reports of a woman in cardiac arrest at an address in Raymead Avenue, Thornton Heath, Croydon , at around 3.30am on Saturday. Miss Fauvrelle’s newborn baby remains in hospital in a critical condition, Scotland Yard said. A 37-year-old man has been arrested on suspicion of murder and is in police custody, with the force stating officers "retain an open mind to any motive". The force later confirmed that a second man, aged 29, had been arrested on the suspicion of her murder. Detective Chief Inspector Mick Norman said: "This is a horrific incident in which a young mother has lost her life and her child is critically ill. "Our sympathies go out to her devastated family. They are being supported by specially trained officers following this awful event, and I would ask that they are left alone at this time as they come to terms with the enormity of what has happened. "A large crime scene is in place, and is likely to be in place for some time. "At the forefront of our inquiries is understanding what exactly has led to these tragic circumstances, and we are doing everything we can to establish the facts." Forensic bags at the scene in Raymead Avenue, Thornton Heath, Croydon where a women who was around eight months pregnant has been stabbed to death and her baby is critically ill in hospital. Medics fought to save the mother after an air ambulance, two ambulance crews and two response cars were sent to the scene by the London Ambulance Service. The force said the woman's next of kin have been informed but formal identification is yet to take place. A post-mortem examination will be held in due course. A London Ambulance Service spokesman said they were called at 3.26am on Saturday to reports of an incident on Raymead Avenue, Thornton Heath. "We sent an incident response officer, two ambulance crews, two medics in response cars and an advanced paramedic to the scene. We also dispatched London's Air Ambulance," he said. "We took one person to hospital as a priority. Sadly, despite the extensive efforts of medics, another person died at the scene." Violence against women has no place in our city, and horrific murders in the home like this show the scale of the problem we face. My heart goes out to this innocent child, and to the mother they have so tragically lost. @MetPoliceUK are investigating - please help if you can. https://t.co/ia8vIuViET — Sadiq Khan (@SadiqKhan) June 29, 2019 Reacting to the murder on Twitter, London mayor Sadiq Khan said: "Violence against women is endemic in society and devastating murders in the home, like this one, show the scale of the problem we face. Story continues "My prayers are with this innocent child, and with the mother it has so tragically lost." Neighbours said that three woman, one of whom was pregnant, lived at the house and they had a small dog. One neighbour said she had got up at about 3.30am to do her prayers when she heard a dog barking at the house, which is two doors down. The neighbour, who did not wish to be named, said she was "shocked and surprised" to hear about the attack. READ MORE Donald Trump becomes first sitting President to enter North Korea A police cordon was in place around the two-storey semi-detached house on Saturday night, with three uniformed officers stationed outside. Lights could be seen inside the property, which is in a quiet one-way street off London Road near Croydon University Hospital. Anyone with information should contact police on the dedicated incident room number of 0208 721 4005, or ring 101 quoting CAD 1358/June 29. Alternatively, contact Crimestoppers on 0800 555 111. Watch the latest videos from Yahoo UK
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How Much Are AstraZeneca PLC (LON:AZN) Insiders Spending On Buying Shares?
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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sellAstraZeneca PLC(LON:AZN), you may well want to know whether insiders have been buying or selling.
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia Universitystudyfound that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Check out our latest analysis for AstraZeneca
In the last twelve months, the biggest single purchase by an insider was when CEO & Executive Director Pascal Soriot bought UK£996k worth of shares at a price of UK£58.26 per share. So it's clear an insider wanted to buy, at around the current price, which is UK£64.38. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. In this case we're pleased to report that the insider purchases were made at close to current prices.
Over the last year, we can see that insiders have bought 26120 shares worth UK£1.5m. While AstraZeneca insiders bought shares last year, they didn't sell. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at thisfreelist of companies. (Hint: insiders have been buying them).
Over the last three months, we've seen significant insider buying at AstraZeneca. Overall, three insiders shelled out US$1.5m for shares in the company -- and none sold. This makes one think the business has some good points.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 0.02% of AstraZeneca shares, worth about UK£20m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest AstraZeneca insiders are well aligned, and that they may think the share price is too low. Therefore, you should should definitely take a look at thisFREEreport showing analyst forecasts for AstraZeneca.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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What Did AstraZeneca PLC's (LON:AZN) CEO Take Home Last Year?
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Pascal Soriot has been the CEO of AstraZeneca PLC (LON:AZN) since 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for AstraZeneca
At the time of writing our data says that AstraZeneca PLC has a market cap of UK£84b, and is paying total annual CEO compensation of US$9.4m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. We took a group of companies with market capitalizations over UK£6.3b, and calculated the median CEO total compensation to be UK£3.9m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
It would therefore appear that AstraZeneca PLC pays Pascal Soriot more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at AstraZeneca has changed from year to year.
AstraZeneca PLC has reduced its earnings per share by an average of 6.3% a year, over the last three years (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to checkthis free visual report onanalyst forecastsfor future earnings.
I think that the total shareholder return of 62%, over three years, would leave most AstraZeneca PLC shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at AstraZeneca PLC with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
However, we can't argue with the strong returns to shareholders, over the same time period. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Whatever your view on compensation, you might want tocheck if insiders are buying or selling AstraZeneca shares (free trial).
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.
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Do You Know What Capacent Holding AB (publ)'s (STO:CAPAC) P/E Ratio Means?
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Today, we'll introduce the concept of the P/E ratio for those who are learning about investing. We'll apply a basic P/E ratio analysis to Capacent Holding AB (publ)'s (STO:CAPAC), to help you decide if the stock is worth further research.Capacent Holding has a P/E ratio of 14.03, based on the last twelve months. That corresponds to an earnings yield of approximately 7.1%.
Check out our latest analysis for Capacent Holding
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Capacent Holding:
P/E of 14.03 = SEK50.4 ÷ SEK3.59 (Based on the year to March 2019.)
A higher P/E ratio implies that investors paya higher pricefor the earning power of the business. That isn't necessarily good or bad, but a high P/E implies relatively high expectations of what a company can achieve in the future.
If earnings fall then in the future the 'E' will be lower. Therefore, even if you pay a low multiple of earnings now, that multiple will become higher in the future. Then, a higher P/E might scare off shareholders, pushing the share price down.
Capacent Holding increased earnings per share by 5.9% last year. In contrast, EPS has decreased by 32%, annually, over 3 years.
We can get an indication of market expectations by looking at the P/E ratio. We can see in the image below that the average P/E (15.8) for companies in the professional services industry is higher than Capacent Holding's P/E.
Capacent Holding's P/E tells us that market participants think it will not fare as well as its peers in the same industry. While current expectations are low, the stock could be undervalued if the situation is better than the market assumes. It is arguably worth checkingif insiders are buying shares, because that might imply they believe the stock is undervalued.
Don't forget that the P/E ratio considers market capitalization. So it won't reflect the advantage of cash, or disadvantage of debt. 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.
Capacent Holding has net cash of kr5.5m. That should lead to a higher P/E than if it did have debt, because its strong balance sheets gives it more options.
Capacent Holding trades on a P/E ratio of 14, which is below the SE market average of 16.7. Recent earnings growth wasn't bad. And the net cash position gives the company many options. So it's strange that the low P/E indicates low expectations. Given analysts are expecting further growth, one might have expected a higher P/E ratio.That may be worth further research.
When the market is wrong about a stock, it gives savvy investors an opportunity. If the reality for a company is not as bad as the P/E ratio indicates, then the share price should increase as the market realizes this. So thisfreevisual report on analyst forecastscould hold the key to an excellent investment decision.
But note:Capacent Holding 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.
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Card Factory plc (LON:CARD): Immense Growth Potential?
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Card Factory plc's (LON:CARD) released its most recent earnings update in May 2019, which signalled that the business faced a substantial headwind with earnings deteriorating by -12%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Card Factory's earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for Card Factory
Analysts' expectations for next year seems rather muted, with earnings climbing by a single digit 9.0%. The growth outlook in the following year seems much more positive with rates generating double digit 12% compared to today’s earnings, and finally hitting UK£59m by 2022.
Even though it is useful to understand the growth year by year relative to today’s figure, it may be more valuable analyzing the rate at which the earnings are rising or falling every year, on average. The advantage of this method is that we can get a bigger picture of the direction of Card Factory's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 4.6%. This means, we can expect Card Factory will grow its earnings by 4.6% every year for the next few years.
For Card Factory, I've put together three relevant aspects you should further research:
1. Financial Health: Does it have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Valuation: What is CARD worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether CARD is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CARD? Exploreour interactive list of stocks with large growth potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Is Card Factory plc (LON:CARD) A High Quality Stock To Own?
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While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. We'll use ROE to examine Card Factory plc (LON:CARD), by way of a worked example.
Card Factory has a ROE of 23%, based on the last twelve months. One way to conceptualize this, is that for each £1 of shareholders' equity it has, the company made £0.23 in profit.
See our latest analysis for Card Factory
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Card Factory:
23% = UK£51m ÷ UK£228m (Based on the trailing twelve months to January 2019.)
Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. It is all the money paid into the company from shareholders, plus any earnings retained. 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. That means that the higher the ROE, the more profitable the company is. So, all else equal,investors should like a high ROE. That means ROE can be used to compare two businesses.
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. Pleasingly, Card Factory has a superior ROE than the average (14%) company in the Specialty Retail industry.
That's what I like to see. I usually take a closer look when a company has a better ROE than industry peers. For example,I often check if insiders have been buying shares.
Companies usually need to invest money to grow their profits. That cash can come from issuing shares, retained earnings, or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the use of debt will improve the returns, but will not change the equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
While Card Factory does have some debt, with debt to equity of just 0.63, 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 one way we can compare the business quality of different companies. In my book the highest quality companies have high return on equity, despite low debt. 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 you might want to check this FREEvisualization of analyst forecasts for the company.
Of courseCard Factory 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.
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Is Capgemini SE's (EPA:CAP) CEO Pay Justified?
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In 2012 Paul Hermelin was appointed CEO of Capgemini SE (EPA:CAP). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Capgemini
Our data indicates that Capgemini SE is worth €18b, and total annual CEO compensation is €5.0m. (This is based on the year to December 2018). That's just a smallish increase of 5.7% on last year. While we always look at total compensation first, we note that the salary component is less, at €1.5m. When we examined a group of companies with market caps over €7.0b, we found that their median CEO total compensation was €3.4m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
As you can see, Paul Hermelin is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Capgemini SE is paying too much. 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 Capgemini, below.
On average over the last three years, Capgemini SE has shrunk earnings per share by 17% each year (measured with a line of best fit). Its revenue is up 5.4% over last year.
Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested inthisfreevisualization of analyst forecasts.
Boasting a total shareholder return of 48% over three years, Capgemini SE has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by Capgemini SE, and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
On the other hand, returns have been good, so the company is doing something right. So on this analysis we'd stop short of criticizing the level of CEO compensation. If you think CEO compensation levels are interesting you will probably really likethis free visualization of insider trading at Capgemini.
If you want to buy a stock that is better than Capgemini, 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.
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Should Capgemini SE's (EPA:CAP) Recent Earnings Decline Worry You?
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For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Capgemini SE (EPA:CAP) useful as an attempt to give more color around how Capgemini is currently performing.
View our latest analysis for Capgemini
CAP's trailing twelve-month earnings (from 31 December 2018) of €730m has declined by -11% 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 8.3%, indicating the rate at which CAP is growing has slowed down. What could be happening here? Let's examine what's going on with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Capgemini has fallen short of achieving a 20% return on equity (ROE), recording 9.7% instead. However, its return on assets (ROA) of 4.5% exceeds the FR IT industry of 4.4%, indicating Capgemini has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Capgemini’s debt level, has increased over the past 3 years from 9.7% to 11%.
Though Capgemini's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research Capgemini to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for CAP’s future growth? Take a look at ourfree research report of analyst consensusfor CAP’s outlook.
2. Financial Health: Are CAP’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out ourfinancial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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How Does Catella AB (publ) (STO:CAT B) Fare As A Dividend Stock?
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Dividend paying stocks like Catella AB (publ) (STO:CAT B) 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. On the other hand, investors have been known to buy a stock because of its yield, and then lose money if the company's dividend doesn't live up to expectations.
With a goodly-sized dividend yield despite a relatively short payment history, investors might be wondering if Catella is a new dividend aristocrat in the making. It sure looks interesting on these metrics - but there's always more to the story . Some simple analysis can offer a lot of insights when buying a company for its dividend, and we'll go through this below.
Click the interactive chart for our full dividend analysis
Companies (usually) pay dividends out of their earnings. If a company is paying more than it earns, the dividend might have to be cut. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. Catella paid out 119% of its profit as dividends, over the trailing twelve month period. Unless there are extenuating circumstances, from the perspective of an investor who hopes to own the company for many years, a payout ratio of above 100% is definitely a concern.
Remember, you can always get a snapshot of Catella's latest financial position,by checking our visualisation of its financial health.
Before buying a stock for its income, we want to see if the dividends have been stable in the past, and if the company has a track record of maintaining its dividend. Catella has been paying a dividend for the past four years. The company has been paying a stable dividend for a few years now, but we'd like to see more evidence of consistency over a longer period. During the past four-year period, the first annual payment was kr0.20 in 2015, compared to kr1.20 last year. This works out to be a compound annual growth rate (CAGR) of approximately 57% a year over that time.
The dividend has been growing pretty quickly, which could be enough to get us interested even though the dividend history is relatively short. Further research may be warranted.
Examining whether the dividend is affordable and stable is important. However, it's also important to assess if earnings per share (EPS) are growing. Over the long term, dividends need to grow at or above the rate of inflation, in order to maintain the recipient's purchasing power. Earnings have grown at around 2.6% a year for the past five years, which is better than seeing them shrink! Still, the company has struggled to grow its EPS, and currently pays out 119% of its earnings. As they say in finance, 'past performance is not indicative of future performance', but we are not confident a company with limited earnings growth and a high payout ratio will be a star dividend-payer over the next decade.
We'd also point out that Catella issued a meaningful number of new shares in the past year. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.
When we look at a dividend stock, we need to form a judgement on whether the dividend will grow, if the company is able to maintain it in a wide range of economic circumstances, and if the dividend payout is sustainable. First, it's not great to see how much of its earnings are being paid as dividends. Unfortunately, earnings growth has also been mediocre, and we think it has not been paying dividends long enough to demonstrate resilience across economic cycles. To conclude, we've spotted a couple of potential concerns with Catella that may make it less than ideal candidate for dividend investors.
Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 3 analysts we track are forecasting for Catellafor freewith publicanalyst estimates for the company.
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.
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Is Catella AB (publ)'s (STO:CAT B) CEO Overpaid Relative To Its Peers?
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In 2014 Knut Pedersen was appointed CEO of Catella AB (publ) (STO:CAT B). 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. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Catella
According to our data, Catella AB (publ) has a market capitalization of kr2.3b, and pays its CEO total annual compensation worth kr5.3m. (This number is for the twelve months until December 2018). That's actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at kr3.5m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of kr928m to kr3.7b. The median total CEO compensation was kr3.2m.
As you can see, Knut Pedersen is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Catella AB (publ) is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Catella, below.
Over the last three years Catella AB (publ) has shrunk its earnings per share by an average of 28% per year (measured with a line of best fit). It achieved revenue growth of 15% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to checkthis free visual depiction ofwhat analysts expectfor the future.
Boasting a total shareholder return of 63% over three years, Catella AB (publ) has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at Catella AB (publ) with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark 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. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. CEO compensation is one thing, but it is also interesting tocheck if the CEO is buying or selling Catella (free visualization of insider trades).
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.
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Japan to tighten export rules for high-tech materials to South Korea: media
TOKYO (Reuters) - Japan plans to tighten restrictions on the export of high-tech material used in smartphones and chips to South Korea from July 4 in connection with a dispute over a South Korean ruling on war-time forced labor, the Sankei newspaper reported on Sunday. The row between Japan and South Korea flared last October when South Korea's Supreme Court ruled that Japan's Nippon Steel must compensate South Koreans for forced labor during World War Two. Japan maintains that the issue of forced labor was fully settled in 1965 when the two countries restored diplomatic ties, and has denounced the ruling as "unthinkable." The materials to be restricted are fluorinated polyimide which is used in smartphone displays, and resist and high-purity hydrogen fluoride (HF), which is used as an etching gas in the making of semiconductors, the paper said. Resist is a thin layer used to transfer a circuit pattern to the semiconductor substrate. High-purity HF is used in etching silicon materials. Japan will stop preferential treatment for these three materials for South Korea, meaning Japanese exporters will need to apply for export permission for each time they want to ship to South Korea, which takes about 90 days, the paper said. A government announcement on the restriction is expected on Monday, it said. Japan produces about 90% of fluorinated polyimide and resist worldwide as well as about 70% of etching gas, making it difficult for chipmakers to find alternative supplies, the paper said, pointing to potential impact on South Korea's Samsung Electronics and LG Electronics. Japan's industry ministry and finance ministry were not available for comment on Sunday. In January, Japan demanded talks with South Korea over the forced labor issue but South Korea has not responded, the newspaper said. (Reporting by Yuka Obayashi)
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What Kind Of Investor Owns Most Of Mersen S.A. (EPA:MRN)?
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A look at the shareholders of Mersen S.A. (EPA:MRN) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. We also tend to see lower insider ownership in companies that were previously publicly owned.
Mersen is not a large company by global standards. It has a market capitalization of €695m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about MRN.
View our latest analysis for Mersen
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
Mersen already has institutions on the share registry. Indeed, they own 46% of the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Mersen, (below). Of course, keep in mind that there are other factors to consider, too.
Mersen is not owned by hedge funds. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
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 data suggests that insiders own under 1% of Mersen S.A. in their own names. It appears that the board holds about €283k worth of stock. This compares to a market capitalization of €695m. Many tend to prefer to see a board with bigger shareholdings. A good next step might be totake a look at this free summary of insider buying and selling.
With a 33% ownership, the general public have some degree of sway over MRN. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
With an ownership of 21%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
I like to dive deeperinto how a company has performed in the past. You can findhistoric revenue and earnings in thisdetailed graph.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can checkthis free report showing analyst forecasts for its future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Should You Invest In Montea Comm. VA (EBR:MONT)?
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Montea Comm. VA is a €1.2b small-cap, real estate investment trust (REIT) based in Erembodegem, Belgium. REIT shares give you ownership of the company than owns and manages various income-producing property, whether it be commercial, industrial or residential. The structure of MONT is unique and it has to adhere to different requirements compared to other non-REIT stocks. Below, I'll look at a few important metrics to keep in mind as part of your research on MONT.
View our latest analysis for Montea Comm. VA
Funds from Operations (FFO) is a higher quality measure of MONT's earnings compared to net income. This term is very common in the REIT investing world as it provides a cleaner look at its cash flow from daily operations by excluding impact of one-off activities or non-cash items such as depreciation. For MONT, its FFO of €56m makes up 112% of its gross profit, which means the majority of its earnings are high-quality and recurring.
MONT's financial stability can be gauged by seeing how much its FFO generated each year can cover its total amount of debt. The higher the coverage, the less risky MONT is, broadly speaking, to have debt on its books. The metric I'll be using, FFO-to-debt, also estimates the time it will take for the company to repay its debt with its FFO. With a ratio of 12%, the credit rating agency Standard & Poor would consider this as aggressive risk. This would take MONT 8 years to pay off using just operating income, which is a long time, and risk increases with time. But realistically, companies have many levers to pull in order to pay back their debt, beyond operating income alone.
Next, interest coverage ratio shows how many times MONT’s earnings can cover its annual interest payments. Usually the ratio is calculated using EBIT, but for REITs, it’s better to use FFO divided by net interest. This is similar to the above concept, but looks at the nearer-term obligations. With an interest coverage ratio of 5.52x, it’s safe to say MONT is generating an appropriate amount of cash from its borrowings.
I also use FFO to look at MONT's valuation relative to other REITs in Belgium by using the price-to-FFO metric. This is conceptually the same as the price-to-earnings (PE) ratio, but as previously mentioned, FFO is more suitable. MONT's price-to-FFO is 21.07x, compared to the long-term industry average of 16.5x, meaning that it is overvalued.
Montea Comm. VA can bring diversification into your portfolio due to its unique REIT characteristics. Before you make a decision on the stock today, keep in mind I've only covered one metric in this article, the FFO, which is by no means comprehensive. I'd strongly recommend continuing your research on the following areas I believe are key fundamentals for MONT:
1. Valuation: What is MONT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether MONT is currently mispriced by the market.
2. Management: Who are the people running the company? Experienced management and board are important for setting the right strategy during a volatile market. Take a look atinformation on MONT's executive and directors 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.
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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What Does SITI - B&T Group S.p.A.'s (BIT:SITI) Balance Sheet Tell Us About It?
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Investors are always looking for growth in small-cap stocks like SITI - B&T Group S.p.A. (BIT:SITI), with a market cap of €52m. However, an important fact which most ignore is: how financially healthy is the business? Assessing first and foremost the financial health is vital, as mismanagement of capital can lead to bankruptcies, which occur at a higher rate for small-caps. The following basic checks can help you get a picture of the company's balance sheet strength. However, this is just a partial view of the stock, and I recommend youdig deeper yourself into SITI here.
SITI's debt levels have fallen from €55m to €51m over the last 12 months , which includes long-term debt. With this debt repayment, SITI currently has €6.0m remaining in cash and short-term investments , ready to be used for running the business. Its negative operating cash flow means calculating cash-to-debt wouldn't be useful. As the purpose of this article is a high-level overview, I won’t be looking at this today, but you can take a look at some of SITI’soperating efficiency ratios such as ROA here.
Looking at SITI’s €117m in current liabilities, it appears that the company has been able to meet these obligations given the level of current assets of €195m, with a current ratio of 1.66x. The current ratio is calculated by dividing current assets by current liabilities. Generally, for Machinery companies, this is a reasonable ratio since there's a sufficient cash cushion without leaving too much capital idle or in low-earning investments.
With debt reaching 58% of equity, SITI may be thought of as relatively highly levered. This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. No matter how high the company’s debt, if it can easily cover the interest payments, it’s considered to be efficient with its use of excess leverage. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In SITI's case, the ratio of 5.18x suggests that interest is appropriately covered, which means that debtors may be willing to loan the company more money, giving SITI ample headroom to grow its debt facilities.
SITI’s high cash coverage means that, although its debt levels are high, the company is able to utilise its borrowings efficiently in order to generate cash flow. Since there is also no concerns around SITI's liquidity needs, this may be its optimal capital structure for the time being. Keep in mind I haven't considered other factors such as how SITI has been performing in the past. You should continue to research SITI - B&T Group to get a more holistic view of the small-cap by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for SITI’s future growth? Take a look at ourfree research report of analyst consensusfor SITI’s outlook.
2. Valuation: What is SITI worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether SITI is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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What Kind Of Shareholders Own Assystem S.A. (EPA:ASY)?
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Every investor in Assystem S.A. (EPA:ASY) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that used to be publicly owned tend to have lower insider ownership.
Assystem is not a large company by global standards. It has a market capitalization of €536m, which means it wouldn't have the attention 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 ASY.
Check out our latest analysis for Assystem
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
Assystem already has institutions on the share registry. Indeed, they own 13% 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 Assystem, (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 Assystem. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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 data suggests that insiders own under 1% of Assystem S.A. in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It appears that the board holds about €38k worth of stock. This compares to a market capitalization of €536m. Many tend to prefer to see a board with bigger shareholdings. A good next step might be totake a look at this free summary of insider buying and selling.
The general public, with a 23% stake in the company, will not easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
It seems that Private Companies own 64%, of the ASY stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.
I like to dive deeperinto how a company has performed in the past. You can findhistoric revenue and earnings in thisdetailed graph.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can checkthis free report showing analyst forecasts for its future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Should We Be Delighted With Andrews Sykes Group plc's (LON:ASY) ROE Of 29%?
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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. By way of learning-by-doing, we'll look at ROE to gain a better understanding of Andrews Sykes Group plc (LON:ASY).
Over the last twelve monthsAndrews Sykes Group has recorded a ROE of 29%. Another way to think of that is that for every £1 worth of equity in the company, it was able to earn £0.29.
Check out our latest analysis for Andrews Sykes Group
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Andrews Sykes Group:
29% = UK£17m ÷ UK£59m (Based on the trailing twelve months to December 2018.)
Most readers would understand what net profit is, but it’s worth explaining the concept of shareholders’ equity. It is the capital paid in by shareholders, plus any retained earnings. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the amount earned after tax over the last twelve months. That means that the higher the ROE, the more profitable the company is. So, all else being equal,a high ROE is better than a low one. That means ROE can be used to compare two businesses.
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. As is clear from the image below, Andrews Sykes Group has a better ROE than the average (15%) in the Trade Distributors industry.
That is a good sign. 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.
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 use of debt will improve the returns, but will not change the equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
Andrews Sykes Group has a debt to equity ratio of just 0.076, which is very low. When I see a high ROE, fuelled by only modest debt, I suspect the business is high quality. Judicious use of debt to improve returns can certainly be a good thing, although it does elevate risk slightly and reduce future optionality.
Return on equity is one way we can compare the business quality of different companies. 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 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. So I think it may be worth checking thisfreethisdetailed graphof past earnings, revenue and cash flow.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Does The ATEME SA (EPA:ATEME) Share Price Tend To Follow The Market?
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If you own shares in ATEME SA (EPA:ATEME) 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. The first type is company specific volatility. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The second sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.
Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Beta is a widely used metric to measure a stock's exposure to market risk (volatility). Before we go on, it's worth noting that Warren Buffett pointed out in his 2014 letter to shareholders that 'volatility is far from synonymous with risk.' Having said that, beta can still be rather useful. The first thing to understand about beta is that the beta of the overall market is 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.
Check out our latest analysis for ATEME
With a beta of 1.04, (which is quite close to 1) the share price of ATEME has historically been about as voltile as the broader market. If the future looks like the past, we could therefore consider it likely that the stock price will experience share price volatility that is roughly similar to the overall market. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. Take a look at how ATEME fares in that regard, below.
ATEME is a rather small company. It has a market capitalisation of €124m, which means it is probably under the radar of most investors. It doesn't take much money to really move the share price of a company as small as this one. That makes it somewhat unusual that it has a beta value so close to the overall market.
ATEME has a beta value quite close to that of the overall market. That doesn't tell us much on its own, so it is probably worth considering whether the company is growing, if you're looking for stocks that will go up more than the overall market. In order to fully understand whether ATEME is a good investment for you, we also need to consider important company-specific fundamentals such as ATEME’s financial health and performance track record. I highly recommend you dive deeper by considering the following:
1. Future Outlook: What are well-informed industry analysts predicting for ATEME’s future growth? Take a look at ourfree research report of analyst consensusfor ATEME’s outlook.
2. Past Track Record: Has ATEME 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 ATEME's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how ATEME measures up against other companies on valuation. You could start with thisfree list of prospective options.
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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Do Directors Own ATEME SA (EPA:ATEME) Shares?
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Every investor in ATEME SA (EPA:ATEME) should be aware of the most powerful shareholder groups. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.'
ATEME is a smaller company with a market capitalization of €124m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholder can tell us about ATEME.
View our latest analysis for ATEME
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
We can see that ATEME does have institutional investors; and they hold 38% of the stock. 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 ATEME, (below). Of course, keep in mind that there are other factors to consider, too.
Our data indicates that hedge funds own 5.3% of ATEME. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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.
We can see that insiders own shares in ATEME SA. As individuals, the insiders collectively own €9.3m worth of the €124m company. This shows at least some alignment, but I usually like to see larger insider holdings. You canclick here to see if those insiders have been buying or selling.
The general public, with a 40% stake in the company, will not easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Our data indicates that Private Companies hold 9.7%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.
I like to dive deeperinto how a company has performed in the past. You can findhistoric revenue and earnings in thisdetailed graph.
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.
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What Kind Of Shareholders Own Micro Systemation AB (publ) (STO:MSAB B)?
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The big shareholder groups in Micro Systemation AB (publ) (STO:MSAB B) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.'
Micro Systemation is not a large company by global standards. It has a market capitalization of kr781m, which means it wouldn't have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholder can tell us about MSAB B.
See our latest analysis for Micro Systemation
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that Micro Systemation does have institutional investors; and they hold 50% of the stock. 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 Micro Systemation, (below). Of course, keep in mind that there are other factors to consider, too.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in Micro Systemation. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Shareholders would probably be interested to learn that insiders own shares in Micro Systemation AB (publ). In their own names, insiders own kr52m worth of stock in the kr781m 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 holds a 16% stake in MSAB B. 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.
With an ownership of 6.9%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
We can see that Private Companies own 21%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
Many find it usefulto take an in depth look at how a company has performed in the past. You can accessthisdetailed graphof past earnings, revenue and cash flow.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can checkthis free report showing analyst forecasts for its future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Should You Worry About Malmbergs Elektriska AB (publ)'s (STO:MEAB B) CEO Pay Cheque?
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The CEO of Malmbergs Elektriska AB (publ) (STO:MEAB B) is Johan Folke. First, this article will compare CEO compensation with compensation at similar sized companies. 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 Malmbergs Elektriska
According to our data, Malmbergs Elektriska AB (publ) has a market capitalization of kr501m, and pays its CEO total annual compensation worth kr1.6m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at kr1.1m. We examined a group of similar sized companies, with market capitalizations of below kr1.9b. The median CEO total compensation in that group is kr1.8m.
That means Johan Folke receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Malmbergs Elektriska has changed from year to year.
On average over the last three years, Malmbergs Elektriska AB (publ) has shrunk earnings per share by 25% each year (measured with a line of best fit). Its revenue is down -4.6% over last year.
Few shareholders would be pleased to read that earnings per share are lower 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. Although we don't have analyst forecasts, you could get a better understanding of its growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
Since shareholders would have lost about 52% over three years, some Malmbergs Elektriska AB (publ) shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
Johan Folke is paid around what is normal the leaders of comparable 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. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. So you may want tocheck if insiders are buying Malmbergs Elektriska 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.
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donald trump north korea kim
North Korea's leader Kim Jong Un stands with US President Donald Trump south of the Military Demarcation Line that divides North and South Korea, in the Joint Security Area (JSA) of Panmunjom in the Demilitarized zone (DMZ) on June 30, 2019. (Photo by Brendan Smialowski / AFP) Donald Trump has become the first sitting US president to enter North Korea as he shook hands with Kim Jong Un across the border at the Korean Demilitarised Zone on Sunday. The historic photo-op was achieved as Mr Trump sought to make a legacy-defining nuclear deal with the North. This latest encounter marks the third time the two leaders have met, and the first since a failed summit on the North's nuclear programme in Vietnam earlier this year. Mr Trump briefly crossed the border into North Korea after greeting Mr Kim. There are as yet no indications of a breakthrough in the stalled negotiations to end the North's nuclear programme. Mr Kim said Mr Trump's brief visit to North Korean territory improves ties between the nations. Mr Trump said it felt "great" to be the first US president to step into the North and hailed his "great friendship" with Mr Kim. Mr Trump earlier had his first glimpse of North Korea from an observation post in the Korean Demilitarised Zone. Mr Trump was shown various landmarks as he stood atop Observation Post Ouellette. He then met with several dozen troops stationed at the Korean Demilitarised Zone separating South and North Korea and telling them: "We're with you all the way." The troops included US soldiers as well as South Korean troops. Mr Trump was joined by South Korean President Moon Jae-in, who is praising Mr Trump for deciding to meet with Mr Kim, calling it "a bold decision". Mr Trump has at times appeared to question the value of keeping US troops on the Korean Peninsula in light of the US-South Korea trade deficit. Mr Trump said the situation used to be marked by "tremendous danger", but that: "After our first summit, all of the danger went away." Every US president since Ronald Reagan has visited the 1953 armistice line, except for George H.W. Bush, who visited as vice president. READ MORE Baby fighting for life after pregnant woman fatally stabbed in London Watch the latest videos from Yahoo UK
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Is It Too Late To Consider Buying Mycronic AB (publ) (STO:MYCR)?
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Mycronic AB (publ) (STO:MYCR), which is in the electronic business, and is based in Sweden, saw significant share price movement during recent months on the OM, rising to highs of SEK138.2 and falling to the lows of SEK112.8. 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 Mycronic's current trading price of SEK112.8 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Mycronic’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Mycronic
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16.41% above my intrinsic value, which means if you buy Mycronic today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is SEK96.9, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Mycronic’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Mycronic, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
Are you a shareholder?MYCR seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor?If you’ve been keeping an eye on MYCR for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on MYCR should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Mycronic. You can find everything you need to know about Mycronic inthe latest infographic research report. If you are no longer interested in Mycronic, 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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Should You Buy Neopost S.A. (EPA:NEO) For Its Dividend?
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Dividend paying stocks like Neopost S.A. (EPA:NEO) 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. On the other hand, investors have been known to buy a stock because of its yield, and then lose money if the company's dividend doesn't live up to expectations.
A 2.8% yield is nothing to get excited about, but investors probably think the long payment history suggests Neopost has some staying power. When buying stocks for their dividends, you should always run through the checks below, to see if the dividend looks sustainable.
Explore this interactive chart for our latest analysis on Neopost!
Companies (usually) pay dividends out of their earnings. If a company is paying more than it earns, the dividend might have to be cut. So we need to form a view on if a company's dividend is sustainable, relative to its net profit after tax. Looking at the data, we can see that 22% of Neopost's profits were paid out as dividends in the last 12 months. We like this low payout ratio, because it implies the dividend is well covered and leaves ample opportunity for reinvestment.
Another important check we do is to see if the free cash flow generated is sufficient to pay the dividend. Neopost's cash payout ratio in the last year was 44%, which suggests dividends were well covered by cash generated by the business. It's positive to see that Neopost's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
As Neopost has a meaningful amount of debt, we need to check its balance sheet to see if the company might have debt risks. A rough way to check this is with these two simple ratios: a) net debt divided by EBITDA (earnings before interest, tax, depreciation and amortisation), and b) net interest cover. Net debt to EBITDA is a measure of a company's total debt. Net interest cover measures the ability to meet interest payments. Essentially we check that a) the company does not have too much debt, and b) that it can afford to pay the interest. With net debt of 2.89 times its EBITDA, Neopost has a noticeable amount of debt, although if business stays steady, this may not be overly concerning.
We calculated its interest cover by measuring its earnings before interest and tax (EBIT), and dividing this by the company's net interest expense. Net interest cover of 5.19 times its interest expense appears reasonable for Neopost, although we're conscious that even high interest cover doesn't make a company bulletproof.
Remember, you can always get a snapshot of Neopost's latest financial position,by checking our visualisation of its financial health.
Before buying a stock for its income, we want to see if the dividends have been stable in the past, and if the company has a track record of maintaining its dividend. Neopost has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of payments. This dividend has been unstable, which we define as having fallen by at least 20% one or more times over this time. During the past ten-year period, the first annual payment was €3.30 in 2009, compared to €0.53 last year. This works out to a decline of approximately 84% over that time.
We struggle to make a case for buying Neopost for its dividend, given that payments have shrunk over the past ten years.
Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. In the last five years, Neopost's earnings per share have shrunk at approximately 13% per annum. Declining earnings per share over a number of years is not a great sign for the dividend investor. Without some improvement, this does not bode well for the long term value of a company's dividend.
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. First, we like that the company's dividend payments appear well covered, although the retained capital also needs to be effectively reinvested. 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. While we're not hugely bearish on it, overall we think there are potentially better dividend stocks than Neopost out there.
Given that earnings are not growing, the dividend does not look nearly so attractive. Businesses can change though, and we think it would make sense to see whatanalysts are forecasting for the company.
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.
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What Should Investors Know About Neopost S.A.'s (EPA:NEO) Growth?
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Looking at Neopost S.A.'s (EPA:NEO) earnings update in January 2019, analysts seem fairly confident, as a 11% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of -7.8%. Currently with trailing-twelve-month earnings of €83m, we can expect this to reach €91m by 2020. Below is a brief commentary on the longer term outlook the market has for Neopost. For those keen to understand more about other aspects of the company, you canresearch its fundamentals here.
Check out our latest analysis for Neopost
Over the next three years, it seems the consensus view of the 6 analysts covering NEO is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for NEO, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 7.6% based on the most recent earnings level of €83m to the final forecast of €104m by 2022. EPS reaches €3.33 in the final year of forecast compared to the current €2.4 EPS today. In 2022, NEO's profit margin will have expanded from 7.6% to 9.1%.
Future outlook is only one aspect when you're building an investment case for a stock. For Neopost, there are three key aspects you should further examine:
1. Financial Health: Does it have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Valuation: What is Neopost worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether Neopost is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of Neopost? Exploreour interactive list of stocks with large growth potentialto get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Estimating The Intrinsic Value Of Smith & Nephew plc (LON:SN.)
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Does the June share price for Smith & Nephew plc (LON:SN.) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by estimating the company's 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.
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 Smith & Nephew
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.
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": "$699.33", "2020": "$820.14", "2021": "$906.00", "2022": "$972.47", "2023": "$1.03k", "2024": "$1.07k", "2025": "$1.10k", "2026": "$1.13k", "2027": "$1.16k", "2028": "$1.18k"}, {"": "Growth Rate Estimate Source", "2019": "Analyst x6", "2020": "Analyst x7", "2021": "Analyst x5", "2022": "Est @ 7.34%", "2023": "Est @ 5.5%", "2024": "Est @ 4.22%", "2025": "Est @ 3.32%", "2026": "Est @ 2.69%", "2027": "Est @ 2.25%", "2028": "Est @ 1.95%"}, {"": "Present Value ($, Millions) Discounted @ 7.45%", "2019": "$650.85", "2020": "$710.36", "2021": "$730.32", "2022": "$729.55", "2023": "$716.33", "2024": "$694.80", "2025": "$668.12", "2026": "$638.54", "2027": "$607.67", "2028": "$576.54"}]
Present Value of 10-year Cash Flow (PVCF)= $6.72b
"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 1.2%. We discount the terminal cash flows to today's value at a cost of equity of 7.4%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = US$1.2b × (1 + 1.2%) ÷ (7.4% – 1.2%) = US$19b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= $US$19b ÷ ( 1 + 7.4%)10= $9.38b
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 $16.10b. 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 $18.44. However, SN.’s primary listing is in United Kingdom, and 1 share of SN. in USD represents 0.787 ( USD/ GBP) share of NYSE:SNN,so the intrinsic value per share in GBP is £14.51.Compared to the current share price of £17.05, 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.
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 Smith & Nephew 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 7.4%, which is based on a levered beta of 0.936. 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 Smith & Nephew, There are three fundamental factors you should further examine:
1. Financial Health: Does SN. 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 SN.'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 SN.? 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 LON 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.
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Despite Its High P/E Ratio, Is Smith & Nephew plc (LON:SN.) Still Undervalued?
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This article is for investors who would like to improve their understanding of price to earnings ratios (P/E ratios). To keep it practical, we'll show how Smith & Nephew plc's (LON:SN.) P/E ratio could help you assess the value on offer. Looking at earnings over the last twelve months,Smith & Nephew has a P/E ratio of 28.53. In other words, at today's prices, investors are paying £28.53 for every £1 in prior year profit.
See our latest analysis for Smith & Nephew
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price (in reporting currency) ÷ Earnings per Share (EPS)
Or for Smith & Nephew:
P/E of 28.53 = $21.67(Note: this is the share price in the reporting currency, namely, USD )÷ $0.76 (Based on the year to December 2018.)
A higher P/E ratio implies that investors paya higher pricefor the earning power of the business. That isn't necessarily good or bad, but a high P/E implies relatively high expectations of what a company can achieve in the future.
Probably the most important factor in determining what P/E a company trades on is the earnings growth. That's because companies that grow earnings per share quickly will rapidly increase the 'E' in the equation. And in that case, the P/E ratio itself will drop rather quickly. Then, a lower P/E should attract more buyers, pushing the share price up.
Smith & Nephew shrunk earnings per share by 13% over the last year. But EPS is up 4.2% over the last 5 years.
We can get an indication of market expectations by looking at the P/E ratio. You can see in the image below that the average P/E (28.5) for companies in the medical equipment industry is roughly the same as Smith & Nephew's P/E.
Its P/E ratio suggests that Smith & Nephew shareholders think that in the future it will perform about the same as other companies in its industry classification. So if Smith & Nephew actually outperforms its peers going forward, that should be a positive for the share price. Further research into factors such asinsider buying and selling, could help you form your own view on whether that is likely.
Don't forget that the P/E ratio considers market capitalization. So it won't reflect the advantage of cash, or disadvantage of debt. In theory, a company can lower its future P/E ratio by using cash or debt to invest in growth.
While growth expenditure doesn't always pay off, the point is that it is a good option to have; but one that the P/E ratio ignores.
Net debt totals just 5.8% of Smith & Nephew's market cap. It would probably trade on a higher P/E ratio if it had a lot of cash, but I doubt it is having a big impact.
Smith & Nephew has a P/E of 28.5. That's higher than the average in the GB market, which is 16.4. With a bit of debt, but a lack of recent growth, it's safe to say the market is expecting improved profit performance from the company, in the next few years.
Investors should be looking to buy stocks that the market is wrong about. People often underestimate remarkable growth -- so investors can make money when fast growth is not fully appreciated. So thisfreevisualization of the analyst consensus on future earningscould help you make theright decisionabout whether to buy, sell, or hold.
Of course,you might find a fantastic investment by looking at a few good candidates.So take a peek at thisfreelist of companies with modest (or no) debt, trading on a P/E 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.
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In race for No. 10, Johnson and Hunt vow to splash the cash
By Kate Holton
LONDON (Reuters) - Boris Johnson and Jeremy Hunt vowed to spend billions of pounds on public services, infrastructure and tax cuts on Sunday as the two men battling to become prime minister pitched themselves as the best candidate to take on the opposition Labour Party.
The rivals to succeed Theresa May as leader of the ruling Conservative Party sought to win broader backing by setting out plans to invest in education, transport and defence, even at the cost of higher government borrowing. The race should be over by July 23.
Johnson, the favourite, vowed to increase spending on education, adding to earlier pledges to invest in transport, superfast broadband, more police and tax cuts.
"Believe me there is cash now available," Johnson told Sky News. "(And) I'm prepared to borrow to finance certain great objectives but overall we will keep fiscal responsibility."
Foreign Secretary Hunt also pledged to slash corporation tax to drive economic growth, enabling him to increase spending on social care, defence and education.
With Britain now due to leave the European Union on Oct. 31, much of the debate has revolved around how the two candidates would steer the world's fifth-largest economy out of the world's biggest trading bloc without crippling growth.
With the winner decided by Conservative Party members, who overwhelmingly back Brexit, Hunt has toughened his language, saying he would take a decision at the beginning of October to go for a disorderly no-deal exit if there was no prospect of getting an agreement through parliament.
Asked how he would face the owners and employees of small companies put at jeopardy by such a decision, Hunt said democracy must come first.
"We are a country where politicians do what the people tell them to do," he told BBC TV. "If we have to leave without a deal I would do that but I would find support for those companies to help them weather the storms."
The self-proclaimed entrepreneur said a plan to cut the corporate tax rate to 12.5%, matching the level in Ireland and one of the lowest in any major economy, would become even more important in the event of a no-deal because it would support companies through the upheaval. The rate is currently 19%.
"Of (my spending) commitments, the one I would not drop is the one to reduce corporation tax. It would fire up the economy in a way that would be helpful in a no-deal context."
With four months until Britain's next deadline to leave the EU, the two men also sought to show they had advanced plans for how they would handle Britain's departure.
Hunt said he had been in talks with the former Canadian prime minister Stephen Harper, who negotiated a trade deal with the EU.
In other possible government moves, a source said Britain's lead Brexit negotiator Olly Robbins was overdue a change of job while Mark Sedwill, the cabinet secretary, could become Britain's ambassador in Washington under a Johnson government.
According to the Mail on Sunday, Johnson also has a transition team which is preparing to invite EU Commission President Jean-Claude Juncker and the bloc's Brexit negotiator Michel Barnier to London to reopen talks once he is in power.
Asked by Sky News how he could seal a new deal when the EU has said it will not reopen the withdrawal agreement, Johnson said "it's possibly the case that they would say that at this particular stage in the negotiations ... Let's see".
Talking up his plans for the future, the former foreign secretary echoed Ronald Reagan in quoting the 14th century scholar Ibn Khaldun's belief that cutting taxes would spur economic growth and said businesses would be supported under his leadership.
The former London mayor has been heavily criticised for a reported dismissal last year of companies' concerns about Brexit with the comment "fuck business".
He said on Sunday that and several other comments that have drawn attention had been taken out of context.
Keeping up the pressure on both candidates was Nigel Farage, who told a rally of his Brexit Party in Birmingham that neither man could be trusted, and he would not be put back in his box.
The Brexit Party, launched only in April, swept to victory in the United Kingdom's European Parliament election in May, riding a wave of anger over May's failure to deliver Brexit.
(Reporting by Kate Holton; Editing by Guy Faulconbridge, Catherine Evans and David Evans)
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At €19.45, Is It Time To Put Fabasoft AG (ETR:FAA) On Your Watch List?
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Fabasoft AG (ETR:FAA), which is in the software business, and is based in Austria, led the XTRA gainers with a relatively large price hike in the past couple of weeks. 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 take a look at Fabasoft’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Fabasoft
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Fabasoft’s ratio of 35.43x is trading slightly above its industry peers’ ratio of 33.93x, which means if you buy Fabasoft today, you’d be paying a relatively reasonable price for it. And if you believe that Fabasoft should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Fabasoft’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Fabasoft, it is expected to deliver a relatively unexciting earnings growth of 8.7%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
Are you a shareholder?FAA’s 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 financial strength of the company. Have these factors changed since the last time you looked at FAA? Will you have enough conviction to buy should the price fluctuate below the true value?
Are you a potential investor?If you’ve been keeping tabs on FAA, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Fabasoft. You can find everything you need to know about Fabasoft inthe latest infographic research report. If you are no longer interested in Fabasoft, 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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Does Fabasoft AG (ETR:FAA) Have A Particularly Volatile Share Price?
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If you own shares in Fabasoft AG (ETR:FAA) 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. The first category is company specific volatility. This can be dealt with by limiting your exposure to any particular stock. The second sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.
Some stocks are more sensitive to general market forces than others. Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). While we should keep in mind that Warren Buffett has cautioned that 'Volatility is far from synonymous with risk', beta is still a useful factor to consider. To make good use of it you must first know that the beta of the overall market is one. Any stock with a beta of greater than one is considered more volatile than the market, while those with a beta below one are either less volatile or poorly correlated with the market.
See our latest analysis for Fabasoft
Zooming in on Fabasoft, we see it has a five year beta of 1.37. 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 Fabasoft 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 Fabasoft is growing earnings and revenue. You can take a look for yourself, below.
With a market capitalisation of €209m, Fabasoft is a very small company by global standards. It is quite likely to be unknown to most investors. Relatively few investors can influence the price of a smaller company, compared to a large company. This could explain the high beta value, in this case.
Since Fabasoft tends to moves up when the market is going up, and down when it's going down, potential investors may wish to reflect on the overall market, when considering the stock. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Fabasoft’s financial health and performance track record. I urge you to continue your research by taking a look at the following:
1. Future Outlook: What are well-informed industry analysts predicting for FAA’s future growth? Take a look at ourfree research report of analyst consensusfor FAA’s outlook.
2. Past Track Record: Has FAA 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 FAA's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how FAA measures up against other companies on valuation. You could start with thisfree list of prospective options.
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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How Financially Strong Is Carnival plc (LON:CCL)?
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There are a number of reasons that attract investors towards large-cap companies such as Carnival plc (LON:CCL), with a market cap of UK£24b. Market participants who are conscious of risk tend to search for large firms, attracted by the prospect of varied revenue sources and strong returns on capital. However, the key to their continued success lies in its financial health. Today we will look at Carnival’s financial liquidity and debt levels, which are strong indicators for whether the company can weather economic downturns or fund strategic acquisitions for future growth. Note that this information is centred entirely on financial health and is a high-level overview, so I encourage you to look furtherinto CCL here.
Check out our latest analysis for Carnival
CCL has built up its total debt levels in the last twelve months, from US$9.9b to US$11b , which includes long-term debt. With this increase in debt, CCL currently has US$1.2b remaining in cash and short-term investments , ready to be used for running the business. Additionally, CCL has produced US$5.6b in operating cash flow in the last twelve months, resulting in an operating cash to total debt ratio of 50%, meaning that CCL’s operating cash is sufficient to cover its debt.
Looking at CCL’s US$10b in current liabilities, the company arguably has a rather low level of current assets relative its obligations, with the current ratio last standing at 0.27x. The current ratio is calculated by dividing current assets by current liabilities.
With a debt-to-equity ratio of 46%, CCL can be considered as an above-average leveraged company. This is common amongst large-cap companies because debt can often be a less expensive alternative to equity due to tax deductibility of interest payments. Consequently, larger-cap organisations tend to enjoy lower cost of capital as a result of easily attained financing, providing an advantage over smaller companies. We can check to see whether CCL is able to meet its debt obligations by looking at the net interest coverage ratio. As a rule of thumb, a company should have earnings before interest and tax (EBIT) of at least three times the size of net interest. In CCL's case, the ratio of 17.66x suggests that interest is comfortably covered. It is considered a responsible and reassuring practice to maintain high interest coverage, which makes CCL and other large-cap investments thought to be safe.
Although CCL’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet debt obligations which means its debt is being efficiently utilised. Though its low liquidity raises concerns over whether current asset management practices are properly implemented for the large-cap. This is only a rough assessment of financial health, and I'm sure CCL has company-specific issues impacting its capital structure decisions. I recommend you continue to research Carnival to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for CCL’s future growth? Take a look at ourfree research report of analyst consensusfor CCL’s outlook.
2. Valuation: What is CCL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? Theintrinsic value infographic in our free research reporthelps visualize whether CCL is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Is Applus Services, S.A. (BME:APPS) Potentially Undervalued?
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Applus Services, S.A. (BME:APPS), which is in the professional services business, and is based in Spain, saw a decent share price growth in the teens level on the BME over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Applus Services’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Applus Services
Great news for investors – Applus Services is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €19.8, but it is currently trading at €11.95 on the share market, meaning that there is still an opportunity to buy now. However, given that Applus Services’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
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. Applus Services’s earnings over the next few years are expected to increase by 89%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
Are you a shareholder?Since APPS is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor?If you’ve been keeping an eye on APPS for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy APPS. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Applus Services. You can find everything you need to know about Applus Services inthe latest infographic research report. If you are no longer interested in Applus Services, 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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Do Macfarlane Group's (LON:MACF) Earnings Warrant Your Attention?
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For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. And in their study titledWho Falls Prey to the Wolf of Wall Street?'Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.
In contrast to all that, I prefer to spend time on companies likeMacfarlane Group(LON:MACF), which has not only revenues, but also profits. While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
See our latest analysis for Macfarlane Group
As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years Macfarlane Group grew its EPS by 8.2% per year. That's a pretty good rate, if the company can sustain it.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. Macfarlane Group maintained stable EBIT margins over the last year, all while growing revenue 11% to UK£217m. That's progress.
In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.
Macfarlane Group isn't a huge company, given its market capitalization of UK£151m. That makes it extra important to check on itsbalance sheet strength.
I always like to check up on CEO compensation, because I think that reasonable pay levels, around or below the median, can be a sign that shareholder interests are well considered. For companies with market capitalizations between UK£79m and UK£315m, like Macfarlane Group, the median CEO pay is around UK£543k.
The Macfarlane Group CEO received UK£440k in compensation for the year ending December 2018. That seems pretty reasonable, especially given its below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.
One important encouraging feature of Macfarlane Group is that it is growing profits. On top of that, my faith in the board of directors is strengthened by the fact of the reasonable CEO pay. So all in all I think it's worth at least considering for your watchlist. Now, you could try to make up your mind on Macfarlane Group by focusing on just these factors,oryou couldalsoconsider how its price-to-earnings ratio compares to other companies in its industry.
You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here isa list of companies with insider buying in the last three months.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Pets can have allergies too and this test can tell you what they are
TL;DR: Grab this pet allergy test for $69 from the Mashable Shop. You may find your pet's sneezes, scratching, and occasional face rubbing charming, but those "cute" snuffles may be indicative of severe health issues. Before you "ooh" and "aah" at the sight of your pet stifling a sneeze, you ought to find out whether or not poor little Fido is suffering from an uncomfortable condition. Instead of heading straight to the vet, though, you can save on ridiculous fees by conducting an at-home test yourself. The Allergy Test My Pet Kit was specifically developed as a wallet-friendly and easy-to-use pet sensitivity test to help you identify factors that might be adversely affecting your pet's overall wellbeing. For a limited time, you can pick one up for 30% off . Here's how it works: simply swab the cheeks of your pet (similar to the process of taking a DNA sample ) and send it over to the lab for analysis. At My Pet will then test their spittle and report for over 100 items that may be impacting your pup. From their unique intolerances and sensitivities to the common household and environmental factors that can be detrimental to their health, the comprehensive report will help you get to the bottom of your dog's overall health. You'll get to know which foods you should and shouldn't be including in their diet, allergens to be wary of, and a whole lot more. The entire process is fast and painless, and doing so might just win you pet parent of the year. The kit retails for $99, but you can get the Allergy Test My Pet Kit on sale for $69 , a savings of 30%. Pets can have allergies too and this test can tell you what they are Allergy Test My Pet Kit — $69 See Details
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Deutsche Bank in wealth management hiring spree
By Sinead Cruise and Simon Jessop
LONDON (Reuters) - Deutsche Bank plans to hire 300 more relationship and investment mangers for its wealth management business by 2021, as part of a plan to bulk up in areas the German lender hopes will bring steadier revenue streams.
Deutsche Bank is in the middle of a major restructuring as it tries to shrink its investment bank that has struggled to generate sustainable profits since the 2008 financial crisis. The shake up is expected to lead to thousands of job cuts in areas like equities trading.
Chief executive Christian Sewing wants instead to allocate more resources to businesses that have more stable revenue streams, with wealth management one of them.
"This drive to grow our business is now materialising with a big investment push," Fabrizio Campelli, global head of Deutsche Bank Wealth Management told Reuters in an interview.
Under Campelli's plan the number of relationship and investment managers will grow by 300 - around a third of the current numbers - globally. They will be spread across its America, Europe and Emerging Markets regions.
"We need to increase significantly our client footprint, which means the net increase of client facing individuals needs to be material," he said.
Wealth management is attractive to banks as it requires less capital and its earnings tend to be less cyclical.
But it is also highly competitive. Swiss banks UBS and Credit Suisse are already big players, with wealth management at the heart of their business models, while upstart fintech companies are also trying to make inroads.
"The space is very crowded and the market is one that many banks have sought to make a mark on," said Campelli, who has run the business at Deutsche since October 2015.
"We looked at trends we believe Deutsche Bank wealth management can be particularly relevant in and within those areas we are making some very targeted investments".
Campelli said trends they are particularly focused on include the growth in entrepreneurial - as opposed to family - wealth, the increasing number of family offices, and the rise of millennial high net worth individuals, who tend to manage their wealth differently from previous generations.
He declined to say how big the overall investment would be to fund this growth, beyond "several hundred million" euros.
TOP 10 AMBITIONS
Deutsche's wealth business had 213 billion euros ($242.35 billion) in assets under management (AUM) in the first quarter of the year, up by 14 billion euros from the end of 2018.
It currently trails its major Swiss and U.S rivals in private banking league tables, tending to sit outside the top ten.
Campelli, an Italian who has been at Deutsche since 2004, would not disclose the bank's long term AUM target but said "if we can't improve from just outside of the top 10 position, I will be very disappointed."
The business generated 427 million euros in revenue in the first quarter, around 17 percent of the 2.5 billion euro total brought in by the private and commercial banking division, where the wealth management business sits.
The first wave of the hiring has started, with new recruits including Michael Rogers, who joined as the new head of the U.S. West Coast business from Merrill Lynch and Marco Pagliara moving from Goldman Sachs to be head of Northern and Eastern European wealth management.
When asked if Deutsche's wider problems at its investment bank were hindering its plans to attract talent, Campelli said: "We're paying them market rate, there is no need to pay a premium." He added that the negative news around Deutsche gives their plans to build-up a more stable business more credibility.
"We need a business model which is stable and based on reliable macro trends and not so reliant on cyclical trends," he added.
($1 = 0.8789 euros)
(Additional reporting and writing by Rachel Armstrong. Editing by Jane Merriman)
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What Does Eddie Stobart Logistics plc's (LON:ESL) P/E Ratio Tell You?
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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 Eddie Stobart Logistics plc's (LON:ESL) P/E ratio to inform your assessment of the investment opportunity.What is Eddie Stobart Logistics's P/E ratio?Well, based on the last twelve months it is 16.94. That means that at current prices, buyers pay £16.94 for every £1 in trailing yearly profits.
View our latest analysis for Eddie Stobart Logistics
Theformula for P/Eis:
Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)
Or for Eddie Stobart Logistics:
P/E of 16.94 = £0.75 ÷ £0.044 (Based on the trailing twelve months to November 2018.)
A higher P/E ratio means that investors are payinga higher pricefor each £1 of company earnings. That is not a good or a bad thingper se, but a high P/E does imply buyers are optimistic about the future.
Probably the most important factor in determining what P/E a company trades on is the earnings growth. If earnings are growing quickly, then the 'E' in the equation will increase faster than it would otherwise. And in that case, the P/E ratio itself will drop rather quickly. So while a stock may look expensive based on past earnings, it could be cheap based on future earnings.
Eddie Stobart Logistics's 265% EPS improvement over the last year was like bamboo growth after rain; rapid and impressive. Even better, EPS is up 40% per year over three years. So you might say it really deserves to have an above-average P/E ratio.
We can get an indication of market expectations by looking at the P/E ratio. As you can see below, Eddie Stobart Logistics has a higher P/E than the average company (9.1) in the transportation industry.
That means that the market expects Eddie Stobart Logistics will outperform other companies in its industry. Shareholders are clearly optimistic, but the future is always uncertain. So investors should delve deeper. I like to checkif company insiders have been buying or selling.
The 'Price' in P/E reflects the market capitalization of the company. 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).
Spending on growth might be good or bad a few years later, but the point is that the P/E ratio does not account for the option (or lack thereof).
Net debt totals 56% of Eddie Stobart Logistics's market cap. If you want to compare its P/E ratio to other companies, you should absolutely keep in mind it has significant borrowings.
Eddie Stobart Logistics's P/E is 16.9 which is about average (16.4) in the GB market. The significant levels of debt do detract somewhat from the strong earnings growth. The P/E suggests the market isn't confident that growth will be sustained, though.
When the market is wrong about a stock, it gives savvy investors an opportunity. As value investor Benjamin Graham famously said, 'In the short run, the market is a voting machine but in the long run, it is a weighing machine.' So thisfreevisual report on analyst forecastscould hold the key to an excellent investment decision.
Of courseyou might be able to find a better stock than Eddie Stobart Logistics. So you may wish to see thisfreecollection of other companies that have grown earnings strongly.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Litecoin Price Jumps 13 Percent as Breakout Bitcoin Slows Down
Litecoin price(LTC) wastradingat $134.47 by 09:30 UTC on Sunday, up 13.03 percent on a 24-hour adjusted timeframe.
The move uphill pushed Litecoin’s market capitalization to approx $8.18 billion, or 2.36 percent of the net cryptocurrency market valuation. At its top, Litecoin’s market worth was $19.9 billion.
Litecoin is trading in a range defined by $146 and $110 on Coinbase exchange in the last 24 hours. Earlier last week, the cryptocurrency established a cycle low of $109.09 upon finishing a 5-day losing streak of up to 25.58 percent.
The latest upside push negated about 19 percent of those losses, accompanied by a decent reported volume of $5.058 billion across all the cryptocurrency exchanges. At the same time, the “Real 10” Volume, which reportedly removes fraudulent trading activities from the equation, showed $359.989 million worth of Litecoin-enabled trades.
The Litecoin price surge came at the time when bitcoin’s uptrend was hinting to catch a breath. The leading cryptocurrency, which established a fresh yearly high of $13,868 on Wednesday last week, was also the one to experience a deep plunge later. As of June 27, 20:00 UTC, the bitcoin-to-dollar exchange rate was trading at $10,300.
A decent upside correction took the pair as high as $12,444.77 on Friday, but bitcoin failed to hold the gains over the weekend. At the press time, the cryptocurrency was trading 4.17 percent down from its Saturday top of $12,379.99. That had a visible impact on the pricing of Litecoin. The altcoin’s rate against bitcoin, in the past 24 hours, was 12.16 percent higher.
Read the full story on CCN.com.
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Despite Its High P/E Ratio, Is Eddie Stobart Logistics plc (LON:ESL) 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 look at Eddie Stobart Logistics plc's (LON:ESL) P/E ratio and reflect on what it tells us about the company's share price. Looking at earnings over the last twelve months,Eddie Stobart Logistics has a P/E ratio of 16.94. That is equivalent to an earnings yield of about 5.9%.
View our latest analysis for Eddie Stobart Logistics
Theformula for P/Eis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Eddie Stobart Logistics:
P/E of 16.94 = £0.75 ÷ £0.044 (Based on the trailing twelve months to November 2018.)
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.'
P/E ratios primarily reflect market expectations around earnings growth rates. If earnings are growing quickly, then the 'E' in the equation will increase faster than it would otherwise. And in that case, the P/E ratio itself will drop rather quickly. And as that P/E ratio drops, the company will look cheap, unless its share price increases.
In the last year, Eddie Stobart Logistics grew EPS like Taylor Swift grew her fan base back in 2010; the 265% gain was both fast and well deserved. And earnings per share have improved by 40% annually, over the last three years. So we'd absolutely expect it to have a relatively high P/E ratio.
The P/E ratio indicates whether the market has higher or lower expectations of a company. The image below shows that Eddie Stobart Logistics has a higher P/E than the average (9.1) P/E for companies in the transportation industry.
Its relatively high P/E ratio indicates that Eddie Stobart Logistics shareholders think it will perform better than other companies in its industry classification. Shareholders are clearly optimistic, but the future is always uncertain. So further research is always essential. I often monitordirector buying and selling.
It's important to note that the P/E ratio considers the market capitalization, not the enterprise value. In other words, it does not consider any debt or cash that the company may have on the balance sheet. Hypothetically, a company could reduce its future P/E ratio by spending its cash (or taking on debt) to achieve higher earnings.
Such expenditure might be good or bad, in the long term, but the point here is that the balance sheet is not reflected by this ratio.
Eddie Stobart Logistics has net debt worth 56% of its market capitalization. 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.
Eddie Stobart Logistics's P/E is 16.9 which is about average (16.4) in the GB market. While it does have meaningful debt levels, it has also produced strong earnings growth recently. The P/E suggests the market isn't confident that growth will be sustained, though.
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 thisfreevisual report on analyst forecastscould hold the key to an excellent investment decision.
But note:Eddie Stobart Logistics 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.
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Does Tricorn Group plc's (LON:TCN) P/E Ratio Signal A Buying Opportunity?
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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 look at Tricorn Group plc's (LON:TCN) P/E ratio and reflect on what it tells us about the company's share price.Tricorn Group has a price to earnings ratio of 7.07, based on the last twelve months. In other words, at today's prices, investors are paying £7.07 for every £1 in prior year profit.
View our latest analysis for Tricorn Group
Theformula for P/Eis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Tricorn Group:
P/E of 7.07 = £0.18 ÷ £0.026 (Based on the trailing twelve months to March 2019.)
The higher the P/E ratio, the higher the price tag of a business, relative to its trailing earnings. That isn't necessarily good or bad, but a high P/E implies relatively high expectations of what a company can achieve in the future.
Earnings growth rates have a big influence on P/E ratios. Earnings growth means that in the future the 'E' will be higher. Therefore, even if you pay a high multiple of earnings now, that multiple will become lower in the future. And as that P/E ratio drops, the company will look cheap, unless its share price increases.
Notably, Tricorn Group grew EPS by a whopping 31% in the last year.
We can get an indication of market expectations by looking at the P/E ratio. We can see in the image below that the average P/E (17.9) for companies in the machinery industry is higher than Tricorn Group's P/E.
Tricorn Group's P/E tells us that market participants think it will not fare as well as its peers in the same industry. While current expectations are low, the stock could be undervalued if the situation is better than the market assumes. If you consider the stock interesting, further research is recommended. For example, I often monitordirector buying and selling.
It's important to note that the P/E ratio considers the market capitalization, not the enterprise value. That means it doesn't take debt or cash into account. 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.
Such expenditure might be good or bad, in the long term, but the point here is that the balance sheet is not reflected by this ratio.
Tricorn Group's net debt is 52% of its market cap. If you want to compare its P/E ratio to other companies, you should absolutely keep in mind it has significant borrowings.
Tricorn Group has a P/E of 7.1. That's below the average in the GB market, which is 16.4. The company has a meaningful amount of debt on the balance sheet, but that should not eclipse the solid earnings growth. If the company can continue to grow earnings, then the current P/E may be unjustifiably low.
When the market is wrong about a stock, it gives savvy investors an opportunity. 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 Tricorn Group. 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.
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Fury from Democrats after Donald Trump Jr attacks Kamala Harris over her race
Senator Kamala Harris , one of only two black presidential candidates in a field of two dozen, had a history-making moment on the debate stage on Thursday night when she challenged former vice president Joe Biden over racial issues. But as the reaction to her debate performance poured in, so did the racist attacks on social media, where some accused the California Democrat of not being black enough, and others suggested she was not really American. On Twitter , some commenters suggested Ms Harris was unfairly portraying herself as African American, since she is the daughter of a Jamaican father and an Indian mother. By Saturday, Ms Harris’s campaign spokeswoman had retweeted nearly a dozen comments and articles defending her boss, and Ms Harris’s 2020 Democratic challengers forcefully condemned the attacks on social media. “This stuff is really vile and everyone should speak out against it,” Lily Adams, Ms Harris’s spokeswoman, wrote on Twitter. “The attacks against @KamalaHarris are racist and ugly,” Senator Elizabeth Warren tweeted shortly after. “We all have an obligation to speak out and say so. And it’s within the power and obligation of tech companies to stop these vile lies dead in their tracks.” “@KamalaHarris doesn’t have s*** to prove,” tweeted Senator Cory Booker. Washington Governor Jay Inslee called the attacks “racist and vile”. Minnesota Senator Amy Klobuchar wrote: “These troll-fuelled racist attacks on Senator @KamalaHarris are unacceptable. We are better than this (Russia is not) and stand united against this type of vile behaviour.” Caroline Orr, a behavioural scientist who studies the spread of disinformation online, noted on Twitter a surge of related anti-Harris tweets that posted within minutes of each other during the debate. “Efforts to attack Kamala Harris’ race have been around for a while, but a huge volume of tweets pushing this manufactured narrative appeared tonight right after Kamala pointed out that she was the only Black woman onstage,” Ms Orr wrote, with images of the tweets questioning Harris’ racial credentials. Story continues At Thursday’s debate, Ms Harris told Mr Biden that his past stance against federally-mandating bussing black students to white schools was personally hurtful because she had benefited from that educational opportunity as a little girl. Afterward, some people on social media falsely claimed that Ms Harris couldn’t lay claim to the afflictions of African Americans. President Donald Trump’s son, Donald Trump Jr retweeted, and then deleted, an alt-right commentator named Ali Alexander, stating: “Kamala Harris is implying she is descended from American Black Slaves. She’s not. She comes from Jamaican Slave Owners. That’s fine. She’s not an American Black. Period.” In sharing that message to his millions of followers, Mr Trump Jr tweeted: “Is this true? Wow.” “This is the same type of racist attacks his father used to attack Barack Obama,” Ms Adams told The Washington Post . “It didn’t work then and it won’t work now.” Two of Ms Harris’s Democratic primary opponents reacted to Trump Jr’s comment. Bernie Sanders tweeted: “Donald Trump Jr is a racist too. Shocker.” South Bend, Indiana, Mayor Pete Buttigieg wrote: “The presidential competitive field is stronger because Kamala Harris has been powerfully voicing her Black American experience. Her first-generation story embodies the American dream. It’s long past time to end these racist, birther-style attacks.” Other fringe social media accounts echoed the birtherism conspiracies fuelled by Donald Trump before he was in politics regarding President Barack Obama’s citizenship. Now they are questioning whether Harris was eligible to run for president, calling her an “anchor baby” because she was born in the United States to immigrants. Ms Harris is the daughter of an Indian mother and a Jamaican father. When she’s asked how she identifies herself, Ms Harris will often say, as “an American.” But recently, she’s leaned in more to what it meant to grow up black in the wake of the civil rights movement – she was born in October 1964, just months after the Civil Rights Act had been signed into law. At a recent campaign event sponsored by Planned Parenthood, Ms Harris spoke about growing up and realising that people treated her mother with less respect because of the colour of her skin. “I remember people looking down at my mother, assuming she was somebody’s housekeeper and treating her like she was a substandard person,” Ms Harris said. “She was a housekeeper, she kept our house, and happened to be a breast cancer researcher. There was an assumption that this woman had no power and should be given no power.” “I realise now that I made a decision at a young age,” she said, “that I’m not going to let anybody do that to anybody else.” Washington Post
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Joe Jonas Had a Regal AF Balcony Moment at Wedding to Sophie Turner
Photo credit: AbacaPress / SplashNews.com From Harper's BAZAAR Sophie Turner and Joe Jonas officially tied the knot for a second time in France on June 29, 2019. They originally got married in Las Vegas in May 2019 following the Billboard Awards , but had always been planning a big wedding celebration. Turner and Jonas hosted a big wedding at Le Château de Tourreau , and Jonas had a totally regal balcony moment with his groomsmen. Sophie Turner and Joe Jonas have officially gotten married for a second time, and their wedding ceremony was all kinds of extra. From their jaw-dropping venue in the south of France, to the huge wedding party, Jonas and Turner proved that throwing a second wedding is never a mistake. And while we await a photo of the bride's dress, we should really just take a moment to appreciate Joe Jonas having a Buckingham Palace-esque balcony moment at Le Château de Tourreau with his groomsmen. Posing in formation on the venue's huge balcony , Jonas stood with all eleven of his groomsmen, which is just, like, an extremely casual way to celebrate your recent nuptials. Obviously, his brothers, Nick, Kevin, and Frankie Jonas were in the wedding party : Photo credit: Splash News And a closer look at Jonas's balcony moment shows just how suave Joe looked at his second wedding to Sophie Turner . To stand out from the crowd, Joe wore a black shirt with his black shirt, while his groomsmen all wore traditional white shirts with their tuxedos: Photo credit: Splash News For now though, we'll just have to wait as patiently as we can for our first glimpse at Turner's wedding gown. Photo credit: . ('You Might Also Like',) The Essential British Packing List 30 Facial Moisturizers for Every Budget We Cut Bangs on 16 Different Women With The Help of Celebrity Stylist Justine Marjan
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The Savills (LON:SVS) Share Price Is Up 45% And Shareholders Are Holding On
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One simple way to benefit from the stock market is to buy an index fund. But if you pick the right individual stocks, you could make more than that. Just take a look atSavills plc(LON:SVS), which is up 45%, over three years, soundly beating the market return of 13% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 6.8% in the last year, including dividends.
See our latest analysis for Savills
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During three years of share price growth, Savills achieved compound earnings per share growth of 6.2% per year. This EPS growth is lower than the 13% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It's not unusual to see the market 're-rate' a stock, after a few years of growth.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into Savills's key metrics by checking this interactive graph of Savills'searnings, revenue and cash flow.
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Savills's TSR for the last 3 years was 60%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
It's nice to see that Savills shareholders have received a total shareholder return of 6.8% over the last year. And that does include the dividend. Having said that, the five-year TSR of 11% a year, is even better. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. Most investors take the time to check the data on insider transactions. You canclick here to see if insiders have been buying or selling.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss thisfreelist of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB 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.
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Ethereum Dips Below 299.02 Level, Down 2%
Investing.com - Ethereum fell bellow the $299.02 level on Sunday. Ethereum was trading at 299.02 by 09:52 (13:52 GMT) on the Investing.com Index, down 2.47% on the day. It was the largest one-day percentage loss since June 30.
The move downwards pushed Ethereum's market cap down to $32.32B, or 9.74% of the total cryptocurrency market cap. At its highest, Ethereum's market cap was $135.58B.
Ethereum had traded in a range of $299.02 to $323.21 in the previous twenty-four hours.
Over the past seven days, Ethereum has seen a drop in value, as it lost 2.39%. The volume of Ethereum traded in the twenty-four hours to time of writing was $10.57B or 12.19% of the total volume of all cryptocurrencies. It has traded in a range of $279.8246 to $364.8898 in the past 7 days.
At its current price, Ethereum is still down 78.99% from its all-time high of $1,423.20 set on January 13, 2018.
Bitcoin was last at $11,195.5 on the Investing.com Index, down 7.27% on the day.
XRP was trading at $0.40553 on the Investing.com Index, a loss of 2.43%.
Bitcoin's market cap was last at $204.04B or 61.49% of the total cryptocurrency market cap, while XRP's market cap totaled $17.53B or 5.28% of the total cryptocurrency market value.
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Vietnam, EU sign landmark free trade deal
By Khanh Vu and Phuong Nguyen
Hanoi (Reuters) - The European Union signed a landmark free trade deal with Vietnam on Sunday, the first of its kind with a developing country in Asia, paving the way for tariff reductions on 99% of goods between the trading bloc and Southeast Asian country.
It still needs the approval of the European Parliament, which is not a given as some lawmakers are concerned about Vietnam's human rights record.
The European Union has described the EU-Vietnam Free Trade Agreement (EVFTA) as "the most ambitious free trade deal ever concluded with a developing country".
The two sides announced the deal in a statement.
It was signed in Hanoi between European Union Trade Commissioner Cecilia Malmstrom and Vietnam's Minister of Industry and Trade Tran Tuan Anh, three-and-a-half years after negotiations ended in December 2015.
It will eliminate 99% of tariffs, although some will be cut over a 10-year period and other goods, notably agricultural products, will be limited by quotas.
Vietnam, which has one of the region's fastest-growing economies, backed by robust exports and foreign investment, has already signed about a dozen free trade pacts, including an 11-country deal that will slash tariffs across much of the Asia-Pacific, known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The agreement with the EU is also expected to open up public procurement and services markets, such as for the postal, banking and maritime sectors.
The EU is Vietnam's second-largest export market after the United States, with main exports including garment and footwear products.
In 2018, Vietnam exported $42.5 billion worth of goods and services to the EU, while the value of imports from the region reached $13.8 billion, official data shows.
The Vietnamese government said on Sunday that EVFTA would boost EU exports to Vietnam by 15.28% and those from Vietnam to the EU by 20.0% by 2020.
The agreement will boost Vietnam's gross domestic product by 2.18%-3.25% annually by 2023 and by 4.57%-5.30% annually between 2024-2028, the government said.
On Friday, the EU and South American bloc Mercosur agreed a free-trade treaty following two decades of talks.
In Asia, the EU has trade agreements with South Korea, Japan and Singapore, and it has launched negotiations with Indonesia, Malaysia, the Philippines and Thailand.
The EU-Singapore deal is set to come into force later this year.
(Reporting by Khanh Vu and Phuong Nguyen; Additional reporting by Kham Nguyen and Thinh Nguyen; Editing by James Pearson)
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Dog left locked in car in sweltering heat
Firefighters rescue dog from car on hottest day of the year (Pictures: Facebook/Saffron Walden Fire Station) ‘Dogs die in hot cars’ is a regular warning in the summer. But it appeared to have gone unheeded in one car park, where firefighters had to rescue a dog that had been left locked in a car on one of the hottest days of the year. The fire brigade was called after a member of the public spotted cockerpoo Bertie locked in the car on the top floor of a mutli-storey car park on Friday. They tried to find the owner through an announcement over the tannoy at the nearby shopping centre in Saffron Walden, Essex, but when they got no response they broke a window to get him to safety. The fire service said they think the the Cockerpoo, called Bertie, had been left in the car for more than an hour. Firefighters rescue dog from car on hottest day of the year Sharing pictures of Bertie and the car on the Saffron Walden Fire Station Facebook page, they wrote: “Today we rescued a Cokerpoo Dog called Bertie from the top deck of Waitrose multi story park car in SW by breaking a window to release him. “The dog was in distress due to the intense heat within a parked car in direct sunlight with no open windows. “Please always keep your pets welfare and safety in mind particularly during this hot spell.” READ MORE Trump becomes first sitting US president to enter North Korea It comes just a week after a toddler was rescued from another car park in the area after being left alone for more than an hour in scorching temperatures. The Facebook post added: “With the recent high profile incident in Saffron Walden we are surprised the message is still not getting through when it comes to leaving children and pets in hot vehicles. “Thankfully Bertie survived to tell the tale! We thank Waitrose staff for their support with trying to help locate the owner and for providing much needed water for Bertie. The incident has been reported to Essex Police.” The incident comes a week after firefighters had to rescue a toddler from a car (Picture: SWNS) Essex County Fire and Rescue Service said firefighters were called to a multi-storey car park on Friday after a member of the public noticed a dog had been locked in a car and left unattended. Story continues “On arrival crews confirmed the animal was alone and distressed in the vehicle, in direct sunlight on the top floor of the car park, with no windows open or ventilation,” a statement said. “Firefighters initially attempted to locate the owner using a nearby shopping tannoy system, but after receiving no response instead worked to rescue the animal. “The dog was released by 12.24pm. We believe it had been left in the car for more than an hour.” In the previous incident, an 18-month-old boy was left inside a 4x4 in a car park in Saffron Walden when temperatures reached up to 25C. A passerby at a nearby fun day heard the boy screaming from inside the locked vehicle and raised the alarm. Watch the latest videos from Yahoo UK
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Ready for a Baby? 5 Financial Milestones to Hit First
Expanding your family is a big decision -- and it has financial implications. Find out here how to make sure you're ready.
Image source: Getty Images
Adding a new person to your family will fundamentally change every aspect of your life -- including your finances. Babies can be extremely expensive, especially during the first years of their lives when you’re buying diapers and paying for daycare.
While no one is ever really 100% ready to take on this big responsibility, it can be helpful to have some of your ducks in a row when it comes to your money. Before baby arrives, here are five financial milestones you should aim to achieve.
Seeing the doctor will become a regular part of your life during pregnancy. Moms-to-be typically have visits every few weeks starting after 12 weeks gestation to monitor the baby’s growth and development. Today, many families also opt for prenatal testing to identify genetic problems or chromosomal abnormalities. These tests can cost more than $1,000 each but they’re important so you can find out early in pregnancy if your baby has serious health issues.
Delivery can also be very expensive, especially if there are complications that necessitate a longer hospital stay. You’ll want your new bundle of joy to be covered from birth so any health issues can be addressed immediately.
Without insurance, you can expect to incur many thousands of dollars in out-of-pocket costs. But if you have good insurance, your prenatal care and delivery should be covered and you can add your new baby to your policy as soon as he or she is born. Many insurance policies pay for prenatal care at 100%, which means you won’t incur any out-of-pocket costs until your hospital delivery.
The good news is Obamacare made maternity coverage an essential benefit. So if you get your insurance through your employer or on the Obamacare exchanges, your pregnancy costs should be at least partially covered by your insurance provider.
Emergencies happen to everyone, but adding a new baby increases the chances that unexpected expenses will occur. Whether it’s a trip to the doctor for a fever or baby gear you didn’t realize you’d need to buy, you need to be prepared for these surprise costs. You also have an extra mouth to feed -- and other ongoing expenses such as diapers -- that will have to be funded if something happens to reduce your income.
Having an emergency fund with three to six months of living expenses ensures you can still provide for your bundle of joy after a job loss -- and that you’re prepared for any surprise expenses that come up before or after birth. If you can’t quite hit this milestone before your child enters the world, you should at least have a few thousand dollars set aside. After all, the last thing you need to deal with when trying to cover all your new baby costs is big debt bills if you end up having to charge an emergency on your credit cards.
In most cases, mom or dad will want to take several weeks off after the baby is born to stay home and provide care. Mom may also need some time off to recover from childbirth. While some employers offer paid maternity or paternity leave -- which could last anywhere from a few weeks to a few months -- many others provide no paid leave at all.
Depending on the state where you live and the size of your employer, you may be covered by the Family and Medical Leave Act (FMLA) or your state’s version of it. FMLA applies to larger employers and requires that you be allowed to take up to 12 weeks of unpaid leave without your job being in jeopardy.
Still, if your leave is unpaid, you need to be prepared to survive on one income -- or no income if you’re a single parent household. This could mean having substantial savings to make sure you can cover your bills during the time when one or both parents is home providing care to your newborn family member.
Because babies come with expenses, you need to find wiggle room in your budget to pay for all the new costs you’ll incur. One way to find some wiggle room is to make sure your high-interest debt is paid off. Freeing yourself of credit card debt, payday loans, car title loans, personal loans, and medical loans also gives you more flexibility in case one parent decides not to go back to work right away after the baby is born.
You can use techniques such as thedebt snowball or debt avalanche methodsto focus on debt payoff. Debts such asmortgageandstudent loan debttypically shouldn’t be included in your payoff plan because these low-interest loans can come with tax breaks and the interest rates can be lower than what you’d earn if you invested. But high-interest debt such ascredit cardscan be difficult to pay down if you make only minimum payments -- and you don’t want to be saddled with all these financial obligations when you’re trying to provide for a child.
If both parents will return to work before a child is school-aged, you’ll need to figure out how you’re going to pay for daycare. In most cases, if you opt for a licensed daycare center or you hire a nanny, daycare will cost thousands of dollars per month -- especially if you have more than one child.
You don’t want to skimp on the quality of your child’s care, so make sure you can afford childcare on what you and your partner make. If daycare eats up your entire salary, one parent may decide to stay home -- but make sure you can survive as a one-income household if that could be part of your plan.
By accomplishing these financial goals before having a baby, you can enjoy your time with your son or daughter without worrying about how you’ll pay the bills each month. You’ll already have enough keeping you up at night with a newborn -- you don’t want to lie awake worrying about your money on those few occasions when your baby lets you sleep.
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.
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Chin-chin: Justin Sun reveals Warren Buffett lunch details
As were sure youre aware, Justin Sun has a lunch date with Warren Buffett . Somewhat unsurprisingly, Sun is milking the auction prize for all its worth, announcing on Twitter that hes selected San Franciscos Quince, a three-Michelin starred restaurant in the historic Jackson Square, for the 25th July, $4.5 million meal. I'm pleased to announce that this years eBay #PowerOfOneLunch with @WarrenBuffett will be held July 25 at @quincesf , a three-Michelin starred restaurant in San Francisco's historic Jackson Square. #TRON #TRX https://t.co/XZCt3lY8oI Justin Sun (@justinsuntron) June 27, 2019 My team looked at many restaurants in the city, on the hunt for an intimate and amazing setting for me and up to seven guests (including Litecoin creator Charlie Lee) to have both a great conversation and great food with Buffett. I ultimately chose Quince because its food represents the traditional and the upstart much like the participants in the lunch itself, Sun says in a blog post. Noting that some in the crypto community have asked what he hopes to accomplish during the lunch, he states: I hope it takes a step, however large or small, to bridge the divide between the blockchain industry and traditional investors. Im looking forward to discussing Buffetts investment strategies, and Im looking to hear what great things other guests are planning to move the industry forward. Story continues For the Tron and BitTorrent community, Ill talk to Buffett and other attendees about how were integrating blockchain into BitTorrent, with its 100 million monthly active users and what were doing to expand and nurture the Tron blockchain. Lastly, Im looking forward to a great meal, he adds. A press conference, meanwhile, will give an update on what we spoke about and end with a cool party to celebrate the one-year anniversary of Trons independence and my purchase of BitTorrent. The post Chin-chin: Justin Sun reveals Warren Buffett lunch details appeared first on Coin Rivet .
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Monero and Zcash Conferences Showcase Their Differences (And Links)
Last weekend, two privacy coin conferences heralded the future of cryptocurrency governance: the hybrid startup model versus grassroots experimentation.
Over 200 people gathered in Croatia for Zcon1, organized by the nonprofit Zcash Foundation, while roughly 75 attendees gathered in Denver for the first Monero Konferenco. These two privacy coins are fundamentally different in a variety of ways – which was clearly on display at their respective events.
Zcon1 had a gala dinner with a seaside backdrop and programming that displayed close relations between companies likeFacebookand the zcash-centric startup Electronic Coin Company (ECC), as evidenced by Libra being widely discussed with team members inattendance.
Related:BIS Chief: Central Banks May Issue Digital Currencies ‘Sooner Than We Think’
The quintessential funding source that distinguishes zcash, called thefounder’s reward,became the center of passionate debates during Zcon1.
This funding source is the crux of the distinction between zcash and projects like monero or bitcoin.
Zcash was designed to automatically siphon off a portion of miners’ profits for creators, including ECC CEO Zooko Wilcox. So far, this funding has been donated to create the independent Zcash Foundation, and support ECC contributions to protocol development, marketing campaigns,exchange listingsandcorporate partnerships.
This automated distribution was scheduled to end in 2020, but Wilcox said last Sunday he would support a “community” decision to extend that funding source. He warned that otherwise ECC might be forced to seek revenue by focusing on other projects and services.
Related:Bitcoin, Facebook and the End of 20th Century Money
Zcash Foundation Director Josh Cincinnati told CoinDesk the non-profit has enough runway to continue operations for at least another three years. However, in aforum post, Cincinnati also warned the non-profit shouldn’t become a single gateway for funding distribution.
The amount of trust zcash users place in the asset’s founders and their various organizations is the primary criticism levied against zcash. Paul Shapiro, CEO of the crypto wallet startup MyMonero, told CoinDesk he’s not convinced that zcash upholds the same cypherpunk ideals as monero.
“Basically you have collective decisions instead of individual, autonomous participation,” Shapiro said. “There’s been perhaps not enough discussion about the potential conflicts of interest in the [zcash] governance model.”
While the simultaneous monero conference was much smaller and slightly more focused on code than governance, there was significant overlap. On Sunday, both conferences hosted a joint panel via webcam where speakers and moderators discussed the future of government surveillance and privacy tech.
The future of privacy coins may rely on such cross-pollination, but only if these disparate groups can learn to work together.
One of the speakers from the joint panel, Monero Research Lab contributor Sarang Noether, told CoinDesk he doesn’t see privacy coin development as a “zero-sum game.”
Indeed, the Zcash Foundation donated almost 20 percent of the funding for the Monero Konferenco. This donation, and the joint privacy-tech panel, could be seen as a harbinger of cooperation between these seemingly rival projects.
Cincinnati told CoinDesk he hopes to see much more collaborative programming, research and mutual funding in the future.
“In my view, there is a lot more about what connects these communities than what divides us,” Cincinnati said.
Both projects want to use cryptographic techniques for zero-knowledge proofs, in particular, a variant called zk-SNARKs. However, as with any open-source project, there are always trade-offs.
Monero relies onring signatures, which mix small groups of transactions to help obfuscate individuals. This isn’t ideal because the best way to get lost in a crowd is for the crowd to be much bigger than ring signatures can offer.
Meanwhile, the zcash setup gave the founders data often called “toxic waste,” because the founding participants could theoretically exploit thesoftwarethat determines what makes a zcash transaction valid. Peter Todd, an independent blockchain consultant who helped establish this system, has since been an adamantcriticof this model.
In short, zcash fans prefer the hybrid startup model for these experiments and monero fans prefer a completely grassroots model as they tinker with ring signatures and research trustless zk-SNARK replacements.
“Monero researchers and the Zcash Foundation have a good working relationship. As for how the foundation began and where they’re going, I can’t really speak to that,” Noether said. “One of the written or unwritten rules of monero is you shouldn’t have to trust someone.”
Shapiro added:
“If certain people are dictating large aspects of the direction of the cryptocurrency project then it raises the question: What is the difference between that and fiat money?”
Stepping back, the long-standing beef between monero and zcash fans is the Biggie vs. Tupac divide of the cryptocurrency world.
For example, former ECC consultant Andrew Miller, and current president of the Zcash Foundation, co-authored apaper in 2017about a vulnerability in monero’s anonymity system. SubsequentTwitter feudsrevealed monero fans, like entrepreneur Riccardo “Fluffypony” Spagni, were upset by how the publication was handled.
Spagni, Noether and Shapiro all told CoinDesk there are ample opportunities for cooperative research. Yet so far most mutually beneficial work is conducted independently, in part because the source of funding remains a point of contention.
Wilcox told CoinDesk the zcash ecosystem will continue to move toward “more decentralization, but not too far and not too fast.” After all, this hybrid structure enabled funding for fast growth compared to other blockchains, including the incumbent monero.
“I believe something not too centralized and not too decentralized is what’s best for now,” Wilcox said. “Things like education, promoting adoption worldwide, talking with regulators, that’s the stuff that I think a certain amount of centralization and decentralization are both right.”
Some fans of both projects see the benefits of that collective approach.
Zaki Manian, head of research at the Cosmos-centric startup Tendermint, told CoinDesk this model has more in common with bitcoin than some critics care to admit.
“I am a big proponent of chain sovereignty, and a big point of chain sovereignty is that the stakeholders in the chain should be able to act collectively in their own interests,” Manian said.
For example, Manian pointed out the wealthy benefactors behindChaincode Labsfund a significant portion of the work that goes into Bitcoin Core. He added:
“Ultimately, I would prefer if protocol evolution was mostly funded by the consent of token holders rather than by investors.”
Researchers on all sides acknowledged their favorite crypto would require significant updates in order to deserve the title “privacy coin.” Perhaps the joint conference panel, and Zcash Foundation grants for independent research, could inspire such cooperation across party lines.
“They’re all moving in the same direction,” Wilcox said about zk-SNARKs. “We’re both trying to find something that has both the larger privacy set and no toxic waste.”
Zcash image via Shutterstock
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3 Hard to Believe -- but 100% True -- Facts About Social Security
According to Democratic presidential candidate Bernie Sanders, "Social Security is the most successful government program in our nation's history." No matter your political preference, there's no denying Sanders' statement.
Since payouts began in 1940, Social Security has been providing a financial foundation for tens of millions of Americans, many of whom are retired workers. As of today, according to an analysis from the Center on Budget Policy and Priorities, it's a program that singlehandedly keepsmore than 22 million people out of poverty, including 15.3 million retired workers.
Aside from being a financial lifeline, it's also a highly misunderstood program, with a number of myths and misconceptions taking on a life of their own, especially following the advent of social media. Below, you'll find three facts about Social Security that you might find hard to believe, but I can assure you are 100% true.
Image source: Getty Images.
Chances are that you've heard the Social Security program is in some pretty big trouble and facing a large cash shortfall over the next 75 years. The latest Social Security Board of Trustees report, released in April, pointed to a $13.9 trillion cash shortfall between 2035 and 2093 that, if not resolved with added revenue, lower expenditures, or some combination of the two, could lead to anup to 23% reduction in benefits for retired workersbeginning in 2035.
The big sticking point of the Trustees report is the projected depletion of the program's asset reserves -- i.e., the net-cash surpluses that the program has saved up since its inception. Beginning in 2020, Social Security will expend more than it collects, thereby shrinking its $2.9 trillion in asset reserves. There's a widely held belief that once this excess capital is gone, Social Security is going to go bankrupt. In other words: Sorry, millennials, no soup for you!
But this couldn't be further from the truth. The Social Security program is designed in such a way thatit can never go bankrupt. And that's not exaggeration -- I literally meannever. With the exception of Congress altering how the program is funded, there's absolutely zero chance of the program going belly up as it's designed now.
The reason it can't go bankrupt is because Social Security has two built-in sources of recurring revenue: the 12.4% payroll tax on earned income (wages and salary, but not investment income)up to $132,900 in 2019, and the taxation of Social Security benefits for certain income thresholds. Pretty much as long as the American public keeps working, revenue will keep flowing into the Social Security program that can then be disbursed to eligible beneficiaries.
What is possible, though, are future cuts to benefits, as noted in the latest Trustees report. If the revenue collected over time is insufficient to meet the existing payout schedule, then benefit cuts could be passed along to all beneficiaries in order to make ends meet. So, yes, your Social Security payout could shrink in the future, as well as struggle to keep up with inflation. But as long as you've met the requirements to receive a retired worker benefit, there's a 100% chance (again, barring congressional changes to how the program is funded) that you'll receive a payout during retirement.
Image source: Getty Images.
Another common thought with the Social Security program is that it would be in considerably better shape if payments weren't being made to people who never contributed to it. Namely, critics point to illegal immigrants, who they surmise are reaping the rewards of Social Security payouts and further straining the program. But, like the idea of Social Security going bankrupt, this beliefis completely false.
Maybe one of the most important things to know about Social Security is justhow crucial legal immigration is to its success. Most legal immigrants to this country tend to be young, meaning they'll wind up working in the labor force for decades to come, thereby contributing to payroll tax revenue. By the time they retire, it's likely they, too, will have earned more than enough lifetime work credits to receive a Social Security retired worker benefit.
On the other hand, undocumented workersaren't able to receive a Social Security benefit, period. Since undocumented workers have no Social Security number, they have no pathway to accrue lifetime benefits, or be protected by Social Security's survivor benefits or long-term disability benefits. In short, they're not receiving a dime from the program, contrary to popular belief.
What asylum-seekers and other immigrants may have access to is Supplemental Security Income, or SSI. Even though SSI is administered by the Social Security Administration, it's funded by the federal government's General Fund. Traditional Social Security is not. It generates revenue from the payroll tax, the taxation of Social Security benefits, and interest income on its asset reserves. Claiming that undocumented workers are getting SSI is not the same as receiving a traditional Social Security benefit, so make sure not to conflate the two.
As it stands now, illegal immigrants are having absolutely no negative impact on Social Security.
Image source: Getty Images.
If you've ever read the comments section of Social Security article on social media, there's an almost 100% chance you've come across a reader who proclaimed that the program's cash shortfall was fully to blame on Congress, whichraided the Trust Fundto pay for wars and never put any of the money back. These folks firmly believe that if Congress were to repay what they "stole," with interest, the program would be solvent for a long time to come.
Yet what might come as a surprise to many is the fact that Congress hasn't stolen anything from the Social Security's Trust Fund, and, best of all, the programisgenerating interest on Uncle Sam's dime.
By law, Social Security's net-cash surpluses are required to be invested in special-issue government bonds, and to a far lesser extent certificates of indebtedness. These interest-bearing assets have varying maturity dates and interest rates, with the nearly $2.9 trillion in asset reserves today yielding more than 2.8% a year. In layman's terms, the federal government is borrowing (not to be confused with stealing or raiding) Social Security's excess cash, and currently paying the program more than $80 billion in interest each year in return. That works out to more than 8% of Social Security's annual income in 2018.
If you were to go to a bank and buy a one-year certificate of deposit (CD) with $5,000 that you had lying around in a savings account, the bank hasn't stolen or raided your money. It's very likely going to take your $5,000 and loan it out to someone else to make a profit, but your CD is going to earn you interest. In other words, the nature of the asset has changed, but it hasn't decreased in value. The same is true with Social Security's investment holdings. Just because the program has $2.89 trillion in bonds as opposed to cold, hard cash doesn't mean Congress has stolen a dime. Every cent is accounted for.
Worse yet, if Congress were to pay the money back, Social Security would lose out on an estimated$800 billion-plus in interest incomeover the decade.
To sum this point up: Congress hasn't stolen anything and is already paying interest to the program. Paying the money back would be the last thing we should hope Congress does.
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3 Tips for Living Comfortably on Social Security Benefits Alone
For a good chunk of American retirees, Social Security benefits are a major source of income. Roughly half of married beneficiaries rely on Social Security for at least 50% of their income according to the Social Security Administration, and around one in five couples depends on their benefits for more than 90% of their retirement income.
Despite the fact that so many people rely on their benefits to make ends meet, not saving anything on your own and expecting Social Security to cover all your retirement expenses isn't the best idea. The average beneficiary only receives around $1,400 per month, and most people will need to pinch pennies to get by on that amount.
That said, sometimes people have no choice but to make the most of Social Security in retirement because theydon't have much in savingsto fall back on. While it's never too late to start saving, if your savings run dry a few years into retirement, finding ways to live comfortably on Social Security alone may be your best bet. Fortunately, there are a few things you can do to ensure you're living your best life on a tight budget.
Image source: Getty Images
Exactly how much you receive in Social Security benefits depends on when you claim them. The only way you'll receive the full amount you're theoretically entitled to is to claim at yourfull retirement age(FRA), which is 66, 67, or somewhere in between, depending on when you were born. You can claim earlier than your FRA (as early as age 62), but by doing so your benefits will be reduced by up to 30%. On the other side of the coin, if you wait until after your FRA to claim (until age 70), you'll receive extra money on top of the full amount you're entitled to -- up to 32% more, in fact.
Once you start claiming benefits, youcan technically change your mind. But you only have a year to do so, and you have to repay the benefits you've already received. Once your decision has been locked in, you're stuck with your benefit amount for the rest of your life (although yearly cost of living adjustments will affect exactly how much you receive). That means if you claim early and receive smaller checks, you'll receive those smaller checks for life. But if you delay benefits to earn those fatter checks, you'll receive more money every month for the rest of your life.
Those bigger checks can go a long way if Social Security is your only source of income in retirement. Even an extra few hundred dollars per month can be the difference between just getting by and being comfortable.
The fewer debt repayments you have to make each month, the more money you have to spend on fun retirement activities. This is especially important if you're going to be living on Social Security alone, since every dollar counts.
If you can't pay off all your debt before retirement, focus first on the debt with the highest interest rates. The longer it takes to pay off high-interest debt, the more your interest payments will snowball over time. Depending on how much debt you have, you may end up paying thousands of dollars in interest alone. Even if you're making more than the minimum payment every month, if the majority of that money goes toward interest, it could take years to pay off your debt completely.
Once your highest-interest debt has been repaid, then tackle the debt with the next-highest interest rate, and so on until you're debt-free.
If you're struggling topay down debt and save for retirementat the same time, establish your priorities by looking at the type of debt you have and what you're paying in interest. While it's always a good idea to set at least a little money aside for retirement, if you're carrying thousands of dollars in debt and paying, say, 18% in interest per year, putting money in a retirement account earning annual returns of 7% may not do as much good as paying off your debt.
You may dream of spending your retirement traveling across the country or lounging on the beach every day. But if you're going to be living on Social Security benefits, you may need to scale back your expectations.
That's not to say you can't live a perfectly enjoyable retirement on a budget. No matter where your interests lie, there are plenty of free and inexpensive activities to enjoy in retirement. You may not be able to travel the world and splurge on expensive hobbies, but that doesn't mean you have to spend retirement stuck at home in front of the TV. Find a cause you care about and start volunteering at a local non-profit organization, write that novel you always said you never had time for, or grab a few friends and explore your city's parks and museums. There are plenty of ways to enjoy retirement without spending a lot of money if you know where to look.
Spending retirement on a tight budget is a great opportunity to stretch your creative muscles and find ways tocut costs without sacrificing your quality of life. For example, when you want to take the occasional vacation, try traveling during the off season when airline tickets and hotel rooms are cheaper. Or if you've always wanted to learn a new hobby, research online to find some free tutorials and practice your skills at home before you sign up for expensive classes.
While living on Social Security benefits alone isn't ideal, if it's your only option you can still make the most of it. By being creative with your retirement lifestyle and making strategic financial decisions, you can still enjoy a comfortable retirement even on a tight budget.
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Crude Oil Underpinned by Geopolitics, Gold Pressured by Rate Concerns, Natural Gas Bulls Hoping for Heat
Commodity markets performed well last week amid concerns over geopolitical events, the direction of interest rates and potentially hot temperatures. Crude oil was underpinned by rising tensions between the United States and Iran, but gains were capped by worries over future demand due to the U.S.-China trade dispute. Gold finished higher for the week, but comments from Fed members capped the recent rally, encouraging investors to book profits. Natural gas rose after government data came in better than expected, while weather forecasts indicated the possibility of lingering heat.
Recent geopolitical events have helped generate an upside bias in crude oil. After reaching a multi-month low in early June, both U.S. West Texas Intermediate and international-benchmark Brent crude oil futures have gone on a tear. The support has come from both the supply and demand sides of the equation.
On the supply side, prices are being supported by speculators betting that U.S.-Iran relations will boil over into a military conflict. This would likely jam up the tanker shipping route in the Middle East, causing a supply disruption and sharply higher prices. Oil experts surveyed by CNBC do not expect the U.S. to have any meaningful discussions with Iran until at least six months, and more than half see either no direct military confrontations or just minor skirmishes. In the meantime, the story is just enough to sustain an upside bias.
Demand side bulls are also paying close attention to the outcome of the Trump – Xi meeting at the G-20 summit. Renewed trade talks should underpin prices, but bullish traders would really like to see a deal reached to end the trade dispute. This would ease tensions over a global recession and lower demand.
One major concern for traders remains the oversupply caused by rising U.S. shale although stockpiles have fallen more than expected the last two weeks.
Gold started the week strong but ran into a wall of sellers after Fed officials dampened hopes of a 50 basis point rate cut by the central bank in late July. The comments were enough to trigger a rise in Treasury yields which made the U.S. Dollar a more attractive investment. This helped reduce demand for dollar-denominated gold.
Investors were rattled after Powell failed to confirm the expected half-point rate cut. He reiterated his message from a week earlier and talked about the uncertainties facing policymakers.
“The question my colleagues and I are grappling with is whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation,” Powell said in brief remarks ahead of a moderated discussion at the Council on Foreign Relations in New York.
St. Louis Federal Reserve President James Bullard also encouraged bullish gold traders to trim their long positions after he didn’t endorse a half-point rate cut.
“I think 50 basis points would be overdone,” Bullard said on Bloomberg Television.
Natural gas futures posted a strong performance last week, but there were no signs of real buying. The relatively impressive rally was primarily fueled by short-covering due to a surprise in this week’s government storage report and position-squaring because of extremely oversold technical conditions. Speculative buyers were also betting on the return of heat to several key areas.
Bullish traders are hoping for the El Nino weather effect to weaken so that the expected heat during the first week of July will linger in key demand areas. Bearish traders were not impressed by the short-term forecasts. Furthermore, their conviction is also being driven by rising production and weak cash markets.
Thisarticlewas originally posted on FX Empire
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The Truth About NASA's Plan to "Privatize the Space Station"
"NASA, floundering under the weight of its promise to return to the Moon by 2024, has been forced to take on some extra work to pay the bills: playing host to private tourists aboard the International Space Station."
That's howRTrecently described the plan from the National Aeronautics and Space Administration to permitBoeingand SpaceX, the two contractors building spacecraft to transport American astronauts to the International Space Station (ISS), to carry tourists to ISS as well. And if Russia's state propaganda outlet sounds a bit snarky, that's understandable. After all, once Boeing's and SpaceX's spacecraft have been certified to carry astronauts into orbit, NASA won't have to rent rides on Russian rockets anymore --at $82 million a seat.
The truth of the matter, however, is a bit more complicated than RT makes it seem. It also has important implications for investors, so let's dig in.
Image source: Getty Images.
Two weeks ago, NASA made a startling announcement: For the first time ever, it will "open" the International Space Station (ISS) to visits by "private astronauts." Beginning in 2020, the space agency will permit at most two private astronauts per year to visit ISS for up to 30 days at a time.
Importantly, though, at no point in its announcement does NASA actually use the term "tourist." Rather, the agency makes it clear it's opening ISS to use by non-NASA employees conducting "approved commercial and marketing activities" -- especially activities connected to "NASA's mission," furthering the development of "a sustainable low-Earth orbit economy," or "requiring the unique microgravity environment to enable manufacturing, production or development of a commercial application."
In short, NASA is selling anything but a pleasure cruise. We're talking strictly business trips here.
This is not to say that space tourism aboard ISS won't ever happen. In fact, from 2001 to 2009 the private U.S. company "Space Adventures" facilitated visits by seven space tourists (most American) to ISS, using seats purchased on Russian Soyuz spacecraft to get them there at prices ranging from $20 million to $40 million a head. Last year privately held Axiom Space began marketing a similar program, offering a 10-day visit aboard ISS for $55 million. (Axiom eventually hopes to build its own "space hotel," independent of ISS, for this service.)
But this is not what NASA is doing.
Unlike the visits organized by Space Adventures, the private astronaut missions sponsored by NASA will fly aboard U.S.-built spacecraft, most likely SpaceX'sCrew Dragon and Boeing's CST-100 Starliner. And this is where we get into the dollars and cents of the story.
According to RT, the cost of visiting ISS will be "over $50 million." But not all of this money will go to NASA -- in fact, far from it. According to NASA, the ticket togetto ISS on a Boeing or SpaceX rocketship will cost $58 million. But that money will be paid to the operator of the spacecraft. NASA is only planning to charge about $35,000 per day to reimburse it for the cost of maintaining life support, as well as for food, air, and other supplies consumed while on board. All in, NASA will collect only a little more than $1 million per private astronaut, per 30-day visit.
Suffice it to say that's hardly sufficientto pay for a moon program.
So what will NASA's new ISS exploitation program accomplish? Two things. Firstly, because NASA currently envisions only sending up about four astronauts at a time on Crew Dragon (which can seat seven), any "extra" passengers carried along for the ride, and paying separately, should help to defray the cost of each crew transport mission -- lowering NASA's total cost.
Second, and more important, NASA intends this program to gauge commercial interest in sending private astronauts to ISS. Now that this is a possibility, NASA wants to know how many companies might be willing to pay for it -- and how much. This will become increasingly important as the agency decides such crucial questions as:
• How long to keep ISS in service? Key ISS partner Russia has spoken several times about wanting toterminate its involvement in the space station, and if it does so NASA will be keenly interested in figuring out how to keep the station operational past 2024 without Russian's financial contributions.
• Whether to allow private companies such as Axiom andBigelow Aerospaceto attach their own modules to ISS to house private tourists?
• Is there sufficient commercial interest in space to justify authorizing private companies to set uptheir ownspace stations in orbit, separate from ISS? As the agency explains, "a robust low-Earth orbit economy will need multiple commercial destinations, and NASA is partnering with industry to pursue dual paths to that objective that either go through the space station or directly to a free-flying destination."
In short, far from profiting from the privatization of the International Space Station, NASA charging $1 million per "tourist" is really just a way of defraying its costs, while providing private companies the opportunity to do some market research on interest in commercializing Low Earth Orbit.
Far from complaining about the cost, investors should be thanking NASA for advancing the cause of space exploration, and colonization, on the cheap.
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Preserve your ammunition, BIS urges top central banks
By Marc Jones
LONDON (Reuters) - Bank for International Settlements (BIS) chief Agustin Carstens has urged top central banks to preserve their ammunition for more serious economic downturns rather than deplete it chasing higher growth.
Presenting the annual report of the Swiss-based BIS, dubbed the central bank for the world's central banks, Carstens told reporters any easing needed to be considered carefully and done sparingly.
"We would stress that it is important to preserve some room for maneuver for more serious downturns," he said.
That message comes just weeks before the U.S. Federal Reserve is expected to confirm a U-turn in global monetary policy and cut interest rates for first time since the financial crisis a decade ago.
Japan and China have both signaled their readiness to ease further and the European Central Bank, which only halted bond buying in December, indicated this month that it could cut its rates even deeper into negative territory.
While U.S.-China trade tensions have weighed on economic sentiment this year many developed countries had recovered to potential or above potential growth rates, Carstens said. Inflation was mostly not that far from target ranges either.
That raised the question of how forthcoming central banks should be with any additional accommodation.
"Monetary policy should be considered more as a backstop rather than as a spearhead of a strategy to induce higher sustainable growth," Carstens said.
He also warned that sustained use rendered policies like negative rates or quantitative easing less effective. "How much more stimulus will you get if rates are reduced by another 25 basis points? That will produce a lower profile of bang for that buck," Carstens said.
The message to conserve firepower from the BIS is not surprising. Until this year it had been urging top central banks to press on with raising rates or at least move away from crisis-era stimulus programs.
The annual report's primary call was for a better balance to be struck between monetary policy, structural reforms, government fiscal policy and macroprudential measures that encompass regulation of banks and other financial institutions.
Carstens also said the possible short-term gain of lowering borrowing costs had to be balanced against the "potential risks in terms of asset misallocation and asset mispricing and financial stability risks as we move forward".
The sharp change in direction from the Fed and others this year has seen global markets rocket since January.
Last year's big drops in European, Asian and eventually U.S. stocks have been replaced by a near 20 percent leap in the S&P 500 and China's biggest markets, reviving hopes the decade-long global bull-run may not have ended after all.
Global stocks have reflated by roughly $8 trillion, emerging markets have done well even as China's economy has revealed cracks, yet yields on ultra-safe government bonds like U.S. Treasuries and German Bunds have plunged dramatically.
DEPENDENCY AND INDEPENDENCY
Claudio Borio, the head of the BIS Monetary and Economic Department, acknowledged that markets had become dependent on accommodative monetary policy and weaning them off that dependence could cause "withdrawal symptoms".
Following fierce criticism of the Federal Reserve by U.S. President Donald Trump, he also stressed the importance of central bank independence.
"The autonomy of central banks is an important asset and it is an asset that tends to come under threat when it is most needed," he told Reuters.
"Of course these are challenging times politically for central banks but it is clearly not helpful to try to interfere with their decisions."
Another of the annual report's warnings was of a rapid build up of corporate debt via collateralized loan obligations (CLO) and other forms of credit that do not go through the normal regulated banking channels.
It had turned on "some warning lights" Carstens said, having similarities to the steep rise in collateralized debt obligations (CDO) that amplified the U.S. subprime crisis more than a decade ago. The banking sector is now better capitalized, however, he said.
For full report click here : https://www.bis.org/publ/arpdf/ar2019e.htm
(Reporting by Marc Jones; Editing by Catherine Evans)
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Why Investors Are Paying a Premium for Wayfair
The bearish case againstWayfair(NYSE: W)is as straightforward as it is compelling. Simply put, the e-commerce upstart hasn't booked a profit in any of the past five years. Worse yet, rather than inching closer to the black, Wayfair's losses are ballooning. The home furnishings specialist posted a $500 million net loss last year, compared to $244 million of red ink in 2017.
And yet Wayfair has been trouncing the market over the past year, putting its returns ahead of consistently profitable peers likeAmazon(NASDAQ: AMZN)andeBay(NASDAQ: EBAY). Let's take a look at why investors are willing to pay up for this money-losing business today.
Image source: Getty Images.
Wayfair's priority right now is to win market share and build a large base of loyal shoppers. By all indications, it is succeeding. The company added $2 billion of revenue to its annual sales base last year, compared to a $1.3 billion increase in 2017. Revenue has improved at a compound annual rate of over 50% since 2014. In contrast, eBay's sales were up just 6% in 2018, and Amazon's e-commerce segment grew by 20%.
Wayfair's user engagement metrics also suggest the company is building a defensible market niche. Over 16 million users have ordered a product through its network of websites in the past year, compared to fewer than 9 million in early 2017. Those shoppers are spending about $440, on average, throughout the year. Repeat business accounted for over 6 million orders, or roughly two-thirds of all sales.
Wayfair has demonstrated in recent quarters that its business can withstand direct challenges from highly motivated rivals.Overstock(NASDAQ: OSTK)in early 2018 set aside its profitability targets to slash prices and attempt to end Wayfair's market share momentum. The results of that experiment were disastrous -- for Overstock. Its profit margins sank, and sales growth remained negative.
Meanwhile, Wayfair'spricing and growth trends held up, and the company even became more efficient in its market spending. That success shows Wayfair's sales growth has more to do with the improvements it is making to the online shopping experience than to simply offering low prices.
Wayfair has a long runway for growth in the core home furnishings market in the U.S. However, investors are even more excited about its potential to expand into new geographies and ancillary product categories. Germany alone represents an addressable market of $75 billion, part of the $300 billion arena that CEO Niraj Shah and his team are targeting in Europe.
And while eBay is shrinking its focus to deprioritize noncore segments like StubHub and its classified group, Wayfair's reach is expanding. The company's proprietary fulfillment network has already made it quicker and more efficient to ship bulky merchandise like sofas, pool tables, and hot tubs. It has used thatflexible platformto push into other product categories such as bathroom vanities lately, and there are likely dozens of similar moves it can make in the years ahead to incrementally add to its sales base.
Outside of the impressive growth trends, the key reason investors are accepting Wayfair's losses is that they're being driven entirely by management's spending choices. Soaring investment in the selling and fulfillment network, and adding engineers and delivery specialists, have pushed expenses up to almost 14% of sales recently, compared to 9% in 2015.
Wayfair is aiming to get that figure down to between 5% and 7% over the long term, with help from a higher sales base and reduced capital needs following its expansion push. A lot will have to go right for the business over the next few years for it to achieve that ambitious goal, but there's no denying that Wayfair is off to an impressive start.
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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.Demitrios Kalogeropoulosowns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and Wayfair. The Motley Fool recommends eBay. The Motley Fool has adisclosure policy.
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