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RBA cuts interest rates AGAIN, to new record low
The Reserve Bank of Australia has cut interest rates by another 0.25 per cent, following its first cut since August 2016 just last month.
This brings the new cash rate to 1 per cent.
However, while a record low, the decision was not a surprise.
The National Australia Bank had tipped three rate cuts before Christmas 2019, echoing similar predictions from JP Morgan which predicted four rate cuts before Christmas.
• Related story:Has your bank passed on the RBA’s back-to-back interest rate cut?
And in a speech to the Committee for Economic Development of Australia Reserve Bank governor Philip Lowe himself said that there was room for improvement in the Australian economy.
“It is not unrealistic to expect a further reduction in the cash rate as the Board seeks to wind back spare capacity in the economy and deliver inflation outcomes in line with the medium-term target,” Lowe said.
According to theFinder RBA Cash Rate Survey,68 per cent of economists and experts predicted the RBA would cut rates in July.
• Related story:Australians’ net wealth nearly doubles since 2007
• Related story:Sydney and Melbourne property prices rise for first time since 2017
• Related story:Is your house your biggest investment? Here’s 5 ways to protect it
• Related story:What will the Australian property market look like in 10 years?
“A follow up cut has been foreshadowed as the impacts of a single cut to make real inroads in an economic sense are questionable. But the economy is in a delicate place and the RBA has reinforced the limitations of what can be achieved solely through lowering the cash rate,” Laing + Simmons’ Leanne Pilkington said.
“The economic indicators are not so rosy and the banks haven't fully passed on previous rate cuts so the RBA likely to lower rates either now or in near future,” added the Australian National University’s Alison Booth.
Nearly three quarters of experts surveyed (73 per cent) expect the Reserve Bank will continue cutting until the cash rate hits 0.75 per cent or lower.
However, 32 per cent believe the cash rate will hit 0.50 per cent.
And while the RBA has historically moved in increments of 0.25 per cent, there’s nothing stopping it from making the leap in one go.
“I've argued that larger steps than [25 basis points] would be apposite, but smaller ones convey a less panicky picture to onlookers," Nicholas Gruen of Lateral Economics said.
If you have a fixed rate home loan, not a lot.
But if you have a variable home loan,your bank is expected to pass along the cut.
"We do expect the banks to pass on in full to the Australian people the benefits of sustained reductions in their funding costs," Treasurer Josh Frydenberg told reporters in Canberra on Monday.
This is what it will look like if the banks do pass along the cut:
While Australia’s sustained property value decline is showing some small signs of easing in Sydney and Melbourne, the rest of the economy is not looking so shiny.
The broader property market slid 0.2 per cent in value, bringing the yearly growth to -6.9 per cent, new analysis from CoreLogic revealed.
“The likelihood of an interest rate cut had been rising throughout June, particularly since the weak GDP reading in early June and following RBA Governor Phil Lowe’s speech which indicated that a single 25 basis point cut to rates (which was delivered last month) was unlikely to shift the path that we are on,” CoreLogic research analyst Cameron Kusher said today.
• Related story:Penalty rates cut again: Here’s how your paypacket has been affected
• Related story:Australia needs ‘fiscal stimulus', but what does that actually mean?
“The decision to cut interest rates is an attempt from the RBA to support the economy; the decision has very little to do with housing market conditions.”
The Australian economy grew 0.4 per cent in the March quarter of 2019, theslowest rate since the end of the GFC in 2009as weak household consumption weighed on growth.
Unemployment is also stuck at 5.2 per cent and wage growth is stagnant,increasing by just a little over 0.5 per cent in the first quarter of the year.
And for many workers,1 July actually marked a wage cutas the new financial year began and previously legislated penalty rate cuts came into effect.
Reserve Bank governor Philip Lowe has admitted it will take more than an RBA rate cut to stimulate the economy, calling on the government to fast-track infrastructure spending to shift the unemployment rate.
“As a country, we should also be looking at other ways to get closer to full employment. One option is fiscal policy, including through spending on infrastructure," Lowe said.
"Another is structural policies that support firms expanding, investing, innovating and employing people. Both of these options need to be kept in mind as the various arms of public policy seek to maximise the economic prosperity of the people of Australia."
The Coalition government is currently attempting to persuade crossbenchers and the Labor party to support its controversial package of tax cuts, which it claims will boost the economy.
Labor MP and former economist Andrew Leigh this afternoon tweeted that the cut was “not a sign of a healthy economy”.
He said the decision should give pause to the Coalition government as it attempts to pass its three stages of tax cuts.
The first two stages are targeted at low- and middle-income Australians, which Labor supports. However, Labor has held off supporting the third phase which delivers tax relief to high-income earners and has not yet been priced.
"Why would you now lock in expensive tax cuts for 2024, when we might need fiscal stimulus much sooner?"
The Australian dollar has slumped since the RBA announced its decision to cut interest rates.
As of 3:22pm, the Aussie dollar was buying 0.69 US dollars.
That fall has been echoed by an ASX retreat on late Tuesday afternoon.
At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.00 per cent. This follows a similar reduction at the Board's June meeting. This easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.
The outlook for the global economy remains reasonable. However, the uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy are tilted to the downside. In most advanced economies, inflation remains subdued, unemployment rates are low and wages growth has picked up. The slowdown in global trade has contributed to slower growth in Asia. In China, the authorities have taken steps to support the economy, while continuing to address risks in the financial system.
Global financial conditions remain accommodative. The persistent downside risks to the global economy combined with subdued inflation have led to expectations of easing of monetary policy by the major central banks. Long-term government bond yields have declined further and are at record lows in a number of countries, including Australia. Bank funding costs in Australia have also declined, with money-market spreads having fully reversed the increases that took place last year. Borrowing rates for both businesses and households are at historically low levels. The Australian dollar is at the low end of its narrow range of recent times.
Over the year to the March quarter, the Australian economy grew at a below-trend 1.8 per cent. Consumption growth has been subdued, weighed down by a protracted period of low income growth and declining housing prices. Increased investment in infrastructure is providing an offset and a pick-up in activity in the resources sector is expected, partly in response to an increase in the prices of Australia's exports. The central scenario for the Australian economy remains reasonable, with growth around trend expected. The main domestic uncertainty continues to be the outlook for consumption, although a pick-up in growth in household disposable income is expected to support spending.
Employment growth has continued to be strong. Labour force participation is at a record level, the vacancy rate remains high and there are reports of skills shortages in some areas. There has, however, been little inroad into the spare capacity in the labour market recently, with the unemployment rate having risen slightly to 5.2 per cent. The strong employment growth over the past year or so has led to a pick-up in wages growth in the private sector, although overall wages growth remains low. A further gradual lift in wages growth is still expected and this would be a welcome development. Taken together, these labour market outcomes suggest that the Australian economy can sustain lower rates of unemployment and underemployment.
Inflation pressures remain subdued across much of the economy. Inflation is still, however, anticipated to pick up, and will be boosted in the June quarter by increases in petrol prices. The central scenario remains for underlying inflation to be around 2 per cent in 2020 and a little higher after that.
Conditions in most housing markets remain soft, although there are some tentative signs that prices are now stabilising in Sydney and Melbourne. Growth in housing credit has also stabilised recently. Demand for credit by investors continues to be subdued and credit conditions, especially for small and medium-sized businesses, remain tight. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality.
Today's decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target. The Board will continue to monitor developments in the labour market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time.
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With EPS Growth And More, Stillfront Group (STO:SF) Is Interesting
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! 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. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy. In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Stillfront Group ( STO:SF ). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. 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. View our latest analysis for Stillfront Group Stillfront Group's Improving Profits In the last three years Stillfront Group's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a wedge-tailed eagle on the wind, Stillfront Group's EPS soared from kr5.22 to kr7.59, in just one year. That's a commendable gain of 45%. I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Stillfront Group shareholders can take confidence from the fact that EBIT margins are up from 24% to 26%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my book. 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. Story continues OM:SF Income Statement, July 2nd 2019 Fortunately, we've got access to analyst forecasts of Stillfront Group's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting . Are Stillfront Group Insiders Aligned With All Shareholders? 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. Like a sturdy phalanx Stillfront Group insiders have stood united by refusing to sell shares over the last year. But the bigger deal is that the , Sten Wranne, paid kr507k to buy shares at an average price of kr169.08. Does Stillfront Group Deserve A Spot On Your Watchlist? Given my belief that share price follows earnings per share you can easily imagine how I feel about Stillfront Group's strong EPS growth. The growth rate whets my appetite for research, and the insider buying only increases my interest in the stock. To put it succinctly; Stillfront Group is a strong candidate for your watchlist. Now, you could try to make up your mind on Stillfront Group by focusing on just these factors, or you could also consider 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 Stillfront Group isn't the only one. You can see a a 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 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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Has your bank passed on the RBA’s back-to-back interest rate cut?
Update: Westpac passes on 0.20 per cent p.a cut for owner occupiers and a reduction of 0.30 per cent p.a. for investors with interest only repayments.
• Westpaccuts rates by 0.20 per cent for owner occupiers and 0.30 for investors with interest only repayments.
• NABhas passed on a 0.19 per cent rate cut.
• CBAhas passed on a 0.19 per cent rate cut onto its principal and interest customers, but the full 0.25 per cent to interest only customers.
• ANZbank has passed on the full 25 basis point rate cut, which will be effective Friday 12 July.
• Non-bank lender Resimacannounced that it will reduce variable rates on its Resimac Prime and Resimac Specialist ranges of mortgages by 0.25 per cent p.a, with rates for new applicants to start from 3.21 per cent p.a.
• Athena Home Loanshave also passed on the full 25 basis point cut.
The Reserve Bank of Australia announced today yet another interest rate cut of 25 basis points taking it to 1 per cent, after bringing ratesto a record low of 1.25 per cent in June.
This means those with variable home loans could see more relief, but only if the banks choose to pass on the cut.
In June, ANZ dropped its rates by 0.18 per cent, while Westpac dropped theirs by 0.20 per cent. The Commonwealth Bank of Australia and NAB passed on the full 0.25 per cent rate cut, as did ING and other smaller banks.
• Related article:RBA cuts cash rates AGAIN, to a new record low
• Related article:Has your bank passed the RBA interest rate cut on?
• Related article:Reserve Bank SLASHES the cash rate to a new record low
So what will these banks do now?
“We're reducing variable interest rates for home loan customers, including a reduction of 0.20 per cent p.a for owner occupiers and a reduction of 0.30 per cent p.a. for investors with interest only repayments.”
“This is on top of the 25-basis point reduction last month, which means customers with an average $400,000 loan could save a total of $1296 a year,” ANZ chief customer officer, Mike Baird, said.
“Commonwealth Bank has responded to the Reserve Bank of Australia’s (RBA) cash rate decision by reducing interest rates for home owners and making a deliberate choice to limit the interest rate reduction on the most popular savings account.”
ANZ has passed on the full 25 basis point rate cut, unlike last cut where it only passed on a 18 basis point cut.
“Today we have decided we will reduce variable interest rates for our home loan customers by 0.25 per cent pa,” ANZ Group Executive, Australia retail and commercial, Mark Hand said.
“Importantly, we will apply this reduction across all our variable rate home loans.”
Standard Variable Rate Owner Occupiers paying principal and interest this reduces the Index Rate to 4.93 per cent pa, and for Standard Variable Rate Owner Occupiers paying interest only the Index Rate reduces to 5.48 per cent.
Historically, variable home loan rates have only followed the RBA cash rate with 92 per cent accuracy since 1990, while the average online savings account rate followed the cash rate with 99 per cent accuracy.
This means the banks like to cut your savings rate before they cut your home loan rates.
On top of that, according to Tom Godfrey, head of media and consumer advocate at Mozo, by holding back some of the official interest rate cuts since 2016, the big four banks have pocketed around $3.6 billion in total additional revenue.
“If passed on in full the average variable home loan rate would be 3.87 per cent down from 4.06 per cent last month,” Godfrey said.
“The average monthly saving could be $57 on a $400,000 loan for an owner occupier paying principal and interest, on top of the $58 monthly saving in June.”
If your bank hasn’t passed on the rate cut, you should consider switching banks.
Realestate.com’s Nerida Consibee toldYahoo Financein June that if your bank doesn’t follow the RBA’s decision,it would be a good idea to look at other loan providers.
Conisbee, who predicted the RBA would hold this time around, says a cut is something that banks should be passing on in full.
Here’show to talk your way to cheaper home loan too.
Yahoo Financewill keep you updated once we know which banks have passed on the rate cuts.
Make your money work with Yahoo Finance’s daily newsletter.Sign up hereand stay on top of the latest money, property and tech news.
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Here's Why I Think Stillfront Group (STO:SF) Might Deserve Your Attention Today
Want to participate in ashort research study? Help shape the future of investing tools and you could win a $250 gift card!
It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But as Peter Lynch said inOne Up On Wall Street, 'Long shots almost never pay off.'
So if you're like me, you might be more interested in profitable, growing companies, likeStillfront Group(STO:SF). While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
View our latest analysis for Stillfront Group
In the last three years Stillfront Group's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Like a wedge-tailed eagle on the wind, Stillfront Group's EPS soared from kr5.22 to kr7.59, in just one year. That's a commendable gain of 45%.
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. Stillfront Group shareholders can take confidence from the fact that EBIT margins are up from 24% to 26%, and revenue is growing. That's great to see, on both counts.
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.
While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not checkthis interactive chart depicting future EPS estimates, for Stillfront Group?
Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Like a sturdy phalanx Stillfront Group insiders have stood united by refusing to sell shares over the last year. But my excitement comes from the kr507k that Sten Wranne spent buying shares (at an average price of about kr169.08).
You can't deny that Stillfront Group has grown its earnings per share at a very impressive rate. That's attractive. The growth rate whets my appetite for research, and the insider buying only increases my interest in the stock. So on this analysis I believe Stillfront Group is probably worth spending some time on. While we've looked at the quality of the earnings, we haven't yet done any work to value the stock. So if you like to buy cheap, you may want tocheck if Stillfront Group is trading on a high P/E or a low P/E, relative to its industry.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Stillfront Group, you'll probably love thisfreelist of growing companies that insiders are buying.
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 Ipsen S.A. (EPA:IPN) Excessively Paying Its CEO?
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David Meek became the CEO of Ipsen S.A. (EPA:IPN) in 2016. 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.
Check out our latest analysis for Ipsen
According to our data, Ipsen S.A. has a market capitalization of €9.9b, and pays its CEO total annual compensation worth € 3.1 million. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at €900k. When we examined a group of companies with market caps over €7.1b, we found that their median CEO total compensation was €3.1m. 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 Ipsen S.A. pays David Meek approximately in line with the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is adequate. 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 Ipsen, below.
Ipsen S.A. has increased its earnings per share (EPS) by an average of 22% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 17%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested inthisfreevisualization of analyst forecasts.
I think that the total shareholder return of 119%, over three years, would leave most Ipsen S.A. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
We examined the amount Ipsen S.A. pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays in line with the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want tocheck if insiders are buying Ipsen shares with their own money (free access).
Important note:Ipsen may not be the best stock to buy. You might find somethingbetterinthis list of interesting companies with high ROE and low debt.
An earlier version of this article stated incorrectly that David Meek was granted total compensation of €9.4 million in 2018. This was incorrect and we apologise for the error. 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 Cloetta AB (publ)’s (STO:CLA B) 8.8% Return On Capital Employed Good News?
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Today we are going to look at Cloetta AB (publ) (STO:CLA B) 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 of all, we'll work out how to calculate ROCE. Next, we'll compare it to others in its industry. Then we'll determine how its current liabilities are affecting 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. 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 Cloetta:
0.088 = kr669m ÷ (kr9.9b - kr2.3b) (Based on the trailing twelve months to March 2019.)
Therefore,Cloetta has an ROCE of 8.8%.
View our latest analysis for Cloetta
ROCE is commonly used for comparing the performance of similar businesses. Using our data, Cloetta's ROCE appears to be around the 10% average of the Food industry. Separate from Cloetta's performance relative to its industry, its ROCE in absolute terms looks satisfactory, and it may be worth researching in more depth.
You can click on the image below to see (in greater detail) how Cloetta's past growth compares to other companies.
When considering this metric, keep in mind that it is backwards looking, and not necessarily predictive. 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. What happens in the future is pretty important for investors, so we have prepared afreereport on analyst forecasts for Cloetta.
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 the ROCE equation works, having large bills due in the near term can make it look as though a company has less capital employed, and thus a higher ROCE than usual. To counteract this, we check if a company has high current liabilities, relative to its total assets.
Cloetta has total liabilities of kr2.3b and total assets of kr9.9b. As a result, its current liabilities are equal to approximately 23% of its total assets. Current liabilities are minimal, limiting the impact on ROCE.
Overall, Cloetta has a decent ROCE and could be worthy of further research. Cloetta 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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Here's What Cloetta AB (publ)'s (STO:CLA B) P/E Is Telling Us
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This article is written for those who want to get better at using price to earnings ratios (P/E ratios). We'll apply a basic P/E ratio analysis to Cloetta AB (publ)'s (STO:CLA B), to help you decide if the stock is worth further research. Looking at earnings over the last twelve months,Cloetta has a P/E ratio of 17.69. That corresponds to an earnings yield of approximately 5.7%.
View our latest analysis for Cloetta
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Cloetta:
P/E of 17.69 = SEK30.06 ÷ SEK1.7 (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.
P/E ratios primarily reflect market expectations around earnings growth rates. Earnings growth means that in the future the 'E' will be higher. 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.
Cloetta's earnings made like a rocket, taking off 83% last year. The cherry on top is that the five year growth rate was an impressive 18% per year. So I'd be surprised if the P/E ratio wasnotabove average.
The P/E ratio essentially measures market expectations of a company. The image below shows that Cloetta has a P/E ratio that is roughly in line with the food industry average (17.6).
That indicates that the market expects Cloetta will perform roughly in line with other companies in its industry. The company could surprise by performing better than average, in the future. 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. In other words, it does not consider any debt or cash that the company may have on the balance sheet. In theory, a company can lower its future P/E ratio by using cash or debt to invest in 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.
Cloetta has net debt worth 25% of its market capitalization. That's enough debt to impact the P/E ratio a little; so keep it in mind if you're comparing it to companies without debt.
Cloetta has a P/E of 17.7. That's around the same as the average in the SE market, which is 17. Given it has reasonable debt levels, and grew earnings strongly last year, the P/E indicates the market has doubts this growth can be sustained.
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 thisfreereport on the analyst consensus forecastscould help you make amaster moveon this stock.
Of courseyou might be able to find a better stock than Cloetta. 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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Is Xing SE (ETR:O1BC) Potentially Underrated?
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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Xing SE (ETR:O1BC) due to its excellent fundamentals in more than one area. O1BC is a company with impressive financial health as well as a buoyant growth outlook. 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, read the fullreport on Xing here.
O1BC is an attractive stock for growth-seeking investors, with an expected earnings growth of 23% in the upcoming year which is expected to flow into an impressive return on equity of 36% over the next couple of years. O1BC currently has no debt on its balance sheet. This implies that the company is running its operations purely on off equity funding. which is rather impressive for a €2.1b market cap company. Investors’ risk associated with debt is virtually non-existent and the company has plenty of headroom to grow debt in the future, should the need arise.
For Xing, I've compiled three fundamental factors you should further research:
1. Historical Performance: What has O1BC's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
2. Valuation: What is O1BC 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 O1BC is currently mispriced by the market.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of O1BC? 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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Are Troax Group AB (publ)'s (STO:TROAX) Interest Costs Too High?
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While small-cap stocks, such as Troax Group AB (publ) (STO:TROAX) with its market cap of kr6.0b, are popular for their explosive growth, investors should also be aware of their balance sheet to judge whether the company can survive a downturn. Evaluating financial health as part of your investment thesis is crucial, since poor capital management may bring about bankruptcies, which occur at a higher rate for small-caps. Let's work through some financial health checks you may wish to consider if you're interested in this stock. However, this is not a comprehensive overview, so I’d encourage you todig deeper yourself into TROAX here.
Over the past year, TROAX has ramped up its debt from €77m to €84m , which accounts for long term debt. With this increase in debt, TROAX's cash and short-term investments stands at €25m , ready to be used for running the business. Additionally, TROAX has produced cash from operations of €25m over the same time period, resulting in an operating cash to total debt ratio of 29%, signalling that TROAX’s debt is appropriately covered by operating cash.
Looking at TROAX’s €27m in current liabilities, it appears that the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 2.64x. The current ratio is the number you get when you divide current assets by current liabilities. Usually, for Machinery companies, this is a suitable ratio as there's enough of a cash buffer without holding too much capital in low return investments.
TROAX is a relatively highly levered company with a debt-to-equity of 98%. This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. We can test if TROAX’s debt levels are sustainable by measuring interest payments against earnings of a company. Ideally, earnings before interest and tax (EBIT) should cover net interest by at least three times. For TROAX, the ratio of 41.05x suggests that interest is comfortably covered, which means that debtors may be willing to loan the company more money, giving TROAX ample headroom to grow its debt facilities.
TROAX’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 TROAX's liquidity needs, this may be its optimal capital structure for the time being. This is only a rough assessment of financial health, and I'm sure TROAX has company-specific issues impacting its capital structure decisions. I recommend you continue to research Troax Group to get a better picture of the small-cap by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for TROAX’s future growth? Take a look at ourfree research report of analyst consensusfor TROAX’s outlook.
2. Valuation: What is TROAX 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 TROAX 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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Nike pulls 'Betsy Ross' shoe after Colin Kaepernick complains
Colin Kaepernick and Nike shoes. (Photos: Jamie McCarthy/Getty Images, Nike) In a decision that will thrust Nike into the spotlight of corporations walking a tightrope between product and historic symbolism, the athletic giant has pulled an American flag-themed shoe from circulation after former NFL quarterback Colin Kaepernick expressed concern to the company about selling apparel he says features a slave-era emblem. According to a source who spoke with Yahoo Sports, Nike began a movement to pull the shoe from stores nearly two weeks ago after Kaepernick and others raised concern that the “Betsy Ross Flag” printed on the heel of the company’s 4th of July-themed Air Max 1 was not only racially insensitive, but had also been adopted by some groups such as the Patriot Movement and Identity Evropa (pronounced “Europa”) allegedly as a symbol of white nationalism. Nike spokesman Mark Rhodes released a statement Monday declaring: “Nike has chosen not to release the Air Max 1 Quick Strike Fourth of July as it featured an old version of the American flag.” A source who went into more detail about the decision told Yahoo Sports that a significant part of the shoe’s removal from circulation stemmed from complaints from Kaepernick and others about the symbolism of the Ross flag, which rose to prominence in the 1790s. Further backlash began to build on a smattering of social media platforms last week, while Nike began quietly recalling the shoes from stores as debates over the sensitivity of the product bubbled up on sneaker-centric accounts. The “Betsy Ross Flag” features 13 stars in a circle representing the United States’ original 13 colonies. As concern over white nationalism has become a spotlight issue in recent years, the Ross flag has for some risen as a symbol of controversy as it’s reportedly been adopted by some movements. One of the most nationally-publicized moments spotlighting the alleged symbolism occurred in Michigan in 2016, when students from largely-white Forest Hills Central High brought the Ross flag and a Donald Trump “Make America Great Again” banner to a high school football game against Grand Rapids Ottawa Hills — a school which has a minority enrollment over 90 percent. Following a complaint about the flag and banner, Forest Hills Public Schools Superintendent Daniel Behm apologized for the incident in a published letter. In it, he said the Forest Hill Central students had “[waved] a historical version of our flag, that to some symbolizes exclusion and hate” and “injects hostility and confusion to an event where no one intended to do so.” The president of the Greater Grand Rapids Branch of the NAACP Cle Jackson later blasted the students’ use of the Ross flag in comments to Michigan Capitol Confidential, calling it a symbol that had been adopted by “[t]he so-called ‘Patriot Movement’ and other militia groups who are responding to America’s increasing diversity with opposition and racial supremacy.” Those were feelings Kaepernick passed on when he shared his concerns with Nike about the Ross flag being a slavery-era symbol, a source told Yahoo Sports. Not long after, the company began moving to recall the shoes, which had already been shipped to stores throughout the country. It’s unclear how many of the shoes — if any — made it into public hands. It’s also not clear what Nike intends to do with the apparel now that it has been recalled. More from Yahoo Sports: Here's how Steph Curry found out where KD was signing Angels P Tyler Skaggs dead at 27 Wimbledon: Venus Williams loses to 15-year-old Police: Ortiz shooting was $30K hit gone wrong
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Trump calls Biden 'Obiden' on Tucker Carlson
Donald Trump sat down with Tucker Carlson in South Korea over the weekend, where he addressed his administrations ongoing trade war with China and touted progress made with Chinese president Xi Jinping at the G20 summit in Japan. As hes been doing for years , Trump also took time to slam the Obama administrations trade policies with China, and at the same time, he may have debuted a new nickname for his possible 2020 opponent, former vice president Joe Biden . Look, China has been beating us badly for many years, Trump said. President Obama did nothing, meaning Obiden. I dont really think I need to say that anymore. They did nothing. This is just the latest in a long line of nicknames Trump has given political opponents over the years, and though it could have just a slip of the tongue, it definitely sounds like he meant to say Obiden. It could be that Trump was trying to tether Biden to Obama in the eyes of voters, or theres the possibility he was just giving Obama and Biden a fun celebrity couple nickname, like Bennifer or Brangelina, but thats doubtful. Either way, one thing is for sure: Trump will never pass up the opportunity for hyperbole. Speaking of a possible deal between him and President Xi, Trump said, He wants to make a deal. I want to make a deal. Very big deal. Probably, I guess youd say the largest deal ever made, of any kind, not only trade. Tucker Carlson Tonight airs weeknights at 8 p.m. on Fox News Channel . Watch John Oliver suggest Trump show women with the same respect he shows murderous autocrats: Read more from Yahoo Entertainment: Twitter slams Fred Savages new show: Worst thing Ive seen on television Kylie Jenner cries while asking Kim Kardashian to not bully Jordyn Woods: Were better than this Meghan McCain questions Pete Buttigiegs absence from post-debate spin room: You made an unusual choice Tell us what you think! Hit us up on Twitter , Facebook or Instagram , or leave your comments below. And check out our host, Kylie Mar, on Twitter , Facebook or Instagram . Want daily pop culture news delivered to your inbox? Sign up here for Yahoo Entertainment & Lifestyle's newsletter.
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Best Tech Deals in July 2019
Amazon Deals | Walmart Deals | Apple Deals | TV Deals | Gaming Deals | Laptop Deals Fourth of July and early access Prime Day deals are in full swing, which means some of the best tech deals of the season are up for grabs. So if you can't want to upgrade your gadgets this month, you've come to the right place. We're rounding up the best tech deals on every thing from smart home devices to game consoles . Amazon continues to discount its best Kindle ever. For a limited time, the Kindle Oasis eReader is on sale for $199.99 ($50 off). Best Buy also offers this same Kindle Oasis deal. It features a 7-inch high-res anti-glare display, Wi-Fi connectivity, and Audible built-in. With 8GB of onboard storage, you'll have ample room for magazines, comics, newspapers, and audiobooks. It's also waterproof so you can read at the beach, by the pool or in the bathtub. Need more storage? Amazon also offers the 32GB model Kindle Oasi s for $229.99 ($50 off). With Amazon's big shopping holiday just a few weeks away, soon we'll be gathering the best Amazon Prime Day 2019 deals. For the time being, here are some of the best tech deals we're seeing right now. Amazon Hardware Deals Amazon is currently offering many of its proprietary devices at discounted pricing. All-New Echo Dot Kids Edition w/ Fire 7 Kids Tablet for $129.98 ($40 off) Amazon Echo Alexa Voice Remote for $19.99 ($10 off) Kindle Oasis 8GB eReader for $199.99 ($50 off) Kindle Oasis 32GB eReader for $229.99 ($50 off) Echo (2nd Gen) 2-Pack for $119.98 ($80 off) Echo Auto for $24.99 ($25 off) Echo Dot (3rd Gen) Smart Speaker (2-Pack) for $59.98 ($40 off) Echo Plus (2nd Gen) with Philips Hue Bulb for $149.99 ($15 off) All-New Echo Dot Kids Edition (2-Pack) for $109.98 ($30 off) Fire HD 8 Tablet (3-Pack) for $179.97 ($60 off) Fire HD 10 Tablet (3-Pack) for $329.97 ($120 off) Fire HD 10 Kids Edition Tablet (2-Pack) for $299.98 ($100 off) Echo Spot Smart Alarm Clock (2-Pack) for $219.98 ($40 off) Ring Smart Lighting Spotlights (2-pack) for $99.99 ($30 off) Story continues Top Tech Deals Right Now Apple 9.7-inch iPad for $249 ($80 off) Apple MacBook Pro 15-inch Laptop for $2,200 ($199 off) Sennheiser PXC 550 Wireless Headphones for $230 ($120 off) Jabra Elite 65T Wireless Earbuds for $139.99 ($10 off via coupon, "JULYSAVE19") Shop ThinkGeek's Entire Sale TV Deals Toshiba 43-inch 1080p Full HD Smart LED TV for $179.99 ($120 off, Prime early access) RCA 43-inch 4K UHD LED TV for $159.99 ($240 off) Sharp 40-inch FHD LED TV for $129.99 ($50 off) Samsung 49-inch Q60 4K QLED Smart TV (2019) for $797.99 ($202 off) Vizio 50-inch 4K HDR Smart TV for $259.99 ($140 off) Hisense 65-inch 4K Roku Smart TV for $498 ($150 off) TCL 75-inch 4K Ultra HD Roku Smart TV for $1,399.99 ($200 off) Samsung 65-inch Q60 QLED 4K Smart TV for $1,397.99 ($400 off) Tech Under $50 Kasa Smart WiFi 2 Outlet Outdoor Plug for $30 ($10 off) RAVPower 26800mAh Power Bank for $49.99 ($24 off) Plantronics BackBeat FIT 500 Headphones for $46 ($32 off) Soundcore Liberty Neo Wireless Earbuds for $39.99 ($20 off) Choetech Gravity Charging Car Phone Mount for $16.99 via coupon, "HRLT7DRT") Echo Auto for $24.99 ($25 off) Smartwatch Deals Fitbit Alta HR for $75 ($115 off) Garmin Vívoactive 3 (GPS) Smartwatch for $209 ($71 off) Apple Watch Series 3 (GPS) 38mm for $199 ($80 off) Apple Watch Series 3 (GPS/LTE) 42mm for $329 ($80 off) Fossil Gen 3 Explorist Smartwatch for $179 ($76 off) Unlocked Phones Google Pixel 3 XL 128GB Unlocked (Not Pink) for $749 ($251 off) Samsung Galaxy S10 128GB Unlocked for $699.99 via on-page coupon ($200 off) Samsung Galaxy S10 Plus 128GB Unlocked for $799.99 via on-page coupon ($200 off) Google Pixel 3 XL 128GB Unlocked for $779.99 ($220 off) Apple iPhone SE 32GB Unlocked for $249 ($100 off) Cameras Nikon Coolpix B500 Compact Camera for $224 ($76 off) Nikon D3500 DSLR 2 Lens Camera Bundle for $446.95 ($400 off) also at Focus Camera Canon EOS M100 Mirrorless Camera w/ 15-45mm Lens for $399 ($200 off) also at Amazon Canon PowerShot SX530 Digital Camera for $229 ($150 off) Games and Consoles New Nintendo 2DS XL Console for $129.99 ($20 off) MS Xbox One S 1TB Console for $199.99 ($100 off) at Newegg via eBay MS Xbox One X 1TB Division 2 Bundle for $375 ($124 off) Sony PS4 1TB Slim Days of Play Console (Steel Black) for $299.99 (Limited Edition) Sony PS4 Slim 1TB Marvel's Spider-Man Bundle for $331 ($29 off) at Walmart Madden NFL 19 Hall of Fame Edition for PS4 for $27 ($53 off) Cyberpunk 2077 Preorder for PS4 or Xbox One for $50 ($10 off)
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How Financially Strong Is Troax Group AB (publ) (STO:TROAX)?
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Troax Group AB (publ) (STO:TROAX) is a small-cap stock with a market capitalization of kr6.0b. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Understanding the company's financial health becomes crucial, since poor capital management may bring about bankruptcies, which occur at a higher rate for small-caps. We'll look at some basic checks that can form a snapshot the company’s financial strength. Nevertheless, this is just a partial view of the stock, and I suggest youdig deeper yourself into TROAX here.
Over the past year, TROAX has ramped up its debt from €77m to €84m – this includes long-term debt. With this rise in debt, the current cash and short-term investment levels stands at €25m , ready to be used for running the business. Additionally, TROAX has generated cash from operations of €25m over the same time period, resulting in an operating cash to total debt ratio of 29%, meaning that TROAX’s operating cash is sufficient to cover its debt.
Looking at TROAX’s €27m in current liabilities, it seems that the business has been able to meet these obligations given the level of current assets of €72m, with a current ratio of 2.64x. The current ratio is the number you get when you divide current assets by current liabilities. For Machinery companies, this ratio is within a sensible range since there is a bit of a cash buffer without leaving too much capital in a low-return environment.
With a debt-to-equity ratio of 98%, TROAX can be considered as an above-average leveraged company. This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. We can check to see whether TROAX is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In TROAX's, case, the ratio of 41.05x suggests that interest is comfortably covered, which means that debtors may be willing to loan the company more money, giving TROAX ample headroom to grow its debt facilities.
Although TROAX’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. Keep in mind I haven't considered other factors such as how TROAX has been performing in the past. I recommend you continue to research Troax 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 TROAX’s future growth? Take a look at ourfree research report of analyst consensusfor TROAX’s outlook.
2. Valuation: What is TROAX 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 TROAX 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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Could The Novartis AG (VTX:NOVN) Ownership Structure Tell Us Something Useful?
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A look at the shareholders of Novartis AG (VTX:NOVN) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. We also tend to see lower insider ownership in companies that were previously publicly owned.
Novartis is a pretty big company. It has a market capitalization of CHF206b. Normally institutions would own a significant portion of a company this size. Taking a look at our data on the ownership groups (below), it's seems that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about NOVN.
See our latest analysis for Novartis
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors own 45% of Novartis. 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. 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 Novartis's historic earnings and revenue, below, but keep in mind there's always more to the story.
We note that hedge funds don't have a meaningful investment in Novartis. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own less than 1% of Novartis AG. But they may have an indirect interest through a corporate structure that we haven't picked up on. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amount to less than 1%, we can see that board members collectively own CHF242m worth of shares (at current prices). In this sort of situation, it can be more interesting tosee if those insiders have been buying or selling.
With a 49% ownership, the general public have some degree of sway over NOVN. 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.
We can see that Private Companies own 3.4%, of the shares on issue. 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's always worth thinking about the different groups who own shares in a company. But to understand Novartis better, we need to consider many other factors.
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.
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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What does Novartis AG's (VTX:NOVN) Balance Sheet Tell Us About Its Future?
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! There are a number of reasons that attract investors towards large-cap companies such as Novartis AG ( VTX:NOVN ), with a market cap of CHF206b. Risk-averse investors who are attracted to diversified streams of revenue and strong capital returns tend to seek out these large companies. However, the key to extending previous success is in the health of the company’s financials. Let’s take a look at Novartis’s leverage and assess its financial strength to get an idea of their ability to fund strategic acquisitions and grow through cyclical pressures. Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis into NOVN here . Check out our latest analysis for Novartis Does NOVN Produce Much Cash Relative To Its Debt? NOVN has shrunk its total debt levels in the last twelve months, from US$34b to US$31b – this includes long-term debt. With this debt repayment, NOVN currently has US$7.0b remaining in cash and short-term investments , ready to be used for running the business. On top of this, NOVN has produced cash from operations of US$14b in the last twelve months, resulting in an operating cash to total debt ratio of 45%, indicating that NOVN’s debt is appropriately covered by operating cash. Does NOVN’s liquid assets cover its short-term commitments? With current liabilities at US$56b, it appears that the company arguably has a rather low level of current assets relative its obligations, with the current ratio last standing at 0.93x. The current ratio is the number you get when you divide current assets by current liabilities. SWX:NOVN Historical Debt, July 2nd 2019 Can NOVN service its debt comfortably? With a debt-to-equity ratio of 61%, NOVN can be considered as an above-average leveraged company. This isn’t uncommon for large companies because interest payments on debt are tax deductible, meaning debt can be a cheaper source of capital than equity. 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 test if NOVN’s debt levels are sustainable by measuring interest payments against earnings of a company. 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 NOVN, the ratio of 16.38x suggests that interest is comfortably covered. Large-cap investments like NOVN are often believed to be a safe investment due to their ability to pump out ample earnings multiple times its interest payments. Story continues Next Steps: NOVN’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. However, its lack of liquidity raises questions over current asset management practices for the large-cap. This is only a rough assessment of financial health, and I'm sure NOVN has company-specific issues impacting its capital structure decisions. I recommend you continue to research Novartis to get a better picture of the stock by looking at: Future Outlook : What are well-informed industry analysts predicting for NOVN’s future growth? Take a look at our free research report of analyst consensus for NOVN’s outlook. Valuation : What is NOVN 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 NOVN 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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Should You Be Impressed By Miquel y Costas & Miquel, S.A.'s (BME:MCM) ROE?
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While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. To keep the lesson grounded in practicality, we'll use ROE to better understand Miquel y Costas & Miquel, S.A. (BME:MCM).
Our data showsMiquel y Costas & Miquel has a return on equity of 14%for the last year. That means that for every €1 worth of shareholders' equity, it generated €0.14 in profit.
Check out our latest analysis for Miquel y Costas & Miquel
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Miquel y Costas & Miquel:
14% = €37m ÷ €270m (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 the capital paid in by shareholders, plus any retained earnings. 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. 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, Miquel y Costas & Miquel has a better ROE than the average (10%) in the Forestry industry.
That's what I like to see. In my book, a high ROE almost always warrants a closer look. For exampleyou might checkif insiders are buying shares.
Most companies need money -- from somewhere -- to grow their profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the use of debt will improve the returns, but will not change the equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
Miquel y Costas & Miquel has a debt to equity ratio of 0.28, which is far from excessive. Its very respectable ROE, combined with only modest debt, suggests the business is in good shape. Conservative use of debt to boost returns is usually a good move for shareholders, though it does leave the company more exposed to interest rate rises.
Return on equity is useful for comparing the quality of different businesses. Companies that can achieve high returns on equity without too much debt are generally of good quality. All else being equal, a higher ROE is better.
But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. So you might want to check this FREEvisualization of analyst forecasts for the company.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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UPDATE 2-Australia's central bank cuts rates again, says ready to ease more if needed
* RBA cuts cash rate 25 bps to historic low of 1%
* Says will ease again "if needed" to support growth
* Markets expect rates to hit 0.75% by year end
* Government slow to heed calls for fiscal stimulus (Adds Lowe's comment from the speech, economist quotes)
By Wayne Cole and Swati Pandey
SYDNEY, July 2 (Reuters) - Australia's central bank on Tuesday cut interest rates for the second time in as many months as it strives to revive a sluggish economy and reduce unemployment, a tough task that may yet require even more stimulus.
The Reserve Bank of Australia's (RBA) quarter-point cut took cash rates to an all-time low of just 1% and left limited room for more reductions, raising the possibility of unconventional policy easing.
RBA Governor Philip Lowe signalled rates could go deeper into record territory.
"We will be closely monitoring how things evolve over coming months," he said in a speech in Darwin, hours after the rate decision.
"Given the circumstances, the Board is prepared to adjust interest rates again if needed to get us closer to full employment and achieve the inflation target in a way that supports the collective welfare of all Australians."
He also piled pressure on the newly re-elected Liberal National government to respond with fiscal stimulus of its own, something the central bank has been crying out for.
Markets are now pricing in a real chance of rates at 0.75% by Christmas. With so much easing already in the price, the Australian dollar was left to idle at $0.6987 .
"For us, the key message from this is that the RBA must be quite worried about growth - back-to-back cuts suggest they have felt a sense of urgency," said HSBC chief economist Paul Bloxham.
The last time the RBA delivered two consecutive cuts was in May and June 2012, in response to global growth concerns in the wake of the European financial crisis.
The RBA is hardly alone in easing with markets convinced the U.S. Federal Reserve will have to cut at the end of this month, likely followed by the European Central Bank and Bank of Japan.
Lowe has also broken with tradition recently to openly call for more government spending. So far, the conservative government of Prime Minister Scott Morrison has played down the need for stimulus, instead reaffirming a political commitment to budget surpluses.
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While some long-touted tax rebates are due in the next month or so a slew of much larger tax cuts are not planned until 2024, far too distant to have any impact on consumer spending now.
A pick-me-up is badly needed as years of sub-par wage growth has pinched household incomes, while a long downturn in home prices have eaten into consumer wealth.
There has been a glimmer of light in the past month as the June cut in rates and a proposed relaxation of mortgage lending rules injected some much needed life into the housing market.
Clearance rates at auctions have rebounded and prices steadied as buyers returned. Data from property consultant CoreLogic out on Monday showed Sydney home values had risen in June for the first time in almost two years.
Any stabilisation would be a tonic for spending power and confidence given Australia's housing stock is valued at A$6.6 trillion ($4.60 trillion), or almost four times the country's annual gross domestic product.
Much more will be needed, however, for the RBA to meet its target of pushing unemployment down to around 4.5% - a low not reached since 2008 - from the current 5.2%.
"Our current view of one more cut this year by November has downside risks for potentially two, and developments over the next few months will determine that outcome," Westpac chief economist Bill Evans said. ($1 = 1.4345 Australian dollars) (Reporting by Wayne Cole and Swati Pandey Editing by Shri Navaratnam)
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Is Future plc's (LON:FUTR) 3.8% ROE Worse Than Average?
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While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. To keep the lesson grounded in practicality, we'll use ROE to better understand Future plc (LON:FUTR).
Over the last twelve monthsFuture has recorded a ROE of 3.8%. That means that for every £1 worth of shareholders' equity, it generated £0.038 in profit.
View our latest analysis for Future
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Future:
3.8% = UK£7.0m ÷ UK£187m (Based on the trailing twelve months to March 2019.)
Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. It is all earnings retained by the company, plus any capital paid in by shareholders. The easiest way to calculate shareholders' equity is to subtract the company's total liabilities from the total assets.
Return on Equity measures a company's profitability against the profit it has kept for the business (plus any capital injections). The 'return' is the yearly profit. That means that the higher the ROE, the more profitable the company is. So, as a general rule,a high ROE is a good thing. Clearly, then, one can use ROE to compare different companies.
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. As shown in the graphic below, Future has a lower ROE than the average (12%) in the Media industry classification.
That certainly isn't ideal. We prefer it when the ROE of a company is above the industry average, but it's not the be-all and end-all if it is lower. Nonetheless, it might be wise tocheck if insiders have been selling.
Companies usually need to invest money to grow their profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. That will make the ROE look better than if no debt was used.
Although Future does use debt, its debt to equity ratio of 0.24 is still low. I'm not impressed with its ROE, but the debt levels are not too high, indicating the business has decent prospects. Conservative use of debt to boost returns is usually a good move for shareholders, though it does leave the company more exposed to interest rate rises.
Return on equity is useful for comparing the quality of different businesses. In my book the highest quality companies have high return on equity, despite low debt. If two companies have the same ROE, then I would generally prefer the one with less debt.
Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. 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.
But note:Future may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Something To Consider Before Buying Euromoney Institutional Investor PLC (LON:ERM) For The 2.5% Dividend
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Today we'll take a closer look at Euromoney Institutional Investor PLC (LON:ERM) from a dividend investor's perspective. Owning a strong business and reinvesting the dividends is widely seen as an attractive way of growing your wealth. If you are hoping to live on the income from dividends, it's important to be a lot more stringent with your investments than the average punter.
A 2.5% yield is nothing to get excited about, but investors probably think the long payment history suggests Euromoney Institutional Investor 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 typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. In the last year, Euromoney Institutional Investor paid out 92% of its profit as dividends. This is quite a high payout ratio that suggests the dividend is not well covered by earnings.
We also measure dividends paid against a company's levered free cash flow, to see if enough cash was generated to cover the dividend. Euromoney Institutional Investor paid out 90% of its free cash flow last year, suggesting the dividend is poorly covered by cash flow. Cash is slightly more important than profit from a dividend perspective, but given Euromoney Institutional Investor's payments were not well covered by either earnings or cash flow, we are concerned about the sustainability of this dividend.
We update our data on Euromoney Institutional Investor 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. Euromoney Institutional Investor has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of payments. During the past ten-year period, the first annual payment was UK£0.19 in 2009, compared to UK£0.33 last year. This works out to be a compound annual growth rate (CAGR) of approximately 5.4% a year over that time.
It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Euromoney Institutional Investor might have put its house in order since then, but we remain cautious.
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. It's not great to see that Euromoney Institutional Investor's have fallen at approximately 9.0% over the past five years. 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. We're a bit uncomfortable with Euromoney Institutional Investor paying out a high percentage of both its cashflow and earnings. Earnings per share are down, and Euromoney Institutional Investor's dividend has been cut at least once in the past, which is disappointing. Using these criteria, Euromoney Institutional Investor looks quite suboptimal from a dividend investment perspective.
Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from costs or inflation. Very few businesses see earnings consistently shrink year after year in perpetuity though, and so it might be worth seeing what the 6analysts we track are forecasting for the future.
We have also put together alist of global stocks with a market capitalisation above $1bn and yielding more 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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How Should Investors Feel About Learning Technologies Group plc's (LON:LTG) CEO Pay?
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In 2013 Jonathan Satchell was appointed CEO of Learning Technologies Group plc (LON:LTG). 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.
See our latest analysis for Learning Technologies Group
At the time of writing our data says that Learning Technologies Group plc has a market cap of UK£646m, and is paying total annual CEO compensation of UK£488k. (This figure is for the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at UK£252k. When we examined a selection of companies with market caps ranging from UK£316m to UK£1.3b, we found the median CEO total compensation was UK£916k.
A first glance this seems like a real positive for shareholders, since Jonathan Satchell is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Learning Technologies Group has changed from year to year.
On average over the last three years, Learning Technologies Group plc has grown earnings per share (EPS) by 68% each year (using a line of best fit). In the last year, its revenue is up 83%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. It could be important to checkthis free visual depiction ofwhat analysts expectfor the future.
Most shareholders would probably be pleased with Learning Technologies Group plc for providing a total return of 227% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
It looks like Learning Technologies Group plc pays its CEO less than similar sized companies. Many would consider this to indicate that the pay is modest since the business is growing. The pleasing shareholder returns are the cherry on top; you might even consider that Jonathan Satchell deserves a raise!
Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders arealsobuying shares with their own money. Shareholders may want tocheck for free if Learning Technologies Group insiders are buying or selling shares.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Terrifying WWE stunt stuns wrestling fans
WWE Raw got off to a scary start on Monday. During the # FallsCountAnywhere match, professional wrestlers Braun Strowman and Bobby Lashley were thrown through a giant LED display. Strowman and Lashley kicked off the show with a fight that went all over the new set. The climax of the fight occurred when Strowman tackled Lashley through the LED display, amid plenty of sparks, smoke and mayhem. Dead serious I hope they all right 😥😥😥 #raw — ken p of ypgent (@KeN_Mrgentleman) July 2, 2019 Once all the smoke cleared, it appeared as though the wrestlers were seriously injured. Fans even took to Twitter to voice their concern for the pair. Fans in attendance, however, knew that it was just part of the pageantry which is professional wrestling. While the wrestlers writhed in pain and were loaded on stretchers, the fans chanted, “This is awesome.” When there’s a new creative director of #RAW and the #FallsCountAnywhere match on #RAW ends in murder, followed by Corey Graves swearing. pic.twitter.com/3OJqPoMAZa — Kyle Lewis (@KeepItFiveStar) July 2, 2019 #ThankYouHeyman needs to be trending on Twitter tonight because that was an amazing opening! Corey Graves used profanity and there’s pyros in WWE again! I think it’s safe to say that the PG era is officially dead thanks to Paul. 😵 #FallsCountAnywhere pic.twitter.com/1Fzno502uU — Luis Hernandez Jr (@luistampagamer) July 2, 2019 This was all part of new Raw executive director Paul Heyman’s debut episode. The longtime WWE personality was in charge of the creative direction for the event and fans loved what they saw. Story continues As for the fake injuries to the wrestlers, viewers were given a few updates throughout the evening. In the last update, viewers were told Lashley appears to be fine, while Strowman may have suffered a ruptured spleen. WWE Raw airs Mondays at 8 p.m. on USA. Watch as Trump debuts a new nickname for Joe Biden: ‘Obiden’: Read more from Yahoo Entertainment: Twitter slams Fred Savage’s new show: ‘Worst thing I’ve seen on television’ Kylie Jenner cries while asking Kim Kardashian to not ‘bully’ Jordyn Woods: ‘We’re better than this’ Meghan McCain questions Pete Buttigieg’s absence from post-debate spin room: ‘You made an unusual choice’ Tell us what you think! Hit us up on Twitter , Facebook or Instagram , or leave your comments below. And check out our host, Kylie Mar, on Twitter , Facebook or Instagram . Want daily pop culture news delivered to your inbox? Sign up here for Yahoo Entertainment & Lifestyle's newsletter.
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Jill Ellis hopes for a USA team win – but her loyalty is conflicted
Football-loving father and daughter, John and Jill Ellis celebrate at UCLA When the England women’s football team squares up against current title holders, the USA , this evening, they will be challenging one of their own. Jill Ellis, the US team captain, will coach her players from the sidelines on how to knock England out of the cup – while her father, John, sings “You’ll Never Walk Alone” to himself. At the heart of the US women’s football team there is a conflict of interest: the Ellis family – which includes Jill’s mother, Margaret, and brother, Paul – hails from the south coast of England, near Portsmouth. On Jill’s match days, John, 80, sits down at his organ in Florida and plays the Liverpool FC anthem. Outside the retirement home he shares with Margaret, American flags wave from flowerpots underneath a 2015 World Cup banner. “On the one hand, I am delighted to see the England girls do well,” John told the Washington Post . “But I truly know where my allegiance lies, because this country gave me my opportunity. I have a lot of pride being English, but I came to America.” The Ellises have always been a football-loving family. In the past, they have supported Manchester United and Portsmouth; now, they are on the side of the US. When Jill, now 52, was growing up, she watched John travel the world as a football player and coach with the Royal Marines, for whom he was also a commander. Later, he coached England club teams. Jill and Paul inherited their father’s passion for the game; they would play football together in the playground during the week, then follow him to training sessions at the weekend. British football coach John Ellis carved a path that his daughter, Jill, has followed carefully and with success Credit: Soccer Academy “I’d stand on the sidelines,” Jill has told USA Today . “The real fun part was, after a game, we’d go in the clubhouse and eat a bag of crisps and drink lemonade with the players.” But her early interest in football was stifled by strict gender rules in Britain. The FA had banned women’s football in 1921, preventing female players from pursuing professional careers in the sport. It wasn’t lifted until 1971, but it took another decade for attitudes to really shift. Story continues Jill was confined to playground games, hockey and athletics. Things only changed in 1980, when Jill turned 14 and John packed up his family and took them from the coastal village of Cowplain to the US. Although it isn’t football’s traditional home, the Ellises thrived in America. John set up a training camp, Soccer Academy, in North Virginia (now run by Paul), and Jill started playing competitively. The academy attracted coaches from across the world, including Japan and Scotland, whom John had met on his travels and invited to stay with the family. Jill coaches her team to victory against France in the Women's World Cup quarter finals Credit: Fifa /Getty In the years that followed, John rose to assistant coach of the US women’s national team – a path that Jill followed closely. She went to study English at William & Mary Univerisity, Virginia, where she was also on the football team. Her teammate from that time, Julie Shackford, has said Jill would randomly break into “God Save the Queen.” As time passed, her British accent softened and long American vowels crept in. Jill set up home in Miami with her wife, Betsy Stephenson, with whom she has a 14-year-old daughter, Lily. By the time she became the US national coach in 2014, the Ellises had become naturalised US citizens and their new allegiance was set. Jill has coached the US team through 125 games, including an unbeaten 12-game stint in the last two World Cups. In 2015, she helped them win their first World Cup since 1999. Gone are the days when Jill sings 'God Save the Queen' – her loyalties now lie with the USA team Credit: Getty Tensions will no doubt be high when the Ellises’ two countries go head-to-head tonight for a place in the World Cup final . England has accused the US of spying on its players , after backroom staff were caught wandering around the team’s hotel. Meanwhile, Britain waits with bated breath to see if its women’s team can go one step further than its men did last year. But the Ellis family will be unwavering in their support. “It has gone through my mind as [Jill] has developed her coaching career whether she would go back to England someday,” John has said. “I don’t think so now. She has a job to do, and she will do it.” For her part, Jill has fond memories of Britain. But when she was asked last week about facing her home nation, her response was clipped: “I’ve got US citizenship, brother.”
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Meet the #MeToo activists in one of the world's most hostile environments
Fakhrriyah Hashim: the woman who sparked the #ArewaMeToo movement On a sunny afternoon in February, four men from Nigeria's dreaded special anti-robbery squad burst into Maryam Awaisu’s office brandishing an arrest warrant. They had come from Abuja, nearly 200km to the south, to apprehend the 29-year old writer for her role as one of the leaders of a new #MeToo movement protesting against violence against women in the notoriously repressive northern regions. “They told me I was a spoiled brat who had no problems in life and wanted to create problems for others,” Ms Awaisu says. The movement was sparked by a tweet sent by Ms Awaisu’s friend Fakhrriyah Hashim a few weeks earlier. A campaigner by nature, the 26-year old activist had coined the #ArewaMeToo hashtag to highlight a story of domestic assault to her 16,000 Twitter followers. Arewa is the Hausa word for north; if Nigeria itself is a tough place to be a woman, the north must be one of the most hostile environments in the country. In this mainly Muslim region, gatekeepers hold sway, using cultural definitions of feminine dignity and religious justifications of not exposing the sins of others as tools to silence those who try to highlight abuse. And it is here where the notorious Islamist terror group Boko Haram has emerged, kidnapping hundreds of teenage girls as spoils of war for its troops. Maryam Awaisu was arrested for her support of Nigeria's nascent #MeToo movement Credit: Twitter/stevescott_itv In such an atmosphere the arrest came as no surprise to Ms Awaisu. But it sparked a global outcry, with human rights organisation Amnesty International saying Ms Awaisu and “other brave human rights defenders… must not be silenced or punished for the vital work they do". She was released that same day and when she returned home found the courage to tell her family of the abuse she had suffered two decades previously. In a perfect illustration of the oppressive social norms she is battling, she was accused of fomenting discord in the household. But this bruising experience has not deterred Ms Awaisu and her fellow campaigners. After their tweets went viral, Ms Hashim, Ms Awaisu and a few other volunteers sprang into action to highlight how pervasive gender-based violence is in the country. Around 50 people got in touch to tell them about the abuse they had suffered and a pattern quickly emerged - most had first experienced sexual violence as children. They began referring the cases to counsellors and pro-bono lawyers willing to help. But the criminal justice system in Nigeria is not a welcoming place for women. Some victims are still wary of going down the legal route, afraid of the danger they may put themselves in. Nigeria’s notoriously understaffed law enforcement agencies routinely dismiss cases of sexual violence and there are regular reports of police officers assaulting, raping and even killing women. Story continues But for the #ArewaMeToo campaigners, stimulating a conversation of this magnitude and keeping up the pressure on abusers is vital. “The spotlight is on us, but we want to put the spotlight on what they [abusers] did,” Ms Hashim says as she taps on her phone, notifying the #ArewaMeToo WhatsApp group of updates on a new case. A two year old has been raped and the mother has disappeared after reporting this horrendous crime to the police. “When that thing happens, you know it’s someone close to the family who is responsible. So the mother is trying to protect her child.” “We are creating a paradigm shift in the perception of gender-based violence in Northern Nigeria and how we do that, if we are able to do that, can lead to institutional reforms,” adds Ms Hashim. “That's why sustainability is very important.” The movement now has branches throughout northern states and another is on the way in Zamfara, which has strict Sharia laws and where the religious police must give permission for the group to operate. And some campaigners are going into schools to talk about gender-based violence. #ArewaMeToo and similar women’s rights organisations springing up around the country are giving other women confidence to report abuse, says Ayisha Osori, Dakar-based executive director for the Open Society Initiative West Africa. “There are not enough organisations like #ArewaMeToo working across Nigeria and specifically in the North. Like most oppressed systems, once people see that someone wants to do something about a problem, there is confidence to report abuse. What would be great is that the campaign gets all the support it deserves and needs from citizens, influencers and the state.” Earlier this year support came from the United Nations. Deputy secretary-general Amina Mohammed, herself from northeastern Nigeria, was speaking at an event in London where Ms Hashim was a panellist. Ms Mohammed said #ArewaMeToo activists deserved credit for speaking about trauma in a society that “is sick and needs help.” The new movement has drawn criticisms from fellow northerners who believe the young women are opening up Islam to scorn and ridicule from unbelievers. One commonly referenced verse is Chapter 4:148: “Allah does not like the public mention of evil, except by one who has been wronged. And ever is Allah all-hearing and All-Knowing” “They conveniently leave out the ‘except’ part,” says Ms Awaisu wearily. Protect yourself and your family by learning more about Global Health Security View comments
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The big property price problem with Boris Johnson’s plan to slash stamp duty
Boris Johnson, Conservative party leadership candidate, speaking at the Bournemouth Pavilion Theatre, south England, last week. Photo: Andrew Matthews/PA via AP Boris Johnson, the likely next Conservative prime minister, made a splash in the housing market when he revealed his plans to abolish stamp duty on home purchases of under £500,000 in value and cut the rates on sales over that. The policy is under consideration as part of a budget to stimulate the economy before the Brexit deadline of 31 October. Johnson believes that a bonanza of regulation-scrapping and tax-cutting will fuel the economy through the worst of a potential no-deal Brexit. Scrapping stamp duty on the majority of home purchases would cost the Treasury billions, but Johnson’s team hopes it’ll spark a wave of activity in a constrained market, particularly at the upper end where the tax would remain in place, albeit at lower rates. Many economists agree that stamp duty is a bad and inefficient tax that deters people from moving when they want to by increasing the cost of doing so. For example, it disincentivises the elderly from downsizing. But here’s the rub. Slashing stamp duty would fuel transactions, putting even more pressure on the country’s limited housing supply, the market’s fundamental issue. In turn, house prices would rise further, worsening the current problem without addressing the chronic undersupply of homes. Moreover, demand is not a problem in the housing market. Planning reform is. Strict planning rules curtail the supply of developable land. This not only curbs supply directly by prohibiting building work, but it also drives up land prices, making development uneconomical. A 2015 paper by the London School of Economics noted research showing that a recent stamp duty holiday for first-time buyers led to an increase in transactions of somewhere between 8% and 20%. Moreover, a study by the Economic & Social Research Council found that an increase in the rate of stamp duty by 1% or 2% reduced household mobility by 40%, suggesting a cut would have the opposite effect. There were warnings of this in 2017, when chancellor Phillip Hammond abolished stamp duty for all first-time buyers on properties worth below £300,000. Story continues The Office for Budget Responsibility predicted that Hammond's stamp duty cut would push house prices up for 0.3% in the following year off the back of higher demand from first-time buyers. The forecaster said that "the main gainers from the policy are people who already own property, not the FTBs themselves." The OBR continued: "For some potential FTBs with smaller deposits, who are constrained by loan-to-value lending criteria, the relief will enable them to borrow a multiple of their SDLT saving, allowing them to buy properties that they otherwise could not afford – but more expensively." Even if Johnson cutting stamp duty coincides with supply-side reforms such as liberalising planning laws, it would take time for developers to respond, perhaps even years before there is a substantial increase in the number of new homes coming to market. In the short-to-medium term, a greater number of transactions would simply push prices higher in the housing market, benefiting existing homeowners most of all at the expense of the likely growing number of first-time buyers, who’ll need bigger mortgages. Though rising house prices are linked with increased consumption, it’s not always good news for the economy, particularly if prices are already high relative to incomes, as they are in the UK, and underpinned in large part by a lack of supply. As the Urban Institute thinktank noted, higher house prices mean more people paying bigger rents and mortgages for a longer period of time, which can reduce demand for consumer goods because the burden of housing costs is so large on household finances. Cutting stamp duty might be a crowd-pleasing policy for many Conservatives, but it’s not a panacea for Britain’s economic problems, especially if no-deal Brexit is as catastrophic as many economists predict it to be, and Johnson should be cautious in pursuing it.
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Does Adval Tech Holding AG's (VTX:ADVN) P/E Ratio Signal A Buying Opportunity?
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This article is written for those who want to get better at using price to earnings ratios (P/E ratios). We'll look at Adval Tech Holding AG's (VTX:ADVN) P/E ratio and reflect on what it tells us about the company's share price.What is Adval Tech Holding's P/E ratio?Well, based on the last twelve months it is 14.57. That corresponds to an earnings yield of approximately 6.9%.
View our latest analysis for Adval Tech Holding
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Adval Tech Holding:
P/E of 14.57 = CHF175 ÷ CHF12.02 (Based on the year to December 2018.)
A higher P/E ratio means that investors are payinga higher pricefor each CHF1 of company earnings. All else being equal, it's better to pay a low price -- but as Warren Buffett said, 'It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.'
Earnings growth rates have a big influence on P/E ratios. If earnings are growing quickly, then the 'E' in the equation will increase faster than it would otherwise. Therefore, even if you pay a high multiple of earnings now, that multiple will become lower in the future. Then, a lower P/E should attract more buyers, pushing the share price up.
Adval Tech Holding maintained roughly steady earnings over the last twelve months. But over the longer term (3 years), earnings per share have increased by 145%.
One good way to get a quick read on what market participants expect of a company is to look at its P/E ratio. The image below shows that Adval Tech Holding has a lower P/E than the average (20) P/E for companies in the machinery industry.
Adval Tech 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. If you consider the stock interesting, further research is recommended. For example, I often monitordirector buying and selling.
One drawback of using a P/E ratio is that it considers market capitalization, but not the balance sheet. That means it doesn't take debt or cash into account. In theory, a company can lower its future P/E ratio by using cash or debt to invest in growth.
Spending on growth might be good or bad a few years later, but the point is that the P/E ratio does not account for the option (or lack thereof).
With net cash of CHF26m, Adval Tech Holding has a very strong balance sheet, which may be important for its business. Having said that, at 20% of its market capitalization the cash hoard would contribute towards a higher P/E ratio.
Adval Tech Holding has a P/E of 14.6. That's below the average in the CH market, which is 18.5. 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. Since analysts are predicting growth will continue, one might expect to see a higher P/E soit may be worth looking closer.
Investors should be looking to buy stocks that the market is wrong about. If it is underestimating a company, investors can make money by buying and holding the shares until the market corrects itself. So thisfreereport on the analyst consensus forecastscould help you make amaster moveon this stock.
Of courseyou might be able to find a better stock than Adval Tech Holding. 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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Rich get richer, everyone else not so much in record U.S. expansion
By Trevor Hunnicutt
NEW YORK (Reuters) - Last month Pink Floyd frontman David Gilmour sold his guitar collection for $21.5 million, including one piece - his famed "Black Strat" Fender Stratocaster - that went for nearly $4 million to the owner of the U.S. National Football League's Indianapolis Colts.
The "Money" singer set a musical instrument sales record in the charity auction, marking yet another milestone for a booming market just weeks after New York-based art dealer Sotheby's Holdings, auctioned Claude Monet's "Meules" for $110.7 million, the most ever for an Impressionist painting.
And it is not just instruments or paintings in high demand among the world's billionaire set. Auction houses themselves now appear to be prized vanity purchases: Just a few days before the Pink Floyd auction, Franco-Israeli cable magnate Patrick Drahi, whose firm Altice earned significant money in the United States, made a $3.7 billion bid for Sotheby's, which had just hosted the Monet sale.
Welcome to the longest U.S. economic expansion in history, one perhaps best characterized by the excesses of extreme wealth and an ever-widening chasm between the unfathomably rich and everyone else.
Indeed, as the expansion entered its record-setting 121st month on Monday, signs of a new Gilded Age are all over.
Big-money deals are getting bigger, from corporate mergers and acquisitions, to individuals buying luxury penthouses, sports teams, yachts and all-frills pilgrimages to the ends of the earth. And while these deals grab headlines, there is a deeper trend at work. The number of billionaires in the United States has more than doubled in the last decade, from 267 in 2008 to 607 last year, according to UBS.
"The rich have gotten richer and they've gotten richer faster," said John Mathews, Head of Private Wealth Management and Ultra High Net Worth at UBS Global Wealth Management. "The drive or the desire for consumption has just gone upscale."
But there are also signs of struggle and stagnation at lower-income levels. The wealthiest fifth of Americans hold 88% of the country's wealth, a share that has grown since before the crisis, Federal Reserve data through 2016 shows. Meanwhile, the number of people receiving federal food stamps tops 39 million, below the peak in 2013 but still up 40% from 2008 even though the country's population has only grown about 8%.
Still, a decade ago, this kind of growth was not thought possible. The U.S. financial system was in a shambles and people feared bank failures could permanently undermine capitalism. Policymakers scrambled to stabilize markets and boost asset prices when U.S. housing markets unraveled. They did less to tackle income and wealth inequality.
Now, many of the signs of mega-wealth that preceded that financial crisis are once again on display.
WEALTH EFFECT
The examples are big and small.
The cost of a dinner at the French Laundry, the chic California restaurant, is up 35% to $325 per person, from $240 10 years ago, beating inflation by nearly 20%.
Undergraduate tuition at Ivy League mainstay Columbia University is a hair under $60,000 a year, up by half from $39,000 in the 2008 school year.
The U.S. stock market, measured by the S&P 500, has tripled in the last decade.
Hedge fund boss Ken Griffin set a record for a U.S. home sale when he bought a $238 million penthouse condominium on "Billionaires' Row" just off New York City's Central Park.
Yet rents in New York have risen twice as fast as wages, according to StreetEasy data from 2010-2017, squeezing lower-income residents. U.S. home prices were near their lowest levels of affordability since 2008, research by ATTOM Data Solutions shows. And the number of homeless people sleeping in the city's shelters is 70% higher than a decade ago, according to the Coalition for the Homeless, an advocacy group.
"Under-resourced areas are not getting any better; the housing opportunity for them is not getting any better," said Carolyn Valli, CEO at Central Berkshire Habitat For Humanity, in Pittsfield, Massachusetts, at a recent economic policy event. She said high healthcare costs and a lack of large employers mean fewer jobs in some areas. Food, utilities and housing costs, meanwhile, remain high. "It doesn't feel like a boom yet."
Anger over what some see as the unfairness of the economy has bubbled into the country's politics, with Democratic presidential candidates promising to lower healthcare costs, guarantee jobs and tax the rich.
Economic policymakers think the expansion could dim as stimulus from tax cuts and low interest rates fades while a U.S.-China trade skirmish brews. They worry that even the underwhelming gains made by low-income people in the last decade are fragile and that people only recently brought into the workforce could be the first fired when a recession hits.
"The benefits of this long recovery are now reaching these communities to a degree that has not been felt for many years," Federal Reserve Chairman Jerome Powell said last week. "Many people who in the past struggled to stay in the workforce are now getting an opportunity to add new and better chapters to their life stories. All of this underscores how important it is to sustain this expansion."
(Reporting by Trevor Hunnicutt; Additional reporting by Conway G. Gittens; Editing by Dan Burns and Andrea Ricci)
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Tecan Group Ltd. (VTX:TECN)'s Earnings Grew 7.2%, Is It Enough?
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Assessing Tecan Group Ltd.'s (VTX:TECN) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess TECN's recent performance announced on 31 December 2018 and evaluate these figures to its long-term trend and industry movements.
See our latest analysis for Tecan Group
TECN's trailing twelve-month earnings (from 31 December 2018) of CHF71m has increased by 7.2% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 10%, indicating the rate at which TECN is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, Tecan Group has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 8.3% exceeds the CH Life Sciences industry of 7.5%, indicating Tecan Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Tecan Group’s debt level, has declined over the past 3 years from 13% to 13%.
Tecan Group's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Tecan Group to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for TECN’s future growth? Take a look at ourfree research report of analyst consensusfor TECN’s outlook.
2. Financial Health: Are TECN’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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Perth Mint's monthly gold sales jump 80% in June
July 2 (Reuters) - The Perth Mint's gold product sales in June rose 80.3% from the previous month, the refiner said on Tuesday. Sales of gold coins and minted bars in June climbed to 19,449 ounces from 10,790 ounces in May, the mint said in a blog post. Meanwhile, silver sales last month fell 49.5% to 344,474 ounces from May. In June, benchmark spot gold prices surged nearly 8%, recording its best monthly performance in three years, supported by expectations of easing monetary policy by major central banks, U.S.-China trade war and tensions in the Middle East. The Perth Mint refines more than 90% of newly-mined gold in Australia, the world's second-largest gold producer after China. Period Gold (oz) Silver (oz) (year-month) 2019-June 19,449 344,474 2019-May 10,790 681,582 2019-April 19,991 906,219 2019-March 32,757 935,819 2019-Feb 19,524 584,310 2019-Jan 31,189 828,854 2018-Dec 29,186 692,971 2018-Nov 64,308 876,446 2018-Oct 36,840 1,079,684 2018-Sept 62,552 1,305,600 2018-August 38,904 520,245 2018-July 29,921 486,821 2018-June 16,847 229,280 2018-May 14,800 557,120 2018-April 15,161 458,655 2018-March 29,883 975,921 2018-Feb 26,473 992,954 2018-Jan 37,174 1,067,361 2017-Dec 27,009 874,437 2017-Nov 23,901 544,436 2017-Oct 44,618 999,425 2017-Sept 46,415 697,849 2017-Aug 23,130 392,091 2017-July 23,675 1,167,963 2017-June 19,259 1,215,071 2017-May 29,679 826,656 2017-April 10,490 468,977 2017-March 22,232 716,283 2017-Feb 25,257 502,353 2017-Jan 72,745 1,230,867 2016-Dec 63,420 430,009 2016-Nov 54,747 984,622 2016-Oct 79,048 1,084,213 2016-Sept 58,811 1,031,858 2016-Aug 14,684 376,461 2016-July 16,870 693,447 2016-June 31,368 1,220,817 2016-May 21,035 974,865 2016-April 47,542 1,161,766 2016-March 47,948 1,756,238 2016-Feb 37,063 1,049,062 2016-Jan 47,759 1,473,408 (Reporting by Eileen Soreng in Bengaluru)
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Here's What Industria de Diseño Textil, S.A.'s (BME:ITX) P/E Is Telling Us
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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 Industria de Diseño Textil, S.A.'s (BME:ITX) P/E ratio could help you assess the value on offer.Industria de Diseño Textil has a price to earnings ratio of 23.46, based on the last twelve months. That means that at current prices, buyers pay €23.46 for every €1 in trailing yearly profits.
View our latest analysis for Industria de Diseño Textil
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Industria de Diseño Textil:
P/E of 23.46 = €26.45 ÷ €1.13 (Based on the year to April 2019.)
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.
Earnings growth rates have a big influence on P/E ratios. If earnings are growing quickly, then the 'E' in the equation will increase faster than it would otherwise. That means unless the share price increases, the P/E will reduce in a few years. A lower P/E should indicate the stock is cheap relative to others -- and that may attract buyers.
Industria de Diseño Textil increased earnings per share by 3.8% last year. And it has bolstered its earnings per share by 8.4% per year over the last five years.
One good way to get a quick read on what market participants expect of a company is to look at its P/E ratio. You can see in the image below that the average P/E (14.6) for companies in the specialty retail industry is lower than Industria de Diseño Textil's P/E.
That means that the market expects Industria de Diseño Textil will outperform other companies in its industry. Shareholders are clearly optimistic, but the future is always uncertain. So further research is always essential. I often monitordirector buying and selling.
The 'Price' in P/E reflects the market capitalization of the company. So it won't reflect the advantage of cash, or disadvantage of debt. 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.
The extra options and safety that comes with Industria de Diseño Textil's €6.7b net cash position means that it deserves a higher P/E than it would if it had a lot of net debt.
Industria de Diseño Textil has a P/E of 23.5. That's higher than the average in the ES market, which is 17. EPS was up modestly better over the last twelve months. And the healthy balance sheet means the company can sustain growth while the P/E suggests shareholders think it will.
Investors should be looking to buy stocks that the market is wrong about. As value investor Benjamin Graham famously said, 'In the short run, the market is a voting machine but in the long run, it is a weighing machine.' 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 Industria de Diseño Textil. 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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How Do Analysts See Ten Entertainment Group plc (LON:TEG) Performing In The Next Couple Of Years?
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Ten Entertainment Group plc's (LON:TEG) released its most recent earnings update in April 2019, which indicated that the company gained from a sizeable tailwind, eventuating to a high double-digit earnings growth of 57%. Investors may find it useful to understand how market analysts predict Ten Entertainment Group's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
View our latest analysis for Ten Entertainment Group
Market analysts' consensus outlook for this coming year seems buoyant, with earnings increasing by a significant 65%. This high growth in earnings is expected to continue, bringing the bottom line up to UK£16m by 2022.
Even though it’s informative understanding the growth year by year relative to today’s level, it may be more insightful to analyze the rate at which the business is rising or falling on average every year. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Ten Entertainment Group's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 11%. This means, we can assume Ten Entertainment Group will grow its earnings by 11% every year for the next couple of years.
For Ten Entertainment Group, I've put together three fundamental factors 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 TEG 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 TEG is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TEG? 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 Knorr-Bremse Aktiengesellschaft (ETR:KBX) Potentially Underrated?
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Knorr-Bremse Aktiengesellschaft (ETR:KBX) 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 KBX, it is a company with great financial health as well as a a great history of performance. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at thereport on Knorr-Bremse here.
KBX delivered a bottom-line expansion of 11% in the prior year, with its most recent earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 36% return to shareholders, which paints a buoyant picture for the company. KBX's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that KBX has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. KBX appears to have made good use of debt, producing operating cash levels of 0.42x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
For Knorr-Bremse, I've put together three key aspects you should look at:
1. Future Outlook: What are well-informed industry analysts predicting for KBX’s future growth? Take a look at ourfree research report of analyst consensusfor KBX’s outlook.
2. Valuation: What is KBX 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 KBX is currently mispriced by the market.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of KBX? 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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Should You Like adidas AG’s (FRA:ADS) High Return On Capital Employed?
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Today we are going to look at adidas AG (FRA:ADS) to see whether it might be an attractive investment prospect. Specifically, we'll consider its Return On Capital Employed (ROCE), since that will give us an insight into how efficiently the business can generate profits from the capital it requires.
First up, we'll look at what ROCE is and how we calculate it. Then we'll compare its ROCE to similar companies. And finally, we'll look at how its current liabilities are impacting its ROCE.
ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Generally speaking a higher ROCE is better. In brief, it is a useful tool, but it is not without drawbacks. Renowned investment researcher Michael Mauboussinhas suggestedthat a high ROCE can indicate that 'one dollar invested in the company generates value of more than one dollar'.
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 adidas:
0.21 = €2.5b ÷ (€19b - €7.4b) (Based on the trailing twelve months to March 2019.)
So,adidas has an ROCE of 21%.
View our latest analysis for adidas
One way to assess ROCE is to compare similar companies. Using our data, we find that adidas's ROCE is meaningfully better than the 14% average in the Luxury industry. I think that's good to see, since it implies the company is better than other companies at making the most of its capital. Putting aside its position relative to its industry for now, in absolute terms, adidas's ROCE is currently very good.
Our data shows that adidas currently has an ROCE of 21%, compared to its ROCE of 16% 3 years ago. This makes us think about whether the company has been reinvesting shrewdly. You can click on the image below to see (in greater detail) how adidas's past growth compares to other companies.
It is important to remember that ROCE shows past performance, and is not necessarily predictive. ROCE can be deceptive for cyclical businesses, as returns can look incredible in boom times, and terribly low in downturns. 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 adidas.
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 the ROCE equation works, having large bills due in the near term can make it look as though a company has less capital employed, and thus a higher ROCE than usual. To check the impact of this, we calculate if a company has high current liabilities relative to its total assets.
adidas has total assets of €19b and current liabilities of €7.4b. As a result, its current liabilities are equal to approximately 39% of its total assets. adidas has a medium level of current liabilities, boosting its ROCE somewhat.
Still, it has a high ROCE, and may be an interesting prospect for further research. adidas 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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Some Crystal International Group (HKG:2232) Shareholders Are Down 37%
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Crystal International Group Limited ( HKG:2232 ) share price is down 37% in the last year. That falls noticeably short of the market return of around -3.5%. Crystal International Group may have better days ahead, of course; we've only looked at a one year period. The falls have accelerated recently, with the share price down 13% in the last three months. But this could be related to the weak market, which is down 6.6% in the same period. Check out our latest analysis for Crystal International Group While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement. Unhappily, Crystal International Group had to report a 15% decline in EPS over the last year. This reduction in EPS is not as bad as the 37% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The P/E ratio of 8.47 also points to the negative market sentiment. The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers). SEHK:2232 Past and Future Earnings, July 2nd 2019 We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Crystal International Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further. Story continues A Different Perspective Crystal International Group shareholders are down 35% for the year (even including dividends), even worse than the market loss of 3.5%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 13%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at. If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges. We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Is Jungfraubahn Holding AG's (VTX:JFN) High P/E Ratio A Problem For Investors?
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This article is for investors who would like to improve their understanding of price to earnings ratios (P/E ratios). We'll show how you can use Jungfraubahn Holding AG's (VTX:JFN) P/E ratio to inform your assessment of the investment opportunity. Based on the last twelve months,Jungfraubahn Holding's P/E ratio is 17.34. In other words, at today's prices, investors are paying CHF17.34 for every CHF1 in prior year profit.
View our latest analysis for Jungfraubahn Holding
Theformula for price to earningsis:
Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)
Or for Jungfraubahn Holding:
P/E of 17.34 = CHF142.6 ÷ CHF8.22 (Based on the year to December 2018.)
A higher P/E ratio means that buyers have to paya higher pricefor each CHF1 the company has earned over the last year. All else being equal, it's better to pay a low price -- but as Warren Buffett said, 'It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.'
Earnings growth rates have a big influence on P/E ratios. If earnings are growing quickly, then the 'E' in the equation will increase faster than it would otherwise. Therefore, even if you pay a high multiple of earnings now, that multiple will become lower in the future. A lower P/E should indicate the stock is cheap relative to others -- and that may attract buyers.
Jungfraubahn Holding increased earnings per share by an impressive 16% over the last twelve months. And it has bolstered its earnings per share by 9.6% per year over the last five years. This could arguably justify a relatively high P/E ratio.
One good way to get a quick read on what market participants expect of a company is to look at its P/E ratio. You can see in the image below that the average P/E (10.4) for companies in the transportation industry is lower than Jungfraubahn Holding's P/E.
Its relatively high P/E ratio indicates that Jungfraubahn Holding shareholders think it will perform better than other companies in its industry classification. Clearly the market expects growth, but it isn't guaranteed. So investors should delve deeper. I like to checkif company insiders have been buying or selling.
Don't forget that the P/E ratio considers market capitalization. So it won't reflect the advantage of cash, or disadvantage of debt. Theoretically, a business can improve its earnings (and produce a lower P/E in the future) by investing in growth. That means taking on debt (or spending its cash).
While growth expenditure doesn't always pay off, the point is that it is a good option to have; but one that the P/E ratio ignores.
Jungfraubahn Holding has net cash of CHF65m. That should lead to a higher P/E than if it did have debt, because its strong balance sheets gives it more options.
Jungfraubahn Holding trades on a P/E ratio of 17.3, which is fairly close to the CH market average of 18.5. The balance sheet is healthy, and recent EPS growth impressive, but the P/E implies some caution from the market.
Investors have an opportunity when market expectations about a stock are wrong. If the reality for a company is not as bad as the P/E ratio indicates, then the share price should increase as the market realizes this. So thisfreevisualization of the analyst consensus on future earningscould help you make theright decisionabout whether to buy, sell, or hold.
Of courseyou might be able to find a better stock than Jungfraubahn Holding. 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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Is There An Opportunity With Telia Company AB (publ)'s (STO:TELIA) 26% Undervaluation?
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In this article we are going to estimate the intrinsic value of Telia Company AB (publ) (STO:TELIA) by projecting its future cash flows and then discounting them to today's value. I will be using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward.
Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in theSimply Wall St analysis model.
See our latest analysis for Telia Company
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.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
[{"": "Levered FCF (SEK, Millions)", "2020": "SEK12.3b", "2021": "SEK12.7b", "2022": "SEK12.3b", "2023": "SEK12.0b", "2024": "SEK11.8b", "2025": "SEK11.7b", "2026": "SEK11.6b", "2027": "SEK11.6b", "2028": "SEK11.6b", "2029": "SEK11.6b"}, {"": "Growth Rate Estimate Source", "2020": "Analyst x11", "2021": "Analyst x9", "2022": "Analyst x1", "2023": "Est @ -2.45%", "2024": "Est @ -1.58%", "2025": "Est @ -0.98%", "2026": "Est @ -0.56%", "2027": "Est @ -0.26%", "2028": "Est @ -0.05%", "2029": "Est @ 0.09%"}, {"": "Present Value (SEK, Millions) Discounted @ 5.2%", "2020": "SEK11.6k", "2021": "SEK11.5k", "2022": "SEK10.5k", "2023": "SEK9.8k", "2024": "SEK9.1k", "2025": "SEK8.6k", "2026": "SEK8.1k", "2027": "SEK7.7k", "2028": "SEK7.3k", "2029": "SEK7.0k"}]
("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF)= SEK91.3b
The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 10-year government bond rate (0.4%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 5.2%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = kr12b × (1 + 0.4%) ÷ (5.2% – 0.4%) = kr244b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= SEKkr244b ÷ ( 1 + 5.2%)10= SEK146.73b
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 SEK238.02b. In the final step we divide the equity value by the number of shares outstanding.This results in an intrinsic value estimate of SEK56.88. Compared to the current share price of SEK42.21, the company appears a touch undervalued at a 26% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind.
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Telia Company 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 5.2%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn’t be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. What is the reason for the share price to differ from the intrinsic value? For Telia Company, I've put together three fundamental factors you should further examine:
1. Financial Health: Does TELIA 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 TELIA'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 TELIA? 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 SE 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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Tyler Skaggs: Yankees OF Giancarlo Stanton posts message for Angels
Tragedy hit all of baseball on Monday with the untimely death of Los Angeles Angels pitcher Tyler Skaggs, who was found dead in his hotel room during a road trip in Texas. Skaggs’ death triggered an outpouring of emotion from figures across the league . One of the later reactions came from New York Yankees slugger Giancarlo Stanton, who posted a direct message to the Angels through Instagram on Monday night. The message features wisdom that Stanton likely learned from another devastating episode for MLB, the death of his Marlins teammate Jose Fernandez in 2016. View this post on Instagram A post shared by Giancarlo Stanton (@giancarlo818) on Jul 1, 2019 at 7:17pm PDT The full text of Stanton’s post: RIP Bro, My heart goes out to your family🙏🏽 My message to the @angels while having no time for yourself to grieve is to hug each other, laugh, cry, lift the ones taking it extra hard up. You’re going to wonder why all of this is happening , is it real, why are u suiting up to play a game that seems irrelevant. Some Anger will ensue while u have to grieve in a fish bowl.. A lot will go through your mind. So stay together through that. The first days back to schedule are the weirdest feeling, from the energy to the questions to having to walk by his locker. Try to Focus & understand how important your strength is for his family, all of your supporters & anyone looking for the power to overcome something. They’re looking @ you for guidance. So you all really need each other right now. Stay strong fellas I’m thinking about you! Sadly, there are also multiple Angels who already had experience with the death of a teammate. First baseman Justin Bour was a member of the 2016 Marlins who went through Fernandez’s death, and Albert Pujols had St. Louis Cardinals teammate Darryl Kile die of a heart attack in 2002. Backup outfielder Peter Bourjos was a member of the 2014 Cardinals, the only team Oscar Taveras played for before his death in a car crash. Story continues Additionally, anyone working for the Angels organization since 2009 also had to face the death of pitcher Nick Adenhart, who was killed by a drunk driver. The Angels were also Luis Valbuena’s final team before his death last offseason during an attempted highway robbery. Many fans visited Angel Stadium to mourn the death of Tyler Skaggs. (AP Photo/Alex Gallardo) More from Yahoo Sports: Here's how Steph Curry found out where KD was signing Angels P Tyler Skaggs dead at 27 Wimbledon: Venus Williams loses to 15-year-old Police: Ortiz shooting was $30K hit gone wrong
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Here's Why We Think Billington Holdings (LON:BILN) Is Well Worth Watching
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It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested inBillington Holdings(LON:BILN). 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.
See our latest analysis for Billington Holdings
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. It's no surprise, then, that I like to invest in companies with EPS growth. We can see that in the last three years Billington Holdings grew its EPS by 17% per year. That growth rate is fairly good, assuming the company can keep it up.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). While we note Billington Holdings's EBIT margins were flat over the last year, revenue grew by a solid 6.0% to UK£76m. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
Billington Holdings isn't a huge company, given its market capitalization of UK£40m. That makes it extra important to check on itsbalance sheet strength.
Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Like a sturdy phalanx Billington Holdings insiders have stood united by refusing to sell shares over the last year. But my excitement comes from the UK£52k that Non-Executive Chairman Ian Lawson spent buying shares (at an average price of about UK£3.01).
As I already mentioned, Billington Holdings is a growing business, which is what I like to see. Not every business can grow its EPS, but Billington Holdings certainly can. The icing on the cake is that an insider bought shares during the year, which inclines me to put this one on a watchlist. Once you've identified a business you like, the next step is to consider what you think it's worth. And right now is your chance to view our exclusivediscounted cashflow valuationof Billington Holdings. You might benefit from giving it a glance today.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Billington Holdings, you'll probably love thisfreelist of growing companies that insiders are buying.
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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Locked out of China, U.S. pork producers sniff out new buyers
By Tom Polansek
CHICAGO (Reuters) - U.S. hog farmers lost hundreds of millions of dollars in export sales to China and Mexico after President Donald Trump launched his trade wars last year.
But the sector has largely offset those massive losses by cobbling together new customers in smaller markets from Colombia to Vietnam, according a Reuters analysis of data from the U.S. Meat Export Federation and the U.S. Department of Agriculture (USDA).
As American farmers pin their hopes for a trade deal on Trump and Chinese President Xi Jinping's agreement to restart talks at last week's G20 summit, the pork industry stands out for its success in avoiding the sharp sales reductions that have slammed other U.S. farm sectors, such as soybeans and sorghum.
Overall, U.S. pork exports fell 3.9% by volume and 8.4% by value from May 2018 to April 2019, compared to a year earlier, according to data compiled by the U.S. Meat Export Federation. China increased its tariff on U.S. pork in April of last year and again in July, when it imposed tariffs on soybeans.
By comparison, total U.S. soybean exports dropped 13.7% by volume and 19.2% by value during the same period, while total sorghum exports dropped 72.8% by volume and 73.6% by value, according to the USDA.
The boom in small-market sales has "been a savior for the pork industry," Iowa hog farmer Dean Meyer said.
The industry's salvation has roots in global marketing efforts that began more than a decade before the U.S-China trade dispute, as American hog farmers and their trade groups sought to take advantage of a boom in protein demand linked rising incomes in emerging markets.
They visited importers and grocery stores in developing countries, taught buyers how U.S. pork is produced and touted its quality to chefs and bloggers around the world, according to participants in the trade trips. Those efforts took years to pay off.
As China and Mexico reduced their purchases last year, a subsequent drop in U.S. pork prices helped encourage alternative buyers to ramp up purchases - particularly from smaller markets that had trade agreements with the United States, such as Colombia and South Korea.
The sector's ability to avoid a sharper decline in total exports underscores the importance of developing a diversified customer base to guard against any trade disruptions with major importers.
The soy industry had grown so heavily dependent on China - which before the trade war purchased 60% of U.S. soy exports, worth about $12 billion - that its more recent efforts to find new markets couldn't make up for the business it lost in the trade war. Sorghum, a much smaller crop, is even more dependent on China, which had accounted for 80% of U.S. exports.
By contrast, the U.S. pork industry relied on China and Hong Kong for about 20% of exports by volume in the $6 billion market before the trade war. Hog farmers started to worry years ago about the risk of a decline in demand from China, which previously blocked some U.S. pork over the use of a drug that helps fatten hogs.
U.S. pork sales to China and Hong Kong sank about 30% by volume and value to about 326,726 metric tons and $737 million in the 12 months ending in April, after Beijing increased its tariff to 62% from 12% last year.
Sales to Mexico over the same period dropped 11% by volume and 25% by value, to about 726,859 metric tons and $1.2 billion, after Mexico imposed 20% tariffs on U.S. pork imports in retaliation for U.S. duties on metals imports last year.
Replacement buyers in smaller markets - many of which already had relationships with U.S. meat producers - quickly stepped in to snap up much of the pork industry's surplus.
U.S. exports to Colombia, the Dominican Republic, Australia, Philippines, Vietnam and South Korea climbed by 24% by volume - to more than 530,000 metric tons - in the 12 months ending in April, compared to a year earlier, according to data from the U.S. Meat Export Federation. (GRAPHIC: https://tmsnrt.rs/2XflUWq )
YEARS OF SALES PITCHES
Meyer and other hog farmers like him have trekked across the globe on trade missions seeking new buyers for U.S. pork. He visited Colombia in 2015 and Peru in 2017, efforts that are now showing results, Meyer said.
Colombia's imports of U.S. pork rose by 34% to more than 103,000 metric tons in the 12 months ending in April 2019, aided by the U.S.–Colombia Trade Promotion Agreement.
Exports to South Korea jumped 14% to more than 230,000 metric tons in the 12 months ending in April, boosted by the United States-Korea Free Trade Agreement.
U.S. pork sales to Vietnam climbed by 334% by volume, to more than 16,500 metric tons, over the same period.
"I think it's a result of doing these trade missions, hitting these markets hard," said Meyer, who also serves on the executive committee for the U.S. Meat Export Federation.
This spring, the U.S. Meat Export Federation organized a pork cook-off in Ho Chi Minh City and afterward held an educational session and reception for about 300 chefs.
U.S. farmers on a separate trade trip to Vietnam visited food manufacturer Vissan last autumn, said Nebraska hog farmer Bill Luckey, who took part in the trip and is a director for the National Pork Board.
As a result, the Vietnamese company sent a delegation to tour U.S. meat processing plants, opening the door for potential deals, he said.
"We are out there trying to look at opportunities around the world," Luckey said.
Vissan is now considering importing frozen U.S. pork for the first time, the company said.
In a bid to increase international meat sales, Tyson Foods Inc added staff last year to include South America, Philippines, and the Middle East. Hormel Foods Corp also added staff, focusing on Asia and South America.
MISSED OPPORTUNITIES
While the pork sector has limited its losses, it might make great gains in sales to China were it not for the trade war. An epidemic of a fatal hog disease, African swine fever (ASF), has decimated millions of pigs in China's domestic herd, increasing its reliance on pork imports.
China is the world's top hog producer and pork consumer.
"This is a once-in-a-lifetime opportunity in China because of ASF," said Nick Giordano, vice president and global government affairs counsel for the National Pork Producers Council. "We can't fully capitalize on it because we have a 50% punitive tariff."
The U.S. industry did benefit from the epidemic, however. Expectations that the disease will push China to increase pork imports lifted U.S. hog futures by 78% from a four-month low in February to a five-year high in May. Prices have since dropped, but the gains allowed some farmers to lock in profits through 2020.
(Reporting by Tom Polansek in Chicago; Additional reporting Phuong Nguyen in Hanoi; Editing by Simon Webb and Brian Thevenot)
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Calculating The Intrinsic Value Of Marshalls plc (LON:MSLH)
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In this article we are going to estimate the intrinsic value of Marshalls plc (LON:MSLH) by taking the foreast future cash flows of the company and discounting them back to today's value. I will be using the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple!
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in theSimply Wall St analysis model.
View our latest analysis for Marshalls
We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars:
[{"": "Levered FCF (\u00a3, Millions)", "2020": "\u00a359.9m", "2021": "\u00a364.9m", "2022": "\u00a368.8m", "2023": "\u00a371.9m", "2024": "\u00a374.5m", "2025": "\u00a376.6m", "2026": "\u00a378.4m", "2027": "\u00a380.0m", "2028": "\u00a381.4m", "2029": "\u00a382.7m"}, {"": "Growth Rate Estimate Source", "2020": "Analyst x1", "2021": "Analyst x1", "2022": "Est @ 5.98%", "2023": "Est @ 4.55%", "2024": "Est @ 3.56%", "2025": "Est @ 2.86%", "2026": "Est @ 2.37%", "2027": "Est @ 2.03%", "2028": "Est @ 1.79%", "2029": "Est @ 1.62%"}, {"": "Present Value (\u00a3, Millions) Discounted @ 7.56%", "2020": "\u00a355.7", "2021": "\u00a356.1", "2022": "\u00a355.3", "2023": "\u00a353.7", "2024": "\u00a351.7", "2025": "\u00a349.5", "2026": "\u00a347.1", "2027": "\u00a344.7", "2028": "\u00a342.3", "2029": "\u00a339.9"}]
("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF)= £496.0m
After calculating the present value of future cash flows in the intial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 10-year government bond rate of 1.2%. We discount the terminal cash flows to today's value at a cost of equity of 7.6%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = UK£83m × (1 + 1.2%) ÷ (7.6% – 1.2%) = UK£1.3b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= £UK£1.3b ÷ ( 1 + 7.6%)10= £638.55m
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is £1.13b. To get the intrinsic value per share, we divide this by the total number of shares outstanding.This results in an intrinsic value estimate of £5.72. Compared to the current share price of £6.75, 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.
Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Marshalls 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 7.6%, which is based on a levered beta of 0.952. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn’t be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Marshalls, There are three fundamental factors you should look at:
1. Financial Health: Does MSLH 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 MSLH'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 MSLH? 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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Teleperformance SE (EPA:TEP) Might Not Be A Great Investment
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Today we are going to look at Teleperformance SE (EPA:TEP) to see whether it might be an attractive investment prospect. In particular, we'll consider its Return On Capital Employed (ROCE), as that can give us insight into how profitably the company is able to employ capital in its business.
First up, we'll look at what ROCE is and how we calculate it. Next, we'll compare it to others in its industry. And finally, we'll look at how its current liabilities are impacting 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. Generally speaking a higher ROCE is better. Overall, it is a valuable metric that has its flaws. 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 Teleperformance:
0.10 = €493m ÷ (€5.9b - €1.1b) (Based on the trailing twelve months to December 2018.)
So,Teleperformance has an ROCE of 10%.
See our latest analysis for Teleperformance
ROCE can be useful when making comparisons, such as between similar companies. In this analysis, Teleperformance's ROCE appears meaningfully below the 15% average reported by the Professional Services industry. This performance is not ideal, as it suggests the company may not be deploying its capital as effectively as some competitors. Regardless of where Teleperformance sits next to its industry, its ROCE in absolute terms appears satisfactory, and this company could be worth a closer look.
You can see in the image below how Teleperformance's ROCE compares to its industry. Click to see more on past growth.
When considering this metric, keep in mind that it is backwards looking, and not necessarily predictive. ROCE can be deceptive for cyclical businesses, as returns can look incredible in boom times, and terribly low in downturns. ROCE is, after all, simply a snap shot of a single year. Since the future is so important for investors, you should check out ourfreereport on analyst forecasts for Teleperformance.
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 the ROCE equation works, having large bills due in the near term can make it look as though a company has less capital employed, and thus a higher ROCE than usual. To check the impact of this, we calculate if a company has high current liabilities relative to its total assets.
Teleperformance has total assets of €5.9b and current liabilities of €1.1b. As a result, its current liabilities are equal to approximately 19% of its total assets. A fairly low level of current liabilities is not influencing the ROCE too much.
With that in mind, Teleperformance's ROCE appears pretty good. Teleperformance shapes up well under this analysis,but it is far from the only business delivering excellent numbers. You might also want to check thisfreecollection of companies delivering excellent earnings growth.
If you are like me, then you willnotwant to miss thisfreelist of growing companies that insiders are buying.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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What Do Analysts Think About Halfords Group plc's (LON:HFD) Future?
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Looking at Halfords Group plc's (LON:HFD) earnings update on 29 March 2019, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 15% next year relative to the past 5-year average growth rate of -5.8%. Presently, with latest-twelve-month earnings at UK£42m, we should see this growing to UK£48m by 2020. Below is a brief commentary around Halfords Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you canresearch its fundamentals here.
Check out our latest analysis for Halfords Group
The view from 9 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of HFD's earnings growth over these next few years.
This results in an annual growth rate of 8.0% based on the most recent earnings level of UK£42m to the final forecast of UK£54m by 2022. This leads to an EPS of £0.27 in the final year of projections relative to the current EPS of £0.21. Margins are currently sitting at 3.7%, which is expected to expand to 4.5% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Halfords Group, I've compiled three pertinent 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 Halfords Group 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 Halfords Group is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of Halfords Group? 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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Can We See Significant Institutional Ownership On The Altri, S.G.P.S., S.A. (ELI:ALTR) Share Register?
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A look at the shareholders of Altri, S.G.P.S., S.A. (ELI:ALTR) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that used to be publicly owned tend to have lower insider ownership.
Altri S.G.P.S has a market capitalization of €1.3b, so we would expect some institutional investors to have noticed the stock. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about ALTR.
View our latest analysis for Altri S.G.P.S
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 Altri S.G.P.S does have institutional investors; and they hold 15% of the stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Altri S.G.P.S, (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 Altri S.G.P.S. 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 company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our information suggests that Altri, S.G.P.S., S.A. insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. Keep in mind that it's a big company, and the insiders own €72k worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checkingif those insiders have been buying.
With a 17% ownership, the general public have some degree of sway over ALTR. 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.
Our data indicates that Private Companies hold 68%, 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.
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 accessthisinteractive graphof past earnings, revenue and cash flow, for free.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss thisfreereport on analyst forecasts.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Should Orsero S.p.A. (BIT:ORS) Be Part Of Your Dividend Portfolio?
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Today we'll take a closer look at Orsero S.p.A. (BIT:ORS) from a dividend investor's perspective. Owning a strong business and reinvesting the dividends is widely seen as an attractive way of growing your wealth. 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.
Some readers mightn't know much about Orsero's 1.5% dividend, as it has only been paying distributions for a year or so. Some simple analysis can offer a lot of insights when buying a company for its dividend, and we'll go through this below.
Click the interactive chart for our full dividend analysis
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. So we need to form a view on if a company's dividend is sustainable, relative to its net profit after tax. Orsero paid out 26% of its profit as dividends, over the trailing twelve month period. This is a middling range that strikes a nice balance between paying dividends to shareholders, and retaining enough earnings to invest in future growth. Plus, there is room to increase the payout ratio over time.
We also measure dividends paid against a company's levered free cash flow, to see if enough cash was generated to cover the dividend. Orsero's cash payout ratio last year was 11%, which is quite low and suggests that the dividend was thoroughly covered by cash flow. It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Consider gettingour latest analysis on Orsero's financial position here.
Before buying a stock for its income, we want to see if the dividends have been stable in the past, and if the company has a track record of maintaining its dividend. Its most recent annual dividend was €0.12 per share, effectively flat on its first payment one years ago.
Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.
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. Orsero's earnings per share have fallen -47% over the past year. This is a pretty serious concern, and it would be worth investigating whether something fundamental in the business has changed - or broken. 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 Orsero's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. It's great to see that Orsero is paying out a low percentage of its earnings and cash flow. Second, earnings per share have been in decline, and the dividend history is shorter than we'd like. While we're not hugely bearish on it, overall we think there are potentially better dividend stocks than Orsero out there.
Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from costs or inflation. Very few businesses see earnings consistently shrink year after year in perpetuity though, and so it might be worth seeing what the 4analysts we track are forecasting for the future.
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 Kind Of Shareholders Own Itera ASA (OB:ITE)?
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Every investor in Itera ASA (OB:ITE) should be aware of the most powerful shareholder groups. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.'
Itera is not a large company by global standards. It has a market capitalization of øre627m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholder can tell us about ITE.
View our latest analysis for Itera
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.
Itera already has institutions on the share registry. Indeed, they own 9.0% of the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Itera's earnings history, below. Of course, the future is what really matters.
Hedge funds don't have many shares in Itera. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.
It seems insiders own a significant proportion of Itera ASA. It has a market capitalization of just øre627m, and insiders have øre207m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You canclick here to see if they have been buying or selling.
With a 25% ownership, the general public have some degree of sway over ITE. 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.
We can see that Private Companies own 33%, 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.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.
Many find it usefulto take an in depth look at how a company has performed in the past. You can accessthisdetailed graphof past earnings, revenue and cash flow.
Of coursethis may not be the best stock to buy. Therefore, you may wish to see ourfreecollection of interesting prospects boasting favorable financials.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Österreichische Post AG (VIE:POST): What Does Its Beta Value Mean For Your Portfolio?
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If you're interested in Österreichische Post AG (VIE:POST), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Volatility is considered to be a measure of risk in modern finance theory. Investors may think of volatility as falling into two main categories. The first type is company specific volatility. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The other type, which cannot be diversified away, is the volatility of the entire market. Every stock in the market is exposed to this volatility, which is linked to the fact that stocks prices are correlated in an efficient market.
Some stocks are more sensitive to general market forces than others. 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 greater than one is more sensitive to broader market movements than a stock with a beta of less than one.
View our latest analysis for Österreichische Post
Given that it has a beta of 0.83, we can surmise that the Österreichische Post share price has not been strongly impacted by broader market volatility (over the last 5 years). This suggests that including it in your portfolio will reduce volatility arising from broader market movements, assuming your portfolio's weighted average beta is higher than 0.83. 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 Österreichische Post's revenue and earnings in the image below.
Österreichische Post is a fairly large company. It has a market capitalisation of €2.0b, which means it is probably on the radar of most investors. It is a little unusual to see big companies like this trade on low beta values. Oftentimes there is some other clear influence on the share price, overshadowing market volatility.
One potential advantage of owning low beta stocks like Österreichische Post is that your overall portfolio won't be too sensitive to overall market movements. However, this can be a blessing or a curse, depending on what's happening in the broader market. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Österreichische Post’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 POST’s future growth? Take a look at ourfree research report of analyst consensusfor POST’s outlook.
2. Past Track Record: Has POST 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 POST's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how POST 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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Why You Should Care About Image Systems AB’s (STO:IS) Low Return On Capital
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! Today we are going to look at Image Systems AB ( STO:IS ) to see whether it might be an attractive investment prospect. In particular, we'll consider its Return On Capital Employed (ROCE), as that can give us insight into how profitably the company is able to employ capital in its business. First, we'll go over how we calculate ROCE. Second, we'll look at its ROCE compared to similar companies. Last but not least, we'll look at what impact its current liabilities have on its ROCE. Return On Capital Employed (ROCE): What is it? ROCE measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Generally speaking a higher ROCE is better. Ultimately, it is a useful but imperfect metric. Author Edwin Whiting says to be careful when comparing the ROCE of different businesses, since 'No two businesses are exactly alike.' How Do You Calculate Return On Capital Employed? The formula for calculating the return on capital employed is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) Or for Image Systems: 0.0012 = kr200k ÷ (kr237m - kr71m) (Based on the trailing twelve months to March 2019.) So, Image Systems has an ROCE of 0.1%. See our latest analysis for Image Systems Does Image Systems Have A Good ROCE? One way to assess ROCE is to compare similar companies. We can see Image Systems's ROCE is meaningfully below the Electronic industry average of 14%. This performance could be negative if sustained, as it suggests the business may underperform its industry. Independently of how Image Systems compares to its industry, its ROCE in absolute terms is low; especially compared to the ~0.4% available in government bonds. It is likely that there are more attractive prospects out there. Image Systems reported an ROCE of 0.1% -- better than 3 years ago, when the company didn't make a profit. That implies the business has been improving. You can click on the image below to see (in greater detail) how Image Systems's past growth compares to other companies. Story continues OM:IS Past Revenue and Net Income, July 2nd 2019 It is important to remember that ROCE shows past performance, and is not necessarily predictive. ROCE can be misleading for companies in cyclical industries, with returns looking impressive during the boom times, but very weak during the busts. ROCE is only a point-in-time measure. What happens in the future is pretty important for investors, so we have prepared a free report on analyst forecasts for Image Systems . How Image Systems's Current Liabilities Impact Its ROCE Liabilities, such as supplier bills and bank overdrafts, are referred to as current liabilities if they need to be paid within 12 months. Due to the way the ROCE equation works, having large bills due in the near term can make it look as though a company has less capital employed, and thus a higher ROCE than usual. To check the impact of this, we calculate if a company has high current liabilities relative to its total assets. Image Systems has total assets of kr237m and current liabilities of kr71m. Therefore its current liabilities are equivalent to approximately 30% of its total assets. With a medium level of current liabilities boosting the ROCE a little, Image Systems's low ROCE is unappealing. The Bottom Line On Image Systems's ROCE There are likely better investments out there. Of course, you might also be able to find a better stock than Image Systems . So you may wish to see this free collection of other companies that have grown earnings strongly. I will like Image Systems better if I see some big insider buys. While we wait, check out this free list 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 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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What Does H&R GmbH & Co. KGaA's (FRA:2HRA) Balance Sheet Tell Us About It?
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Investors are always looking for growth in small-cap stocks like H&R GmbH & Co. KGaA (FRA:2HRA), with a market cap of €248m. However, an important fact which most ignore is: how financially healthy is the business? Assessing first and foremost the financial health is essential, since poor capital management may bring about bankruptcies, which occur at a higher rate for small-caps. We'll look at some basic checks that can form a snapshot the company’s financial strength. However, potential investors would need to take a closer look, and I suggest youdig deeper yourself into 2HRA here.
2HRA's debt levels surged from €122m to €151m over the last 12 months , which includes long-term debt. With this increase in debt, the current cash and short-term investment levels stands at €82m , ready to be used for running the business. Additionally, 2HRA has produced cash from operations of €70m over the same time period, resulting in an operating cash to total debt ratio of 46%, indicating that 2HRA’s debt is appropriately covered by operating cash.
At the current liabilities level of €227m, the company has been able to meet these commitments with a current assets level of €360m, leading to a 1.58x current account ratio. The current ratio is calculated by dividing current assets by current liabilities. Usually, for Chemicals companies, this is a suitable ratio since there's a sufficient cash cushion without leaving too much capital idle or in low-earning investments.
With debt reaching 41% of equity, 2HRA may be thought of as relatively highly levered. This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. We can test if 2HRA’s debt levels are sustainable by measuring interest payments against earnings of a company. Ideally, earnings before interest and tax (EBIT) should cover net interest by at least three times. For 2HRA, the ratio of 4.46x suggests that interest is appropriately covered, which means that debtors may be willing to loan the company more money, giving 2HRA ample headroom to grow its debt facilities.
Although 2HRA’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised. This may mean this is an optimal capital structure for the business, given that it is also meeting its short-term commitment. Keep in mind I haven't considered other factors such as how 2HRA has been performing in the past. I suggest you continue to research H&R GmbH KGaA to get a more holistic view of the small-cap by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for 2HRA’s future growth? Take a look at ourfree research report of analyst consensusfor 2HRA’s outlook.
2. Valuation: What is 2HRA 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 2HRA 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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Our Take On TGS-NOPEC Geophysical Company ASA's (OB:TGS) CEO Salary
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In 2016 Kristian Johansen was appointed CEO of TGS-NOPEC Geophysical Company ASA (OB:TGS). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for TGS-NOPEC Geophysical
According to our data, TGS-NOPEC Geophysical Company ASA has a market capitalization of øre25b, and pays its CEO total annual compensation worth US$2.2m. (This is based on the year to December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$558k. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$1.0m.
As you can see, Kristian Johansen is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean TGS-NOPEC Geophysical Company ASA 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.
The graphic below shows how CEO compensation at TGS-NOPEC Geophysical has changed from year to year.
On average over the last three years, TGS-NOPEC Geophysical Company ASA has grown earnings per share (EPS) by 99% each year (using a line of best fit). It achieved revenue growth of 22% over the last year.
This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to checkthis free visual depiction ofwhat analysts expectfor the future.
Most shareholders would probably be pleased with TGS-NOPEC Geophysical Company ASA for providing a total return of 96% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount TGS-NOPEC Geophysical Company ASA pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of 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 TGS-NOPEC Geophysical 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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Croda International Plc (LON:CRDA): Did It Outperform The Industry?
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Assessing Croda International Plc's (LON:CRDA) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess CRDA's latest performance announced on 31 December 2018 and evaluate these figures to its historical trend and industry movements.
See our latest analysis for Croda International
CRDA's trailing twelve-month earnings (from 31 December 2018) of UK£239m has increased by 0.6% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 8.5%, indicating the rate at which CRDA is growing has slowed down. What could be happening here? Well, let's examine what's transpiring with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Croda International has invested its equity funds well leading to a 24% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the GB Chemicals industry of 6.0%, indicating Croda International has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Croda International’s debt level, has declined over the past 3 years from 24% to 20%.
Though Croda International's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Croda International gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Croda International to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for CRDA’s future growth? Take a look at ourfree research report of analyst consensusfor CRDA’s outlook.
2. Financial Health: Are CRDA’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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You can quit your mobile provider with a text: Here's why the new rules will trigger a battle for millions of UK customers
Mobile graphic The days of staying on hold while listening to elevator music and battling with your mobile phone operator to try to exit a contract, are officially over. New rules introduced this week from Ofcom, Britains telecoms watchdog , mean that sending a single text message will be enough to terminate a mobile phone contract and switch suppliers . Jonathan Lenton of Ombudsman Services, welcomed the changes, claiming that for too many people the traditional process of switching mobile provider was problematic and stressful. The replacement of the current switching process, which negatively affects 2.5 million customers, is expected to trigger a major shakeup in the mobile phone industry. Phone networks are set to battle to steal Britain's 28 million pay-monthly mobile customers, who now have more freedom than ever before to jump between providers. Assuming an average monthly handset contract costs around £18.50, mobile customers may collectively be overpaying by approximately £330m each year. Ofcom estimates that consumers could also take back £10m a year from mobile phone operators, who are no longer allowed to charge them for overlapping services when they change providers. Meanwhile, the 1.5 million people on expired mobile phone contracts, who continue to pay their full monthly charge and have not yet changed services, are expected to start an exodus toward cheaper alternatives. The businesses most likely to be affected by this change are the big four phone networks: Three, BT-owned EE, Vodafone and O2, which have 75pc of the market share in the UK, according to data from Statista. Alternative mobile operators, such as Sky Mobile, Tesco Mobile, Virgin Mobile and Giffgaff, could pick up a bigger chunk of the market as people search for value for money deals, experts claim. Big mobile providers need to "sit up and take notice" Ernest Doku, mobiles expert at uSwitch, says consumers are turning away from upgrading to shiny new smartphones -- the big four providers bread and butter -- which are no longer considered sexy and exciting enough to warrant a costly monthly contract. Thats where we will see the main shift, consumers spinning down from those previously costly handset- tariffs, he says. Consumers are becoming more savvy on how much a gig is worth and some of those tariffs arent as appealing. Gartner analysts warned earlier this year that a global smartphone slump is set to continue, and forecast a 0.5pc drop in smartphone sales. Its prediction came after Apple trimmed its sales forecast in January for the first time in 15 years. Story continues Doku believes Ofcoms changes are a chance for big mobile operators to sit up and take notice. Alternatively, they risk losing market share to smaller providers that offer better deals, without the previous draw of regular smartphone upgrades. A lot of those nimble providers are trying to nip away and gain market share, he says. There are a number of attractive packages that do offer value adds, whether its zero rating the amount of data that you use on social networks, or streaming apps like Sky Sports or movies without eating into data allowance. Emma Mohr-McClune, head of the consumer services, platforms and devices team at data analytics company GlobalData, believes the impact in terms of churn could be significant and that smaller networks will be the key beneficiaries. She believes Ofcom's move will cause UK operators to copy a well-known marketing tactic in the US known as switcher promotions. These deals typically offer new device and connectivity bundles that specifically target customers from other mobile networks, with incentives to switch and even move their phone number at the same time. Yesterday we saw one of the first examples of this, when Sky Mobile promoted a discounted smartphone contract deal while also casually name-dropping the Ofcom changes as a selling point. As well as helping phone networks to attract new customers, analysts hope that the changes will prompt networks to improve their services for existing consumers. If the barrier to swapping your network is as easy as sending a text message, then experts hope that the networks will be spurred into action to try to retain customers. For too long their emphasis has been on poaching customers, rather than trying harder to keep the potentially loyal ones they already have, said Alex Tofts, broadband expert at Broadband Genie. A Vodafone spokesman said it was too soon to tell what the effect of these new rules will be, but welcomed the initiative from Ofcom. The company believes the figures from the last financial year are an encouraging sign, because the churn rate was the lowest it has ever been, meaning fewer customers had been swapping to rival services. Will 5G be enough to sway customers? Phone networks have been aggressively advertising the launch of 5G , promising faster speeds for mobile data. For customers who are on networks which arent planning to support 5G as it launches in the UK throughout the year, Ofcoms push to encourage easier switching could mean that more customers swap networks in order to use it. Responding to the news of Ofcoms changes, Dave Dyson, the chief executive of Three UK, said that Three is preparing to launch the UKs fastest 5G network, in more cities and towns than anyone else this year. A survey of people in the UK carried out by Deloitte earlier this year found that 19pc of smartphone users would switch to a 5G network if they started to hear good things about it. 15m people could be prepared to switch to 5G networks, Deloitte estimated. It expects shipments of 50,000 5G-capable smartphones in the UK this year, rising to between 2m and 3m next year. Mobile operators might already find themselves under pressure this year because of hefty 5G investments. These new changes could cause more strain. It is likely that they will be forced to offer discounts not only on their current smartphones, but on the next-generation handsets to push people into buying them, experts argue. So far, there are few really killer arguments to incentivise a customer upgrade from 4G to 5G, so were expecting to see a flood of 5G handset promotions particularly in the run-up to the Christmas sales season, the most important few weeks of the entire sales calendar for mobile operators, says Mohr-McClune. The timing couldnt be worse for the larger players. View comments
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Experian plc (LON:EXPN): What Does The Future Look Like?
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The latest earnings announcement Experian plc (LON:EXPN) released in June 2019 suggested that the business endured a substantial headwind with earnings declining by -15%. Investors may find it useful to understand how market analysts view Experian's earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
See our latest analysis for Experian
Analysts' outlook for this coming year seems optimistic, with earnings expanding by a robust 25%. This growth seems to continue into the following year with rates reaching double digit 40% compared to today’s earnings, and finally hitting US$1.0b by 2022.
Although it’s useful to be aware of the growth each year relative to today’s level, it may be more insightful to determine the rate at which the business is moving every year, on average. The pro of this approach is that we can get a better picture of the direction of Experian's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 13%. This means that, we can anticipate Experian will grow its earnings by 13% every year for the next few years.
For Experian, I've compiled three pertinent factors you should further examine:
1. Financial Health: Does it have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Valuation: What is EXPN 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 EXPN is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EXPN? 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 TFF Group's (EPA:TFF) 164% Share Price Increase Well Justified?
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TFF Group(EPA:TFF) shareholders might be concerned after seeing the share price drop 12% in the last quarter. But in stark contrast, the returns over the last half decade have impressed. In fact, the share price is 164% higher today. To some, the recent pullback wouldn't be surprising after such a fast rise. Ultimately business performance will determine whether the stock price continues the positive long term trend.
View our latest analysis for TFF Group
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Over half a decade, TFF Group managed to grow its earnings per share at 8.0% a year. This EPS growth is lower than the 21% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Dive deeper into TFF Group's key metrics by checking this interactive graph of TFF Group'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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, TFF Group's TSR for the last 5 years was 176%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
While the broader market gained around 8.4% in the last year, TFF Group shareholders lost 10% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 23% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before deciding if you like the current share price, check how TFF Group scores on these3 valuation metrics.
But note:TFF Group 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 FR 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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What Kind Of Shareholders Own Irish Residential Properties REIT Plc (ISE:IRES)?
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If you want to know who really controls Irish Residential Properties REIT Plc (ISE:IRES), then you'll have to look at the makeup of its share registry. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Companies that have been privatized tend to have low insider ownership.
Irish Residential Properties REIT has a market capitalization of €805m, so we would expect some institutional investors to have noticed the stock. In the chart below below, we can see 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 IRES.
View our latest analysis for Irish Residential Properties REIT
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
We can see that Irish Residential Properties REIT does have institutional investors; and they hold 77% of the stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Irish Residential Properties REIT's earnings history, below. Of course, the future is what really matters.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. It looks like hedge funds own 5.4% of Irish Residential Properties REIT shares. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own less than 1% of Irish Residential Properties REIT Plc. It has a market capitalization of just €805m, and the board has only €1.7m worth of shares in their own names. 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 17% ownership, the general public have some degree of sway over IRES. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
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 accessthisinteractive graphof past earnings, revenue and cash flow, for free.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss thisfreereport on analyst forecasts.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Is TOD'S S.p.A. (BIT:TOD) A Good Dividend Stock?
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Is TOD'S S.p.A. (BIT:TOD) 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.
A slim 2.4% yield is hard to get excited about, but the long payment history is respectable. At the right price, or with strong growth opportunities, TOD'S could have potential. Some simple analysis can reduce the risk of holding TOD'S for its dividend, and we'll focus on the most important aspects below.
Click the interactive chart for our full dividend analysis
Dividends are usually paid out of company earnings. If a company is paying more than it earns, then the dividend might become unsustainable - hardly an ideal situation. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. Looking at the data, we can see that 70% of TOD'S's profits were paid out as dividends in the last 12 months. This is a fairly normal payout ratio among most businesses. It allows a higher dividend to be paid to shareholders, but does limit the capital retained in the business - which could be good or bad.
In addition to comparing dividends against profits, we should inspect whether the company generated enough cash to pay its dividend. Last year, TOD'S paid a dividend while reporting negative free cash flow. While there may be an explanation, we think this behaviour is generally not sustainable.
Remember, you can always get a snapshot of TOD'S's latest financial position,by checking our visualisation of its financial health.
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 TOD'S's dividend payments. During the past ten-year period, the first annual payment was €1.25 in 2009, compared to €1.00 last year. The dividend has shrunk at around 2.2% a year during that period.
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.
The other half of the dividend investing equation is evaluating whether earnings per share (EPS) are growing. Growing EPS can help maintain or increase the purchasing power of the dividend over the long run. It's not great to see that TOD'S's have fallen at approximately 20% over the past five years. 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.
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, the company has a payout ratio that was within an average range for most dividend stocks, but it paid out virtually all of its generated cash flow. Earnings per share have been falling, and the company has cut its dividend at least once in the past. From a dividend perspective, this is a cause for concern. Using these criteria, TOD'S looks quite suboptimal from a dividend investment perspective.
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.
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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Natasha Kaplinsky: Dancing with husband will never compare to Strictly's Brendan Cole
Natasha Kaplinsky, who has been awarded an OBE in the Queen's Birthday Honours List, outside Kensington Palace, London. (Photo by Yui Mok/PA Images via Getty Images) Natasha Kaplinsky has said dancing with her husband will never compare to being on the floor with professional dancer Brendan Cole. The newsreader won the very first series of Strictly Come Dancing partnered with Cole in 2004, but admits she has not continued to practice the moves she learned on the BBC show. Kaplinsky, 46, told Yahoo UK: “It’s very different dancing with a drunken husband to a world class professional. “So I do love dancing but it’s never going to be the same. The opportunity to be literally whisked around a dancefloor with one of the best dancers in the world is really quite magical and once that spell is broken I don’t think it can be recreated. Read more: Natasha Kaplinsky receiving therapy used for war veterans “So I love dancing, I find it a wonderful way to release tension and it’s a great form of exercise, but I do not dance in the way that I used to sadly.” Natasha Kaplinsky and Brendan Cole were Strictly dance partners in 2004 (Credit: PA) The newsreader met her husband Justin Bower in 2005, a year after appearing on Strictly. Her dance partner Cole famously split from his then fiancee Camilla Dallerup after being paired with Kaplinksy on the show - the first to be struck by the ‘Strictly Curse’ which has seen the pressure of the show end a string of relationships. Kaplinsky - who has rediscovered another creative passion for art after taking part in new Channel 4 show Kirstie's Celebrity Craft Masters - also said she wants to see Arlene Phillips reinstated to the Strictly judging panel. Phillips, 76, was embroiled in an ageism row when she was replaced on the show in 2009 by Alesha Dixon. Darcey Bussell announced in April that she is stepping down from the panel, leaving an empty chair. Kaplinsky said: “It’s going to be a massive loss that Darcey wont be retuning. I think they should bring back Arlene Phillips - she should not have gone in the first place, so I think I should start a campaign to bring back Arlene.” Jo Wood and Natasha Kaplinsky compete in 'Kirstie's Celebrity Craft Masters' (Credit: Channel 4) Kaplinsky appears on Kirstie Allsopp’s new Channel 4 crafting show competing against former Strictly rival Jo Wood, who was desperate to be the one to raise the trophy this time. Story continues Kaplinsky said: “I’m the least competitive person on the planet. I’m hopeless at playing tennis or anything like that, because I really don’t care about winning. So I found it quite funny that she was so competitive. Read more: Kirstie Allsopp quit Twitter over iPad smashing row “And all the way through Strictly I kept on saying, I want to go out, I don’t want to carry on.’ And everyone said that’s just her strategy to try and win, but I absolutely didn’t think I would be there until the end, let alone win it!” View this post on Instagram A post shared by Natasha Kaplinsky OBE (@kaplinskyn) on Mar 4, 2019 at 10:49am PST The TV presenter revealed she was delighted to have the opportunity to do something artistic. Kaplinsky explained: “I did an art A-level and I absolutely loved it and I desperately wanted to go on and do art as a degree. But my father’s a professor of economics and so he sat me down and said, ‘Excuse me young lady I think you ought to go and get yourself a proper education first, you can always go back to art later.’ “And so I ended up going to Oxford to read English and forgot to go back to art. “So when I had the opportunity to be part of the programme I jumped at it.” Read more: Kirstie Allsopp urges young people to start having babies 'NOW' She added: “I think the show is going to be a huge success. In the way that Strictly spoke to the older and the younger generation, I think that’s what this show will do. “It’s so exciting that everyone can be crafty if you just give yourself a chance. You don’t have to be amazing at it, it’s about how it makes you feel. For me it was like a meditation.” Kaplinsky - who appears on the show on Tuesday July 9th - is seen creating cuddly alpaca toys from wool collected from her own pet alpacas, that live on her family farm. View this post on Instagram A post shared by Natasha Kaplinsky OBE (@kaplinskyn) on Feb 22, 2018 at 5:53am PST Kaplinksy revealed: “I was just absolutely obsessed with having alpacas. They’re such magical creatures. They’re so elegant and haughty and so hard to please, and yet they’re so refined. “They are my peace. If I ever get stressed or I’ve got a difficult time at work I’ll always go out and just hang out with them.” Kirstie's Celebrity Craft Masters airs on Channel 4, Monday to Friday at 5pm from July 1st.
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What Are Analysts Saying About The Future Of Iren SpA's (BIT:IRE)?
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Based on Iren SpA's (BIT:IRE) earnings update in March 2019, analysts seem cautiously bearish, with earnings expected to grow by 4.5% in the upcoming year against the higher past 5-year average growth rate of 29%. Currently with trailing-twelve-month earnings of €242m, we can expect this to reach €253m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Iren in the longer term. For those keen to understand more about other aspects of the company, you canresearch its fundamentals here.
Check out our latest analysis for Iren
Longer term expectations from the 4 analysts covering IRE’s stock 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. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of IRE's earnings growth over these next few years.
From the current net income level of €242m and the final forecast of €274m by 2022, the annual rate of growth for IRE’s earnings is 4.4%. This leads to an EPS of €0.20 in the final year of projections relative to the current EPS of €0.19. With a current profit margin of 6.4%, this movement will result in a margin of 6.7% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Iren, I've put together three important factors 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 Iren 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 Iren is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of Iren? 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 Troax Group AB (publ) (STO:TROAX) A Smart Pick For Income Investors?
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Is Troax Group AB (publ) (STO:TROAX) 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.
With only a three-year payment history, and a 1.6% yield, investors probably think Troax Group is not much of a dividend stock. A low dividend might not be a bad thing, if the company is reinvesting heavily and growing its sales and profits. Some simple analysis can offer a lot of insights when buying a company for its dividend, and we'll go through this below.
Explore this interactive chart for our latest analysis on Troax Group!
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. Looking at the data, we can see that 41% of Troax Group's profits were paid out as dividends in the last 12 months. A medium payout ratio strikes a good balance between paying dividends, and keeping enough back to invest in the business. Plus, there is room to increase the payout ratio over time.
Another important check we do is to see if the free cash flow generated is sufficient to pay the dividend. Troax Group's cash payout ratio in the last year was 48%, which suggests dividends were well covered by cash generated by the business. It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Remember, you can always get a snapshot of Troax Group's latest financial position,by checking our visualisation of its financial health.
From the perspective of an income investor who wants to earn dividends for many years, there is not much point buying a stock if its dividend is regularly cut or is not reliable. During the past three-year period, the first annual payment was €0.10 in 2016, compared to €0.15 last year. Dividends per share have grown at approximately 15% per year over this time.
Troax Group has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, but it might be worth considering if the business has turned a corner.
The other half of the dividend investing equation is evaluating whether 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. Over the past five years, it looks as though Troax Group's EPS have declined at around 45% a year. If earnings continue to decline, the dividend may come under pressure. Every investor should make an assessment of whether the company is taking steps to stabilise the situation.
To summarise, shareholders should always check that Troax Group's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. First, we like that the company's dividend payments appear well covered, although the retained capital also needs to be effectively reinvested. Earnings per share are down, and Troax Group's dividend has been cut at least once in the past, which is disappointing. Ultimately, Troax Group comes up short on our dividend analysis. It's not that we think it is a bad company - just that there are likely more appealing dividend prospects out there on this analysis.
See if management have their own wealth at stake, by checking insider shareholdings inTroax Group stock.
We have also put together alist of global stocks with a market capitalisation above $1bn and yielding more 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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How Many Zardoya Otis, S.A. (BME:ZOT) Shares Did Insiders Buy, In The Last Year?
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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares inZardoya Otis, S.A.(BME:ZOT).
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 Zardoya Otis
CEO & Director Bernardo Calleja Fernandez made the biggest insider purchase in the last 12 months. That single transaction was for €128k worth of shares at a price of €6.60 each. So it's clear an insider wanted to buy, at around the current price, which is €6.71. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Zardoya Otis share holders is that an insider was buying at near the current price. Bernardo Calleja Fernandez was the only individual insider to buy shares in the last twelve months.
Bernardo Calleja Fernandez bought a total of 34000 shares over the year at an average price of €6.78. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Zardoya Otis is not the only stock that insiders are buying. For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Zardoya Otis insiders own about €5.4m worth of shares (which is 0.2% of the company). However, it's possible that insiders might have an indirect interest through a more complex structure. We do generally prefer see higher levels of insider ownership.
Our data shows a little insider buying, but no selling, in the last three months. That said, the purchases were not large. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Zardoya Otis stock. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check thisfreereport showing analyst forecasts for its future.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Does Wolters Kluwer N.V.'s (AMS:WKL) Debt Level Pose A Problem?
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Investors pursuing a solid, dependable stock investment can often be led to Wolters Kluwer N.V. (AMS:WKL), a large-cap worth €18b. Big corporations are much sought after by risk-averse investors who find diversified revenue streams and strong capital returns attractive. But, the health of the financials determines whether the company continues to succeed. Today we will look at Wolters Kluwer’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 WKL here.
View our latest analysis for Wolters Kluwer
Over the past year, WKL has reduced its debt from €3.1b to €2.8b , which includes long-term debt. With this debt payback, WKL currently has €783m remaining in cash and short-term investments , ready to be used for running the business. Moreover, WKL has generated cash from operations of €934m in the last twelve months, resulting in an operating cash to total debt ratio of 33%, meaning that WKL’s current level of operating cash is high enough to cover debt.
Looking at WKL’s €3.3b in current liabilities, it seems that the business may not be able to easily meet these obligations given the level of current assets of €2.3b, with a current ratio of 0.68x. The current ratio is calculated by dividing current assets by current liabilities.
Wolters Kluwer is a highly levered company given that total debt exceeds equity. This isn’t uncommon for large companies because interest payments on debt are tax deductible, meaning debt can be a cheaper source of capital than equity. Accordingly, large companies often have an advantage over small-caps through lower cost of capital due to cheaper financing. By measuring how many times WKL’s earnings can cover interest payments, we can evaluate whether its level of debt is sustainable or not. Net interest should be covered by earnings before interest and tax (EBIT) by at least three times to be safe. For WKL, the ratio of 12.71x suggests that interest is comfortably covered. High interest coverage is seen as a responsible and safe practice, which highlights why most investors believe large-caps such as WKL is a safe investment.
WKL’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. Though its lack of liquidity raises questions over current asset management practices for the large-cap. I admit this is a fairly basic analysis for WKL's financial health. Other important fundamentals need to be considered alongside. I recommend you continue to research Wolters Kluwer to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for WKL’s future growth? Take a look at ourfree research report of analyst consensusfor WKL’s outlook.
2. Valuation: What is WKL 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 WKL 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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ITM Power PLC Announces British Columbia Hydrogen Feasibility Study
ITM Power plc("ITM Power" or "the Company")Completion of the British Columbia Renewable Hydrogen Feasibility StudyITM Power, Mitsui, Chiyoda and BC Hydro in 300MW Power-to-Gas study
SHEFFIELD, UK / ACCESSWIRE / July 2, 2019 /ITM Power (ITM.L), the energy storage and clean fuel company, is pleased to announce the completion of a techno-economic feasibility study for the large-scale centralised production of renewable hydrogen in the Province of British Columbia ("BC"). The project, "Feasibility Study and Assessment of Centralized RenewableHydrogen Production in BC followed by a Pilot Plant Development", was led by ITM Power with support from G&S Budd Consulting Ltd. and partners Mitsui & Co., Chiyoda Corporation and BC Hydro. It was funded by the BC Government.
The study commenced in April 2018 with the aim of examining the potential for large-scale production of renewable hydrogen in BC, which could be used domestically and for export to California and Japan. BC brings a number of competitive advantages to the establishment of a first-of-its-kind large renewable hydrogen industry including the availability of renewable electricity, the abundance of freshwater and the proximity of numerous production sites to deep water harbours for the export of hydrogen to markets in the United States and Asia. The study was based on using ITM Power's state of the art PEM electrolyser technology and Chiyoda Corporation's newly developed liquid organic hydrogen carrier, SPERA Hydrogen.
The study analysed over 10 potential BC Hydro grid and private wire connected locations for the practical installation and operational business cases for up to 300MW of electrolysis paired with the liquid organic hydrogen carrier technology. Demand for hydrogen was analysed for the domestic market, to help BC meet the goals of a new zero emission vehicle policy, and international markets including large scale export to California and Japan.
The study highlighted a number of attractive opportunities which provide the basis for BC to leverage its vast renewable electricity generation capacity to become a world leader in the production and export of renewable electrolytic hydrogen whilst providing socio-economic benefits including business development and job growth for local communities including the First Nations people.
The results of the study will be used by ITM Power, Mitsui & Co. and Chiyoda Corporation to consider the installation of a facility in BC which has the potential to be the world's largest hydrogen production facility.
SteveJones, MD of ITM Power Inc. commented:"ITM Power is pleased with the results of this feasibility study which highlights the BC region as one of the world's best locations for the generation and export of large-scale renewable hydrogen. The demand for renewable hydrogen is growing around the world and we look forward to continuing discussions on real world deployments."
Hon.Michelle Mungall, British Columbia Minister for Energy, Mines and PetroleumResources, added:"Government is taking bold action to meet the climate targets set out in our world-leading CleanBC plan. Producing and exporting made-in-BC hydrogen power is an exciting opportunity to reduce greenhouse gas emissions, boost our economy and create good clean energy jobs."
Hon.Bruce Ralston, British Columbia Minister for Jobs, Trade and Technology, added:"Clean energy solutions like the possibility of BC generated hydrogen, will help protect the global environment while advancing our clean export priorities, which are crucial to driving strong economic activity."
Mitsui & Co. commented:"Mitsui is increasingly interested in the hydrogen industry particularly the opportunity to use hydrogen as an alternative fuel suitable for export and import"
Chiyoda Corporation commented:"Transporting hydrogen using our SPERA technology is simple and has the potential to scale to the enormous volumes required for the global energy transition."
For further information please visitwww.itm-power.comor contact:
[{"ITM Power plcAndy Allen, Finance Director": "Investec Bank plc (Nominated Adviser and Broker)Chris Sim / Jeremy Ellis", "+44 (0)114 244 5111": "+44 (0)20 7597 5970"}, {"ITM Power plcAndy Allen, Finance Director": "Tavistock (Financial PR and IR)Simon Hudson / Nick Elwes / Barney Hayward", "+44 (0)114 244 5111": "+44 (0)20 7920 3150"}]
About ITM Power plc:
ITM Power plc manufactures integrated hydrogen energy solutions for grid balancing, energy storage and the production of green hydrogen for transport, renewable heat and chemicals. ITM Power plc was admitted to the AIM market of the London Stock Exchange in 2004. In September 2017, the Company announced the completion of a £29.4m working capital fundraise. The Company signed a forecourt siting agreement with Shell for hydrogen refuelling stations in September 2015, which was extended in May 2019 to include buses, trucks, trains and ships, and subsequently a deal to deploy a 10MW electrolyser at Shell's Rhineland refinery. The Company entered into a Strategic Partnership Agreement with Sumitomo Corporation in July 2018 for the development of multi-megawatt projects in Japan. Additional customers and partners include Ørsted, National Grid, Cadent, Northern Gas Networks, Gasunie, RWE, Engie, BOC Linde, Toyota, Honda, Hyundai, Anglo American among others.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contactrns@lseg.comor visitwww.rns.com.
SOURCE:ITM Power PLC
View source version on accesswire.com:https://www.accesswire.com/550586/ITM-Power-PLC-Announces-British-Columbia-Hydrogen-Feasibility-Study
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Yield Growth Announces First Hemp Product Passes EU Compliance Review and may Now be Sold in the European Market
Vancouver, British Columbia--(Newsfile Corp. - July 2, 2019) -The Yield Growth Corp. (CSE: BOSS) (OTCQB: BOSQF) (FSE: YG3)is pleased to announce that its Urban Juve Anti-Aging Serum can now be sold in the European market. A Compliance Certificate has been issued by Biorius, who is acting as Urban Juve's Responsible Person in Europe.
Urban Juve Anti-aging serum may now be sold in the European marketTo view an enhanced version of this graphic, please visit:https://orders.newsfilecorp.com/files/6377/46005_figure1.jpg
Pursuant to EU regulations, Yield Growth retained Biorius to act as its Responsible Person for Urban Juve, Yield Growth's wholly owned subsidiary that formulates luxury hemp-based skincare products. In order to sell products in the European Union, the Responsible Person must first issue a compliance certificate for each product. After compliance review of each ingredient in the Anti-Aging Serum, including Urban Juve's proprietary hemp root oil, Biorius issued a certificate of compliance, confirming that Urban Juve Anti-Aging Serum can now be sold in the European Market.
"This certificate of compliance is a crucial last step towards distribution in European markets," says Penny Green, CEO of Yield Growth. "We're very much looking forward to introducing high-quality hemp-powered cosmetics to a new consumer base in the European Union."
As previously announced, Yield Growth has already signed a letter of intent with Melorganics Hellas, who will act as the exclusive retail distributor and non-exclusive e-commerce distributor for Urban Juve products in Greece and Cyprus. And as proposed legislation across the European Union continues to bring cannabis closer to the mainstream, high-end cannabis products are gaining in popularity. With a total population over 508 million, the EU represents massive market potential for Urban Juve products. Urban Juve is seeking to obtain compliance certificates for sale in the EU of all 11 of its products currently in the market. Sales of Urban Juve products in Europe are expected to commence in the fall.
About The Yield Growth Corp.
The Yield Growth Corp. develops, manufactures and distributes cannabis and hemp infused luxury product brands Urban Juve and Wright & Well and has a catalogue of over 200 wellness and beauty products in development. It intends to disrupt the international wellness market, which is a $4.2 Trillion Global Economy, according to the Global Wellness Institute, by connecting ancient healing with modern science and technology. Its management team has deep experience with global brands including Johnson & Johnson, Procter & Gamble, M·A·C Cosmetics, Skechers, Best Buy, Aritzia, Coca-Cola and Pepsi Corporation. Yield Growth serves mainstream luxury consumers who seek sophisticated wellness products. Its flagship consumer brand, Urban Juve, has proprietary, patent-pending hemp root oil extraction technology and formulas. Yield Growth is building sophisticated international distribution channels and has multiple revenue streams including licensing, services and product sales.
For more information about Yield Growth, visitwww.yieldgrowth.comor follow@yieldgrowthon Instagram. Visitwww.urbanjuve.comand #findyourjuve across social platforms to learn, engage and shop.
Investor Relations Contacts:
Penny Green, President & CEOKristina Pillon, Investor Relationsinvest@yieldgrowth.com
1-833-514-BOSS1-833-514-26771-833-515-BOSS1-833-515-2677
The Canadian Securities Exchange has not reviewed, approved or disapproved the content of this news release.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking information and statements (collectively, "forward looking statements") under applicable Canadian securities legislation. Forward-looking statements are necessarily based upon a number of estimates, forecasts, beliefs and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such risks, uncertainties and factors include, but are not limited to: risks related to the development, testing, licensing, intellectual property protection, and sale of, and demand for, Urban Juve and UJ Topicals products, general business, economic, competitive, political and social uncertainties, delay or failure to receive board or regulatory approvals where applicable, and the state of the capital markets. Yield Growth cautions readers not to place undue reliance on forward-looking statements provided by Yield Growth, as such forward-looking statements are not a guarantee of future results or performance and actual results may differ materially. The forward-looking statements contained in this press release are made as of the date of this press release, and Yield Growth expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.
To view the source version of this press release, please visithttps://www.newsfilecorp.com/release/46005
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America's corporate activism: the rise of the CEO as social justice warrior
Photograph: Jeff Chiu/Associated Press On the heels of JP Morgan and Wells Fargo, which both divested from private prisons in March, Bank of America recently announced that it will no longer finance the operations of prisons and detention centers. While the bank has cited political disagreement as the reason for the divestment, its decision to sever ties comes after a Miami Herald article revealed that Bank of America had provided a $380m loan and a $75m credit line to Caliburn, operator of a facility that houses separated migrant children. Related: Jony Ive: 8 hits and 8 misses from 20 years at Apple Bank of America claimed the decision was down to the prison industry’s lack of “needed” criminal justice and immigration reforms, though it didn’t elaborate. But it’s obvious bad PR was a factor. Corporations have belatedly developed something approximating a social conscience. Apple’s Tim Cook has called the Trump administration’s border policies “inhumane” and urged it to stop. JP Morgan’s Jamie Dimon criticized the policy in an email to employees and wrote that his “heart goes out to the impacted families”. Goldman Sachs’ Lloyd Blankfein has called the situation “heart-rending”. These CEOs are taking a stand on social issues when elected Republican officials can’t – or won’t. But even though these corporate liberal gestures are better than nothing, and sometimes even effective, they aren’t necessarily altruistic. CEOs and companies attach themselves to ideas and policies that elevate their economic or moral status – in corporate America’s case, policies that generate profits or, at least, don’t get in the way of generating profits. Elite companies thrive by having their own cultures and thought-bubbles that ripple throughout the firm. Opposing administration policies that are antithetical to these values increases a firm’s power and cachet. As a result, entities such as Apple and Amazon transform into mini fiefdoms that dictate the political sensibilities of not only their employees, clients and those in their sphere, but sometimes the public at large. When Trump was elected in 2016, corporate America became a lot more activist. Amazon, Microsoft and other firms provided impact data in support of the Washington state lawsuit against the Muslim ban. Companies renewed their commitments to fighting climate change in the wake of dismantled EPA rules. Of course, in opposing the travel ban, firms had a self-serving need: their desire for skilled labor. In the case of opposition to border policies, firms had a different self-serving need: a demand for a moral stand either because it suited the culture of the firm or staved off a public relations mishap. Story continues According to a 2019 study , The Politics of CEOs, CEOs influence political spending at their firms and gain stature from their image as thought leaders with expertise and authority on policy issues. They also have tools to influence the political process, as Citizens United made it legal for corporations to make unlimited campaign expenditures. A 2018 Edelman survey found that 64% of the public believes CEOs “should take the lead on change rather than waiting for the government to impose it”, and 84% believes that CEOs should inform and shape ongoing policy debates. The outcry over the migrants didn’t change public policy. But it raised the profiles of CEOs whose jobs depend on preserving their public image or risking ouster. As Bank of America’s CEO, Brian Moynihan, has said , a CEO’s job description now includes driving what the CEO thinks is right. But what the CEO thinks is right is usually based on hours of vetting talking points to ensure the message matches the mission – and doesn’t disturb net profits. Jill Priluck’s reporting and analysis has appeared in the New Yorker, Slate, Reuters and elsewhere View comments
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What To Know Before Buying Wallenstam AB (publ) (STO:WALL B) For Its Dividend
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Is Wallenstam AB (publ) (STO:WALL B) a good dividend stock? How can we tell? Dividend paying companies with growing earnings can be highly rewarding in the long term. 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 slim 1.9% yield is hard to get excited about, but the long payment history is respectable. At the right price, or with strong growth opportunities, Wallenstam could have potential. There are a few simple ways to reduce the risks of buying Wallenstam for its dividend, and we'll go through these 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. So we need to form a view on if a company's dividend is sustainable, relative to its net profit after tax. Wallenstam paid out 20% of its profit as dividends, over the trailing twelve month period. With a low payout ratio, it looks like the dividend is comprehensively covered by earnings.
Another important check we do is to see if the free cash flow generated is sufficient to pay the dividend. With a cash payout ratio of 130%, Wallenstam's dividend payments are poorly covered by cash flow. Wallenstam paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough free cash flow to cover the dividend. Cash is king, as they say, and were Wallenstam to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.
As Wallenstam has a meaningful amount of debt, we need to check its balance sheet to see if the company might have debt risks. A rough way to check this is with these two simple ratios: a) net debt divided by EBITDA (earnings before interest, tax, depreciation and amortisation), and b) net interest cover. Net debt to EBITDA measures total debt load relative to company earnings (lower = less debt), while net interest cover measures the ability to pay interest on the debt (higher = greater ability to pay interest costs). Wallenstam has net debt of 30.21 times its EBITDA, which we think carries substantial risk if earnings aren't sustainable.
Net interest cover can be calculated by dividing earnings before interest and tax (EBIT) by the company's net interest expense. Interest cover of 3.06 times its interest expense is starting to become a concern for Wallenstam, and be aware that lenders may place additional restrictions on the company as well. Low interest cover and high debt can create problems right when the investor least needs them, and we're reluctant to rely on the dividend of companies with these traits.
We update our data on Wallenstam every 24 hours, so you can always getour latest analysis of its financial health, here.
One of the major risks of relying on dividend income, is the potential for a company to struggle financially and cut its dividend. Not only is your income cut, but the value of your investment declines as well - nasty. For the purpose of this article, we only scrutinise the last decade of Wallenstam's dividend payments. During the past ten-year period, the first annual payment was kr0.50 in 2009, compared to kr1.90 last year. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time.
With rapid dividend growth and no notable cuts to the dividend over a lengthy period of time, we think this company has a lot going for it.
The other half of the dividend investing equation is evaluating whether 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. Strong earnings per share (EPS) growth might encourage our interest in the company despite fluctuating dividends, which is why it's great to see Wallenstam has grown its earnings per share at 20% per annum over the past five years. Rapid earnings growth and a low payout ratio suggests this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
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. Wallenstam has a low payout ratio, which we like, although it paid out virtually all of its generated cash. We like that it has been delivering solid improvement in its earnings per share, and relatively consistent dividend payments. Overall we think Wallenstam is an interesting dividend stock, although it could be better.
Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for Wallenstamfor 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 There Now An Opportunity In SLM Solutions Group AG (FRA:AM3D)?
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SLM Solutions Group AG (FRA:AM3D), which is in the machinery business, and is based in Germany, led the DB gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on SLM Solutions Group’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for SLM Solutions Group
According to my valuation model, the stock is currently overvalued by about 26.32%, trading at €12.22 compared to my intrinsic value of €9.67. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since SLM Solutions Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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.
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. With profit expected to grow by 91% over the next couple of years, the future seems bright for SLM Solutions Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
Are you a shareholder?AM3D’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe AM3D should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor?If you’ve been keeping tabs on AM3D for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for AM3D, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on SLM Solutions Group. You can find everything you need to know about SLM Solutions Group inthe latest infographic research report. If you are no longer interested in SLM Solutions 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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SoftBank-backed lender OakNorth doubles staff, inks deal with NIBC Bank
By Lawrence White LONDON (Reuters) - British financial technology firm OakNorth has signed a five-year deal to provide its credit analysis and monitoring platform to Dutch lender NIBC Bank NV [NIBC.AS], OakNorth said on Tuesday in its first such agreement to be made public. OakNorth is Britain's most valuable financial technology company, having raised $440 million from investors including Japan's SoftBank Group <9984.T> in a February funding round that valued the firm at $2.8 billion. The deal with NIBC bank is the first enterprise-wide agreement to be announced between OakNorth and a bank, as the firm works to monetize its proprietary software and justify the 'unicorn' status implied by its multi-billion dollar valuation. It will see NIBC use OakNorth's technology which it says helps banks make better decisions on small business loans. More such deals will be announced shortly, OakNorth Chief Executive Rishi Khosla told Reuters, declining to give financial details of the NIBC deal. "We are engaged with over 10 banks from today, and behind that there are at least another 10 which we are actively working with," he said. Seizing on a growing trend for banks worldwide to invest heavily in technology, Artificial Intelligence (AI) and business analytics in a bid to cut costs and improve decision making, OakNorth has grown rapidly since the February funding round. The financial technology firm's staffing levels have nearly doubled from just below 300 in February to 520 today, Khosla said, as OakNorth hires software developers, credit experts and product designers. He said OakNorth has made a number of significant hires from major technology companies in recent weeks and is targeting expansion in the United States, continental Europe and 'two to three' Asian markets. OakNorth operates two main businesses, a bank in Britain focused on loans to small and medium-sized businesses, and its technology platform which it says uses data analytics and AI to help lenders make decisions. Story continues The software uses data about a prospective borrower such as the financial performance of its peers and sentiment about its brand from online reviews to help inform lending decisions. OakNorth says such software allows a level of detailed credit analysis normally reserved for loans above 25 million pounds ($31.60 million). NIBC listed in Amsterdam in March last year and is known as a mortgage broker and lender to small and medium-sized corporate borrowers in the Netherlands, Germany, Britain and Belgium. (Reporting By Lawrence White; editing by Emelia Sithole-Matarise)
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How AMG Advanced Metallurgical Group N.V. (AMS:AMG) Can Impact Your Portfolio Volatility
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If you're interested in AMG Advanced Metallurgical Group N.V. (AMS:AMG), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.
Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. 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 AMG Advanced Metallurgical Group
Zooming in on AMG Advanced Metallurgical Group, we see it has a five year beta of 1.36. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market. Based on this history, investors should be aware that AMG Advanced Metallurgical Group are likely to rise strongly in times of greed, but sell off in times of fear. 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 AMG Advanced Metallurgical Group's revenue and earnings in the image below.
AMG Advanced Metallurgical Group is a small company, but not tiny and little known. It has a market capitalisation of €823m, which means it would be on the radar of intstitutional investors. It has a relatively high beta, which is not unusual among small-cap stocks. Because it takes less capital to move the share price of a smaller company, actively traded small-cap stocks often have a higher beta that a similar large-cap stock.
Beta only tells us that the AMG Advanced Metallurgical Group share price is sensitive to broader market movements. This could indicate that it is a high growth company, or is heavily influenced by sentiment because it is speculative. Alternatively, it could have operating leverage in its business model. Ultimately, beta is an interesting metric, but there's plenty more to learn. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as AMG Advanced Metallurgical Group’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 AMG’s future growth? Take a look at ourfree research report of analyst consensusfor AMG’s outlook.
2. Past Track Record: Has AMG 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 AMG's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how AMG 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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Sensex ends in the black; financials, IT stocks boost index
BENGALURU (Reuters) - Indian shares closed higher on Tuesday, with financials and IT stocks driving gains on the index as investors awaited further cues from the budget due later in the week.
Earlier in the session, markets witnessed thin trade as heavy rains lashed Mumbai, India's financial capital, for a second straight day, disrupting road, rail and air traffic. The authorities declared a public holiday in the city.
The broader Nifty closed 0.38% higher at 11,910.3, while the benchmark Sensex settled 0.33% firmer at 39,816.48.
Housing Development Finance Corp Ltd closed 1.6% up, while Infosys Ltd ended the session 1.1% higher.
Meanwhile, a day after auto makers posted lacklustre monthly sales figures, the country's auto index rebounded from early losses to close 0.2% firmer.
Shares of Yes Bank Ltd finished the session 8.3% lower on report that Mumbai-based real estate company Radius Developers defaulted on scheduled interest payments on 12 bln rupees ($174.07 million) loan to the lender.
(Reporting by Chandini Monnappa in Bengaluru, Editing by Sherry Jacob-Phillips)
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Bayerische Motoren Werke Aktiengesellschaft (FRA:BMW) Should Be In Your Dividend Portfolio, Here's Why
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If you are an income investor, then Bayerische Motoren Werke Aktiengesellschaft (FRA:BMW) should be on your radar. Bayerische Motoren Werke Aktiengesellschaft, together with its subsidiaries, develops, manufactures, and sells automobiles and motorcycles, and spare parts and accessories worldwide. Over the past 10 years, the €42b market cap company has been growing its dividend payments, from €0.30 to €3.5. Currently yielding 5.4%, let's take a closer look at Bayerische Motoren Werke's dividend profile.
View our latest analysis for Bayerische Motoren Werke
It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:
• Its annual yield is among the top 25% of dividend payers
• It has paid dividend every year without dramatically reducing payout in the past
• Its dividend per share amount has increased over the past
• It is able to pay the current rate of dividends from its earnings
• It is able to continue to payout at the current rate in the future
Bayerische Motoren Werke's dividend yield stands at 5.4%, which is high for Auto stocks. But the real reason Bayerische Motoren Werke stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you're eyeing out is reliable in its payments. BMW has increased its DPS from €0.30 to €3.5 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes BMW a true dividend rockstar.
Bayerische Motoren Werke has a trailing twelve-month payout ratio of 32%, which means that the dividend is covered by earnings. Going forward, analysts expect BMW's payout to remain around the same level at 34% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 5.2%. Furthermore, EPS is forecasted to fall to €8.41 in the upcoming year.
When considering the sustainability of dividends,it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
Bayerische Motoren Werke ticks all the boxes for what I look for in a dividend stock. If you are looking to build an income focused portfolio, this could be one to include. However, given this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three fundamental aspects you should further examine:
1. Future Outlook: What are well-informed industry analysts predicting for BMW’s future growth? Take a look at ourfree research report of analyst consensusfor BMW’s outlook.
2. Valuation: What is BMW worth today? Even if the stock is a cash cow, it's not worth an infinite price. Theintrinsic value infographic in our free research reporthelps visualize whether BMW is currently mispriced by the market.
3. Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out 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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Binance Exchange to Launch Crypto Futures Trading with 20x Leverage
Binance, the world’s largest cryptocurrency exchange by trading volume, is soon to launch futures trading.
During a presentation at the Asia Blockchain Summit in Taipei on Tuesday, Changpeng “CZ” Zhao, founder and CEO of the exchange, showcased a futures trading interface on Binance with features including longs and shorts on crypto assets.
“Binance will be launching a futures platform very soon. I don’t have the exact date yet. The simulation test version will be live in a few weeks,” he said. Referring to the screenshot of the interface showed on the stage, Zhao added:
Related:S&P 500 Gains Can Earn You Bitcoin on New Bain Capital-Backed Exchange
He indicated in his presentation slide that the leverage could be up to 20 times and will be offered for trading on bitcoin initially. While a firm releasing date of the feature is not yet set, a Binance spokesperson told CoinDesk it plans to launch the test in about two weeks from now.
The futures trading feature comes after the firmrolledout margin trading on the platform last month.
“Margin trading will roll out to all users first (around July 11 or so), then futures testnet will come about a week after that,” the spokesperson added.
Related:Binance Talking to Facebook About Libra Listing: Reports
Screenshot and CZ image courtesy of Binance
• Binance to Launch Bitcoin-Pegged Token on Its Own Blockchain
• Crypto Exchange Binance.com to Block US Customers from Trading
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Should You Be Adding Camellia (LON:CAM) To Your Watchlist Today?
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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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.
So if you're like me, you might be more interested in profitable, growing companies, likeCamellia(LON:CAM). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. 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 Camellia
In the last three years Camellia's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Like the last firework on New Year's Eve accelerating into the sky, Camellia's EPS shot from UK£3.26 to UK£9.20, over the last year. You don't see 182% year-on-year growth like that, very often.
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. Camellia shareholders can take confidence from the fact that EBIT margins are up from 7.9% to 13%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my book.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
While profitability drives the upside, prudent investors alwayscheck the balance sheet, too.
I always like to check up on CEO compensation, because I think that reasonable pay levels, around or below the median, can be a sign that shareholder interests are well considered. For companies with market capitalizations between UK£158m and UK£632m, like Camellia, the median CEO pay is around UK£685k.
Camellia offered total compensation worth UK£616k to its CEO in the year to December 2018. That comes in below the average for similar sized companies, and seems pretty reasonable to me. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.
Camellia's earnings have taken off like any random crypto-currency did, back in 2017. Such fast EPS growth makes me wonder if the business has hit an inflection point (and I mean the good kind.) Meanwhile, the very reasonable CEO pay reassures me a little, since it points to an absence profligacy. So Camellia looks like it could be a good quality growth stock, at first glance. That's worth watching. While we've looked at the quality of the earnings, we haven't yet done any work to value the stock. So if you like to buy cheap, you may want tocheck if Camellia is trading on a high P/E or a low P/E, relative to its industry.
Of course, you can do well (sometimes) buying stocks thatare notgrowing earnings anddo nothave insiders buying shares. But as a growth investor I always like to check out companies thatdohave those features. You can accessa free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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What Does Brenntag AG's (ETR:BNR) P/E Ratio Tell You?
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This article is for investors who would like to improve their understanding of price to earnings ratios (P/E ratios). We'll look at Brenntag AG's (ETR:BNR) P/E ratio and reflect on what it tells us about the company's share price.What is Brenntag's P/E ratio?Well, based on the last twelve months it is 14.76. That is equivalent to an earnings yield of about 6.8%.
Check out our latest analysis for Brenntag
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Brenntag:
P/E of 14.76 = €44 ÷ €2.98 (Based on the year to March 2019.)
The higher the P/E ratio, the higher the price tag of a business, relative to its trailing earnings. All else being equal, it's better to pay a low price -- but as Warren Buffett said, 'It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.'
Generally speaking the rate of earnings growth has a profound impact on a company's P/E multiple. 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. A lower P/E should indicate the stock is cheap relative to others -- and that may attract buyers.
Brenntag increased earnings per share by an impressive 24% over the last twelve months. And it has bolstered its earnings per share by 6.3% per year over the last five years. With that performance, you might expect an above average P/E ratio.
The P/E ratio essentially measures market expectations of a company. You can see in the image below that the average P/E (14.2) for companies in the trade distributors industry is roughly the same as Brenntag's P/E.
Its P/E ratio suggests that Brenntag shareholders think that in the future it will perform about the same as other companies in its industry classification. The company could surprise by performing better than average, in the future. Checking factors such asdirector buying and selling. could help you form your own view on if that will happen.
The 'Price' in P/E reflects the market capitalization of the company. So it won't reflect the advantage of cash, or disadvantage of debt. Theoretically, a business can improve its earnings (and produce a lower P/E in the future) by investing in growth. That means taking on debt (or spending its cash).
Such expenditure might be good or bad, in the long term, but the point here is that the balance sheet is not reflected by this ratio.
Brenntag's net debt equates to 25% of its market capitalization. You'd want to be aware of this fact, but it doesn't bother us.
Brenntag's P/E is 14.8 which is below average (20.3) in the DE market. The EPS growth last year was strong, and debt levels are quite reasonable. If it continues to grow, then the current low P/E may prove to be unjustified.
Investors have an opportunity when market expectations about a stock are wrong. If the reality for a company is not as bad as the P/E ratio indicates, then the share price should increase as the market realizes this. So thisfreevisualization of the analyst consensus on future earningscould help you make theright decisionabout whether to buy, sell, or hold.
But note:Brenntag 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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Is Now An Opportune Moment To Examine Sino Land Company Limited (HKG:83)?
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Sino Land Company Limited (HKG:83) saw significant share price movement during recent months on the SEHK, rising to highs of HK$15.48 and falling to the lows of HK$12.5. 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 Sino Land's current trading price of HK$13.1 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Sino Land’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 Sino Land
Sino Land is currently overpriced based on 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 12.73x is currently well-above the industry average of 6.48x, meaning that it is trading at a more expensive price relative to its peers. In addition to this, it seems like Sino Land’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by a double-digit 12% over the next couple of years, the outlook is positive for Sino Land. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
Are you a shareholder?83’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 83 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor?If you’ve been keeping tabs on 83 for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for 83, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Sino Land. You can find everything you need to know about Sino Land inthe latest infographic research report. If you are no longer interested in Sino Land, 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 Worry About Lucas Bols N.V.'s (AMS:BOLS) CEO Pay Cheque?
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Huub L. M. P. Doorne is the CEO of Lucas Bols N.V. (AMS:BOLS). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. 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.
View our latest analysis for Lucas Bols
According to our data, Lucas Bols N.V. has a market capitalization of €180m, and pays its CEO total annual compensation worth €659k. (This figure is for the year to March 2019). That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at €470k. We examined companies with market caps from €88m to €354m, and discovered that the median CEO total compensation of that group was €626k.
So Huub L. M. P. Doorne is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at Lucas Bols has changed from year to year.
Over the last three years Lucas Bols N.V. has grown its earnings per share (EPS) by an average of 17% per year (using a line of best fit). Its revenue is down -5.6% over last year.
This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. It could be important to checkthis free visual depiction ofwhat analysts expectfor the future.
Lucas Bols N.V. has generated a total shareholder return of 0.9% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
Huub L. M. P. Doorne is paid around the same as most CEOs of similar size companies.
The company is growing EPS but shareholder returns have been sound but not amazing. So upon reflection one could argue that the CEO pay is quite reasonable. CEO compensation is one thing, but it is also interesting tocheck if the CEO is buying or selling Lucas Bols (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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Does Market Volatility Impact Koninklijke Brill NV's (AMS:BRILL) Share Price?
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! If you own shares in Koninklijke Brill NV ( AMS:BRILL ) 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 other type, which cannot be diversified away, is the volatility of the entire market. Every stock in the market is exposed to this volatility, which is linked to the fact that stocks prices are correlated in an efficient 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. A stock with a beta below one is either less volatile than the market, or more volatile but not corellated with the overall market. In comparison a stock with a beta of over one tends to be move in a similar direction to the market in the long term, but with greater changes in price. See our latest analysis for Koninklijke Brill What we can learn from BRILL's beta value As it happens, Koninklijke Brill has a five year beta of 1.01. This is fairly close to 1, so the stock has historically shown a somewhat similar level of volatility as the market. Using history as a guide, we might surmise that the share price is likely to be influenced by market voltility going forward but it probably won't be particularly sensitive to it. Beta is worth considering, but it's also important to consider whether Koninklijke Brill is growing earnings and revenue. You can take a look for yourself, below. Story continues ENXTAM:BRILL Income Statement, July 2nd 2019 Does BRILL's size influence the expected beta? Koninklijke Brill is a noticeably small company, with a market capitalisation of €38m. Most companies this size are not always actively traded. 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. What this means for you: Since Koninklijke Brill has a beta close to one, it will probably show a positive return when the market is moving up, based on history. If you're trying to generate better returns than the market, it would be worth thinking about other metrics such as cashflows, dividends and revenue growth might be a more useful guide to the future. In order to fully understand whether BRILL is a good investment for you, we also need to consider important company-specific fundamentals such as Koninklijke Brill’s financial health and performance track record. I highly recommend you dive deeper by considering the following: Future Outlook : What are well-informed industry analysts predicting for BRILL’s future growth? Take a look at our free research report of analyst consensus for BRILL’s outlook. Past Track Record : Has BRILL 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 at the free visual representations of BRILL's historicals for more clarity. Other Interesting Stocks : It's worth checking to see how BRILL measures up against other companies on valuation. You could start with this free 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 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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Tencent, Paytm Plan to Invest $100 Million in Video Startup
(Bloomberg) -- Tencent Holdings Ltd. and Paytm plan to invest about $100 million in Indian streaming service MX Player, according to a person familiar with the matter, as local and foreign companies compete for a piece of the country’s burgeoning online video market.
The WeChat operator and Paytm are in the final stages of discussions but specific terms may still change, said the person, who asked not to be named because the details are private. Jane Yip, a spokeswoman for Tencent, and representatives for Paytm and MX Player declined to comment.
Tencent has invested in movies, television shows and other content to increase user engagement. The Chinese social media giant, which offers HBO series and National Football League games at home, launched its first overseas video streaming service last month in Thailand as it seeks growth abroad. The MX Player deal offers Tencent a foothold in India, where smartphone users are proliferating and avidly consuming content via cheap wireless data plans.
India’s content streaming market is projected to grow at an annual rate of 22% to 120 billion rupees ($1.7 billion) by 2023, according to PricewaterhouseCoopers. For Indian digital payments leader Paytm and parent One97 Communications Ltd., MX Player’s 30 million registered users adds to a plethora of offerings from food delivery and e-commerce to financial services. Paytm reported 5.5 billion transactions in the year ending March 2019 with a gross value of over $50 billion.
MX Player is one of a coterie of streaming services vying for a slice of a highly fragmented but fast-growing market. Owned by Times Internet, a unit of top Indian media conglomerate Bennett Coleman & Co., MX Player generates about two-thirds of its viewership from smaller towns and competes with the likes of Netflix Inc., Amazon.com Inc.’s Prime video and market leader Hotstar, owned by Walt Disney Co.
Last month, Hotstar recorded 100 million daily active users, when about 15.6 million people watched a pivotal match between India and Pakistan in the ICC Cricket World Cup 2019.
(Updates with Tencent declining comment from the second paragraph.)
--With assistance from Lulu Yilun Chen.
To contact the reporter on this story: Saritha Rai in Bangalore at srai33@bloomberg.net
To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, Edwin Chan, Colum Murphy
For more articles like this, please visit us atbloomberg.com
©2019 Bloomberg L.P.
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Why We’re Not Keen On Drax Group plc’s (LON:DRX) 4.2% Return On Capital
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! Today we'll evaluate Drax Group plc ( LON:DRX ) to determine whether it could have potential as an investment idea. 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. Next, we'll compare it to others in its industry. And finally, we'll look at how its current liabilities are impacting its ROCE. Return On Capital Employed (ROCE): What is it? ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. In general, businesses with a higher ROCE are usually better quality. Ultimately, it is a useful but imperfect metric. Renowned investment researcher Michael Mauboussin has suggested that a high ROCE can indicate that 'one dollar invested in the company generates value of more than one dollar'. How Do You Calculate Return On Capital Employed? 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 Drax Group: 0.042 = UK£118m ÷ (UK£4.5b - UK£1.7b) (Based on the trailing twelve months to December 2018.) So, Drax Group has an ROCE of 4.2%. See our latest analysis for Drax Group Is Drax Group's ROCE Good? When making comparisons between similar businesses, investors may find ROCE useful. In this analysis, Drax Group's ROCE appears meaningfully below the 5.4% average reported by the Renewable Energy industry. This performance is not ideal, as it suggests the company may not be deploying its capital as effectively as some competitors. Regardless of how Drax Group stacks up against its industry, its ROCE in absolute terms is quite low (especially compared to a bank account). It is likely that there are more attractive prospects out there. Story continues We can see that , Drax Group currently has an ROCE of 4.2% compared to its ROCE 3 years ago, which was 2.7%. This makes us think the business might be improving. You can click on the image below to see (in greater detail) how Drax Group's past growth compares to other companies. LSE:DRX Past Revenue and Net Income, July 2nd 2019 Remember that this metric is backwards looking - it shows what has happened in the past, and does not accurately predict the future. Companies in cyclical industries can be difficult to understand using ROCE, as returns typically look high during boom times, and low during busts. ROCE is, after all, simply a snap shot of a single year. Future performance is what matters, and you can see analyst predictions in our free report on analyst forecasts for the company . How Drax Group's Current Liabilities Impact Its ROCE 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 check the impact of this, we calculate if a company has high current liabilities relative to its total assets. Drax Group has total liabilities of UK£1.7b and total assets of UK£4.5b. As a result, its current liabilities are equal to approximately 38% of its total assets. With a medium level of current liabilities boosting the ROCE a little, Drax Group's low ROCE is unappealing. The Bottom Line On Drax Group's ROCE There are likely better investments out there. But note: make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a P/E ratio below 20). I will like Drax Group better if I see some big insider buys. While we wait, check out this free list 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 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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IOC close to deal for Panama-flagged vessel as Indian vessels fail to match
By Nidhi Verma
NEW DELHI (Reuters) - India's top refiner Indian Oil Corp is close to chartering a Panama-flagged ship rather than an Indian vessel in its first five-year tender to hire an oil tanker with scrubbers that remove sulphur emissions, sources with knowledge of the matter said.
In December last year, state-owned IOC issued a global tender and offered Indian shippers a first right of refusal as the nation seeks to boost its shipping industry. India, the world's third-biggest oil importer, wants to promote the market share of its vessels in bringing in crude imports.
But the Panama-flagged very large crude carrier (VLCC) Bright Pioneer, owned by Nissen Kaiun Co Ltd, has emerged as the likely winner for a daily rate of $30,000-$32,000, the sources said.
None of the Indian companies could match the bid, they said. "Indian companies declined the first right of refusal," said one of the sources.
That will be a blow to the federal shipping ministry, which wants the state-refiners to sign five-year contracts with local shipping firms to shift freight worth billions of dollars to Indian flag carriers, including Shipping Corp of India (SCI), Mercator Ltd, Great Eastern Shipping Co and Essar Shipping.
SCI, Great Eastern, Seven Island Shipping and other Indian shipping companies participated in the IOC tender, the sources said.
"We did not match the offer as the rates were not in line with market trends. Very low rates have been offered," said an official at SCI.
The introduction of the scrubbers is important because the International Maritime Organization (IMO) is introducing the rules on marine fuels from the beginning of 2020, limiting the sulphur content to 0.5 percent, down substantially from the current 3.5 percent, to curb shipping pollution.
IOC will be using Bright Pioneer from January 2020 for at least five years, giving its Singapore-based operator Global United Shipping Company six months to install the scrubbers.
IOC and Global United Shipping did not respond to Reuters emails seeking comments.
By stripping out sulphur emissions, scrubbers allow shippers to use dirtier fuel oil but still meet new global requirements for lower emissions.
The IMO says that when the new rules come into force it will ban ships that do not have scrubbers from carrying any fuel oil, making it easier to catch cheaters.
The duration of the IOC contract can be extended by another two years to a total of seven.
(Reporting by Nidhi Verma; Editing by Martin Howell and Tom Hogue)
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Should You Be Impressed By MPS Limited's (NSE:MPSLTD) ROE?
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While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. We'll use ROE to examine MPS Limited (NSE:MPSLTD), by way of a worked example.
Over the last twelve monthsMPS has recorded a ROE of 16%. Another way to think of that is that for every ₹1 worth of equity in the company, it was able to earn ₹0.16.
Check out our latest analysis for MPS
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for MPS:
16% = ₹760m ÷ ₹4.7b (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 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 measures a company's profitability against the profit it retains, and any outside investments. The 'return' is the profit 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 it can be interesting to compare the ROE of different companies.
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. 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, MPS has a better ROE than the average (12%) in the Media industry.
That's what I like to see. I usually take a closer look when a company has a better ROE than industry peers. One data point to check is ifinsiders have bought shares recently.
Companies usually need to invest money to grow their profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.
MPS is free of net debt, which is a positive for shareholders. Its ROE already suggests it is a good business, but the fact it has achieved this -- and doesn't borrowings -- makes it worthy of further consideration, in my view. After all, when a company has a strong balance sheet, it can often find ways to invest in growth, even if it takes some time.
Return on equity is useful for comparing the quality of different businesses. In my book the highest quality companies have high return on equity, despite low debt. If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE.
But when a business is high quality, the market often bids it up to a price that reflects this. 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 course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Trump should realise that Iranians unite when bullied, says Iran parliament speaker
DUBAI, July 2 (Reuters) - U.S. President Donald Trump should realise that Iranians become more united when bullied, Iranian Parliament Speaker Ali Larijani said on Tuesday in remarks broadcast live on state television.
Iran announced on Monday it had amassed more low-enriched uranium than permitted under its 2015 nuclear deal with world powers, drawing a warning from Trump that Tehran was "playing with fire."
"Mr Trump should understand that when one uses bullying language against a civilised nation, they become more united," Larijani said. U.S. threats had united political factions in Iran, he added. (Reporting by Dubai newsroom)
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Jamie Oliver and wife Jools to renew vows in barefoot ceremony
Jools Oliver and Jamie Olive arrrive for the European premiere of 'Eddie The Eagle' at Odeon Leicester Square on March 17, 2016 in London, England. (Photo by Samir Hussein/WireImage) Jamie Oliver’s wife Jools has revealed the couple are planning a second wedding, to mark their 20th anniversary. The 44-year-old TV chef - who last month said he was “devastated” when his restaurant empire collapsed resulting in around 1,000 employees losing their jobs - met his wife at school when they were teenagers and they married in 2000. Jools, 44, told Red magazine: “Next year, we’ll have been married 20 years, and we’re going to get married again, but do things differently – outside and barefoot.” Read more: Jamie Oliver restaurant empire collapses, with 1,000 jobs lost Recalling their first wedding she said: "Our wedding was formal, but we’re so not like that. It’ll be a big party. Why the hell not? I think we’ve done well! “Our first dance was to Dusty Springfield’s I Only Want To Be With You , but Jamie doesn’t like dancing, so I threw him off. I was in my element!” View this post on Instagram A post shared by Jools Oliver (@joolsoliver) on Jun 24, 2019 at 12:47am PDT But first the couple and their five children - Poppy 17, Daisy, 16, Petal, 10, Buddy, 8 and two-year-old River - are planning a big holiday to Cornwall to recover form the stress of Oliver’s recent business troubles. Jools said: “Everyone looks shattered and we all need a break. “All I wanted was children and to get stuck into home life. I was quite true to myself in that way,’ she adds. Jools - who has on her own children’s clothing line Little Bird - admitted the collapse of Oliver’s restaurant chain had been, “challenging”. Jools and Jamie Oliver with their children in 2016 (left to right) Daisy Boo Pamela, Petal Blossom Rainbow, River Rocket Blue Dallas, Buddy Bear Maurice and Poppy Honey Rosie (Credit: PA) Last month administrators appointed to Jamie Oliver’s restaurant empire closed all but three of the company’s restaurants, resulting in thousands of job losses. The company, which includes 22 Jamie’s Italian restaurants in the UK as well as the celebrity chef’s Fifteen and Barbecoa restaurants, on Tuesday appointed accounting firm KPMG as administrator. Read more: What Killed Jamie Oliver's Restaurant Chain? “Unfortunately, with insufficient funds available to be able to trade the business in administration, all but the Gatwick airport restaurants have now closed,” joint administrator Will Wright, a partner in KPMG, said in a statement. Story continues Oliver said in a statement on Twitter: “I’m devastated that our much-loved UK restaurants have gone into administration.” I’m devastated that our much-loved UK restaurants have gone into administration. I am deeply saddened by this outcome and would like to thank all of the people who have put their hearts and souls into this business over the years. Jamie Oliver — Jamie Oliver (@jamieoliver) May 21, 2019 “I am deeply saddened by this outcome and would like to thank all of the people who have put their hearts and souls into this business over the years.”
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These Fundamentals Make Basler Aktiengesellschaft (ETR:BSL) Truly Worth Looking At
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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Basler Aktiengesellschaft (ETR:BSL), it is a company with robust financial health as well as an optimistic future outlook. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the fullreport on Basler here.
BSL's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. BSL seems to have put its debt to good use, generating operating cash levels of 0.72x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
For Basler, I've put together three essential factors you should look at:
1. Historical Performance: What has BSL's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
2. Valuation: What is BSL 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 BSL is currently mispriced by the market.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of BSL? 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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GLOBAL MARKETS-Global growth woes, trade uncertainty drag on Asian shares
* MSCI Asia ex-Japan up 0.28% as HK plays catch-up
* Trump says trade deal should favour U.S.
* Global PMIs show manufacturing weakness
* RBA cuts cash rate to record low 1%
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Andrew Galbraith
SHANGHAI, July 2 (Reuters) - Asian shares wobbled on Tuesday, U.S. Treasury yields fell and gold rebounded as weak global factory activity reinforced fears about slowing growth, while doubts over whether the United States and China can pull off a trade deal also hurt sentiment.
Markets in Europe are expected to extend the previous day's rally, with financial spreadbetters seeing London's FTSE and Paris' CAC up 0.3% each at the open, and Frankfurt's DAX 0.2% higher.
President Donald Trump said on Monday that any trade deal with China would need to be "somewhat tilted" in favour of the United States. The U.S. government also threatened tariffs on $4 billion of additional European Union goods in a long-running dispute over aircraft subsidies.
U.S. S&P 500 e-mini futures were up 0.09% and MSCI's broadest index of Asia-Pacific shares outside Japan added 0.28%, helped by a 1.23% gain in Hong Kong shares as investors caught up to Monday's global rally. Markets in Hong Kong had been closed on Monday for a public holiday.
But Chinese blue-chips dipped 0.13% and Korean shares lost 0.3%.
"Euphoria that the trade negotiations are back on the table has probably waned and again the cautious tone is getting hold of the markets," said Prakash Sakpal, an economist with ING in Singapore.
"We need to see a great deal of negotiation progress on the China-U.S. trade war. And we should also see more regional policy stimulus actually kicking in to prevent any further deterioration in economic activity across the region."
Australian shares were flat, pulling back from earlier gains after the Reserve Bank of Australia cut its benchmark cash rate by 25 basis points to a record low of 1.0%, as widely expected. However, the RBA left limited room for more reductions, raising the possibility of unconventional policy easing.
Japan's Nikkei finished up 0.11%.
Global shares had rallied strongly on Monday after the United States and China agreed on the weekend to restart trade negotiations aimed at resolving their year-long trade war and Washington said it would postpone further tariffs.
U.S. President Donald Trump also offered concessions, including an easing of restrictions on tech company Huawei .
Yet, with the previous rounds of Sino-U.S. negotiations breaking down in acrimony, investors were now turning to the prospects of actual progress in talks to settle the dispute that has dented global trade, business investment and economic growth.
The fresh U.S. tariff threats against Europe also point to a worrisome prospect of a broadening trade dispute, said Michael McCarthy, chief markets strategist at CMC Markets in Sydney, in a note to clients.
"The problem is the widening of the dispute. Europe, the U.S. and China account for almost two thirds of global GDP," he said. "An ongoing disruption to trade between these three major economies, prosecuted for domestic political purposes, could sink global growth."
WEAK MANUFACTURING
Manufacturing surveys over the past 24 hours underscored those risks. Factory activity in the euro zone shrank faster last month than previously thought, and U.S. manufacturing activity slowed to a near three-year low in June.
"Global manufacturing PMI took the wind from the sails of risk assets outside of those which are stock related as it becomes apparent this is a real and genuine slowdown the world is experiencing," Greg McKenna, strategist at McKenna Macro, said in a note to clients.
While stocks on Wall Street ended higher, they pared early gains that had seen the benchmark S&P 500 index briefly surpass its previous record high.
The Dow Jones Industrial Average rose 0.44% to 26,717.43, the S&P 500 gained 0.77% to 2,964.33 and the Nasdaq Composite added 1.06% to 8,091.16.
Over recent trading sessions, risk assets have also been held back by a tempering of expectations by U.S. Federal Reserve policymakers for aggressive rate cuts at this month's meeting.
"With the easing of Sino-U.S. trade frictions there will certainly be an improvement in downward pressure on the U.S. economy, and the need for the Fed to ease will clearly lessen," analysts at Jianghai Securities said in a note.
Market expectations that the Fed would implement a relatively large rate cut in July have fallen, with the probability of a 50 basis-point cut at 17.5%, from close to 50% last week.
The cautious market mood pushed the yield on benchmark 10-year Treasury notes lower to 2.017%, compared with its U.S. close of 2.033% on Monday, while the two-year yield, watched as a gauge of rate expectations, edged down to 1.7713% from a U.S. close of 1.787%.
The safe-haven yen strengthened against the dollar, which fell 0.09% to 108.34, and the euro was flat at $1.1287. The dollar index, which tracks the greenback against major rivals was 0.05% lower at at 96.792.
In commodity markets, Brent crude recovered after worries over the outlook for the global economy had weighed on prices. The global benchmark was up 0.11% at $65.13 per barrel, though U.S. crude remained weaker, down 0.05% at $59.06 a barrel
Spot gold retained its lustre, adding 0.52% to $1,391.26 per ounce.
(Reporting by Andrew Galbraith; Additional reporting by David Randall in NEW YORK Editing by Jacqueline Wong & Shri Navaratnam)
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What Kind Of Shareholder Owns Most Wm Morrison Supermarkets PLC (LON:MRW) Stock?
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Every investor in Wm Morrison Supermarkets PLC (LON:MRW) should be aware of the most powerful shareholder groups. 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.
Wm Morrison Supermarkets is a pretty big company. It has a market capitalization of UK£4.8b. Normally institutions would own a significant portion of a company this size. In the chart below below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about MRW.
See our latest analysis for Wm Morrison Supermarkets
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 Wm Morrison Supermarkets does have institutional investors; and they hold 87% 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Wm Morrison Supermarkets's earnings history, below. Of course, the future is what really matters.
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 Wm Morrison Supermarkets. 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. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that Wm Morrison Supermarkets PLC insiders own under 1% of the company. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own UK£6.8m worth of shares. It is good to see board members owning shares, but it might be worth checkingif those insiders have been buying.
The general public, with a 12% 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.
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.
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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Do You Know What Bobst Group SA's (VTX:BOBNN) P/E Ratio Means?
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This article is for investors who would like to improve their understanding of price to earnings ratios (P/E ratios). We'll apply a basic P/E ratio analysis to Bobst Group SA's (VTX:BOBNN), to help you decide if the stock is worth further research.Bobst Group has a price to earnings ratio of 18.98, based on the last twelve months. That means that at current prices, buyers pay CHF18.98 for every CHF1 in trailing yearly profits.
View our latest analysis for Bobst Group
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Bobst Group:
P/E of 18.98 = CHF72.95 ÷ CHF3.84 (Based on the year to December 2018.)
A higher P/E ratio means that buyers have to paya higher pricefor each CHF1 the company has earned over the last year. That isn't necessarily good or bad, but a high P/E implies relatively high expectations of what a company can achieve in the future.
If earnings fall then in the future the 'E' will be lower. That means unless the share price falls, the P/E will increase in a few years. So while a stock may look cheap based on past earnings, it could be expensive based on future earnings.
Bobst Group saw earnings per share decrease by 44% last year. But it has grown its earnings per share by 19% per year over the last five years. And over the longer term (3 years) earnings per share have decreased 1.5% annually. This might lead to low expectations.
The P/E ratio essentially measures market expectations of a company. The image below shows that Bobst Group has a P/E ratio that is roughly in line with the machinery industry average (20).
Bobst Group's P/E tells us that market participants think its prospects are roughly in line with its industry. The company could surprise by performing better than average, in the future. I would further inform my view by checkinginsider buying and selling., among other things.
Don't forget that the P/E ratio considers market capitalization. In other words, it does not consider any debt or cash that the company may have on the balance sheet. In theory, a company can lower its future P/E ratio by using cash or debt to invest in growth.
Spending on growth might be good or bad a few years later, but the point is that the P/E ratio does not account for the option (or lack thereof).
Net debt totals just 1.7% of Bobst Group's market cap. So it doesn't have as many options as it would with net cash, but its debt would not have much of an impact on its P/E ratio.
Bobst Group trades on a P/E ratio of 19, which is fairly close to the CH market average of 18.5. When you consider the lack of EPS growth last year (along with some debt), it seems the market is optimistic about the future for the business.
Investors should be looking to buy stocks that the market is wrong about. If the reality for a company is better than it expects, you can make money by buying and holding for the long term. So thisfreereport on the analyst consensus forecastscould help you make amaster moveon this stock.
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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An Examination Of SQLI SA (EPA:SQI)
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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on SQLI SA (EPA:SQI) due to its excellent fundamentals in more than one area. SQI is a company with robust financial health as well as a buoyant growth outlook. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, read the fullreport on SQLI here.
SQI's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that SQI manages its cash and cost levels well, which is an important determinant of the company’s health. SQI's has produced operating cash levels of 0.55x total debt over the past year, which implies that SQI's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
For SQLI, there are three relevant factors you should further research:
1. Historical Performance: What has SQI's returns been like over the past? Go into more detail in the past track record analysis and take a look atthe free visual representations of our analysisfor more clarity.
2. Valuation: What is SQI 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 SQI is currently mispriced by the market.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of SQI? 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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Japan cites security concerns in curbing exports to SKorea
TOKYO (AP) — Japan has defended its decision to impose export restrictions on South Korea, citing national security concerns and its obligation as part of the international community to keep tabs on sensitive technology transferrable for military uses. Chief Cabinet Secretary Yoshihide Suga said Tuesday the step does not violate free trade principles. Japan said Monday it will impose restrictions on exports of semiconductor-related materials to South Korea. Officials cited a lack of trust between the Asian neighbors, stemming from disputes over the issue of Koreans forced to work as laborers during World War II. Suga said Japan will closely watch the possible impact on Japanese companies. The trade ministry said exports related to manufacturing computer chips, such as fluorinated polyimides used for displays, must apply for approval for each contract beginning Thursday.
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New Air France-KLM CEO Ben Smith Begins Putting His Imprint on Air France
After Ben Smith became CEO of Air France-KLM last year, he looked at Air France’s Africa network, one of the company’s jewels. France no longer rules much of the continent, but Air France retains air rights other airlines covet.
Smith didn’t like what he saw. In his previous job, as chief operating officer of Air Canada, he preferred simplicity and consistency, and Air France’s network is, well, complicated. Many routes operate less than daily, and some go in a circle,like AF 775, which twice weekly departs Paris for Bangui, capital of the Central African Republic, before stopping in Yaoundé, capital of Cameroon, and sitting for about four hours before returning home.
Sometimes there are reasons for odd routings, like security concerns, but worldwide, Smith said, the airline’s operation is more complex than it needs to be, a reason the carrier underperforms its peers on many financial metrics.
“You go look at the Air France African network and you just go, ‘What is this?'” Smith said. “It’s like this tangled web.”
He’s not the first person to notice Air France’s complexity. Rivals often talk about the airline’s potential, saying they envy its strengths, including its iconic brand, vast global route network, and Paris hub. But since its 2004 merger with KLM, Air France has languished as its two main European rivals overhauled their businesses. Rivals have cut bloated infrastructure; Air France retains a legendary bureaucracy.
Previous CEOs have tried to tame it. Some ran into inertia while fighting powerful unions or the French government, which owns 14.3 percent of Air France-KLM. The last two CEOsresigned after failing to persuade French unions to accept their turnaround plans.
Smith, the first non-French executive to lead the parent company, might be different. Smith, 47, joined last August, and after some early personnel missteps — with one decision, he antagonized Dutch politicians so much the government bought stake in the company — Smith is beginning to put his imprint on Air France-KLM.
Recently he has focused on the French side, letting KLM CEO Pieter Elbers run his company,which in recent years has produced much of its parent’s profits.Smith seeks to mold Air France into the airline he wants: a simpler operation with better relations with unions and other stakeholders.
“For Air France, one of the key features for success is going to be to simplify,” he said. “It is complex. I got in there and thought, ‘Wow, where do we start?'”
Before he resigned a year ago, former CEOJean-Marc Janaillac introduced Joon, one of the more mocked brands in aviation history.
His team conceived the airline-within-an-airline to compete against low-cost carriers in Europe, North America, and the Middle East, which had been undercutting Air France on price. Joon needed to attract all customer segments, but in advertising it billed itself as a millennial-oriented airline, claiming it had a “fashion brand, a rooftop bar, an entertainment channel, [and] a personal assistant.”
It was not much more than a regular airline with snazzy crew uniforms, fancy alcoholic drinks, and an inflight entertainment system. It wasn’t even a low-cost airline, as management had not won real concessions from employees, other than flight attendants, who were paid less than at Air France, andhated the airline for it.
Smith scrapped it,as he negotiated a new agreement for Air France flight attendants, that should make the main airline more competitive.
“It broke the trust of management and flight attendants,” Smith said. “You couldn’t fix that, so we had to get rid of Joon. There was no way we were going to be fighting with our flight attendants every day, forever, over a product they didn’t understand and they wouldn’t accept.”
Smith, who created Air Canada Rouge, a discount subsidiary, said he understands low-cost, long-haul airlines may steal share from Air France. But he said Norwegian doesn’t pose so much of a threat that Air France needs another airline to combat it.
Air France-KLM CEO Ben Smith is speaking at Skift Global Forum in NYC. Get tickets now
“Are we going to start a whole new airline because of Norwegian?” he said. “Not today. I’d like to wait and see. The model hasn’t been proven. I’m not convinced yet. I think most people in the industry are not convinced that you should go buy brand-new 787s without a true premium cabin, while not being able to get prime slots at the best airports. Let’s see how this works.”
As long as Norwegian exists, Air France may go with a simpler strategy to thwart it. Air France has large airplanes, including the 516-seat Airbus A380 and a 468-seat Boeing 777-300ER. Air France can discount the last 50 or 100 seats and still make money, Smith said.
“In the summer if you want a price to New York, or to L.A., or to San Francisco, we have built-in LCC on some of these big airplanes,” he said.
There are other places Smith wants to simplify. More than many airline CEOs, Smith is a product person, taking care to choose seats and other cabin elements. At Air Canada, he was fanatical about consistency, so while the airline may not have the world’s best product, business travelers knew what to expect.
Air France is nothing like that. It has a mishmash of products for first and business class, and key customers sometimes don’t know what they’ll get, because the airline is always swapping planes among routes.
“We’ve got 29 airplanes equipped withLa Premiere, the Air France first class, which has two products,” Smith said. “One of the products just won best in the world. And we had them on so many routes, some daily, some non-daily, at different times of the day. To Beijing, we have been flying two aircraft types, depending on the day of the week. How the hell do you market that product?”
By next summer, he said, Air France should have a consistent product on transatlantic flights, except for its Airbus A380s, which will retain an antiquated cabin for the foreseeable future. Retrofitting the jets will cost 30 to 35 million euros per plane, he said, and it’s not clear that it’s worth it.
If Smith succeeds where others have failed, he’ll need to do more than simplify. He must persuade stakeholders Air France cannot continue the same way as ever.
France’s domestic market could be a test. Air France is an iconic national airline, and politicians and travelers expect it to fly among the country’s major cities. The problem is the business stinks: Air France has lost share to high-speed trains, includinga new line from Paris to Bordeaux,and it’s probably not coming back.
In May Smith outlined a plan tocut 15 percent of capacity from the short-haul market over the next two and a half years.But he said the airline probably needs more changes.
“This all has to be restructured,” Smith said. “We’re losing almost 200 million euros a year. We have a regional operation which just can’t compete against low-cost carriers. We’ve got this train. We have to figure this out.”
Smith may have a tool to stem the losses. Air France and KLM each run a low-cost, short-haul airline called Transavia, and both are reasonably competitive. However, because of union agreements, Transavia France can only fly 40 airplanes, so it lacks the scale to fly all the routes Smith would like.
Air France-KLM CEO Ben Smith is speaking at Skift Global Forum in NYC. Get tickets now
In May Air France pilots voted to allow their union to negotiate with the companyon increasing the 40-airplane limit at Transavia France. In the past pilots have been angry whenever the airline has proposed adding new airplanes at Transavia, so Smith said he sees this as a good sign. But he still needs a deal.
Even if he gets one, it’s not clear unions or politicians would let Transavia take over domestic Air France routes. Even if it cannot, Smith said he sees Transavia as an effective competitor on short-haul international routes against established low-cost airlines, like EasyJet and Ryanair. None is so big in France, but several are an annoyance, he said.
Jay Shabat, senior analyst at Skift Airline Weekly, said Air France could be a major force if Smith can tweak the short-haul network. For longer flights, he said, Air France and KLM are in strong shape, not only across the Atlantic, but also in Asia, Africa, and even South America.
“They just bleed money on short haul,” he said.
Not everyone is sure Smith has what it takes to reform Air France-KLM.
Daniel Röska, senior research analyst at Sanford C. Bernstein, said many European investors soured on Smith in February,when reports indicated he wanted to push out KLM’s Elbers.Employees and politicians in the Netherlands rebelled, and to maintain influence, the Dutch governmentupped its stake in Air France-KLM to 14 percent.
“He really miscalculated that move with Pieter Elbers,” Röska said. “The Dutch government went on a rampage and said, ‘You are not going to fire this guy.”‘
Elbers and Smith say they have a fine working relationship, but the episode may have repercussions.Smith now runs a company where roughly half the stock is owned by strategic investorswith disparate interests. The French and the Dutch governments may want one thing, while Air France-KLM’s other owners, including Delta Air Lines (8.8 percent), China Eastern (8.8 percent), and employees (3.9 percent) seek something else. They could keep Smith from taking a decision that would help the company but hurt one of the investors, Röska said.
Röska, a former vice president at Lufthansa, also said he questions why Smith spends so much time on Air France. At other European airline companies, the group CEO handles high-level strategy, while others lead the airlines. But with Air France, Smith has a higher public profile than Air France CEO Anne Rigail.
Röska said European equity markets have mostly given up on Air France-KLM, saying the group has not proven it can sustain the same margins as its competitors. In its most recent fiscal year, Air France-KLM had an operating margin, excluding special items, of 5 percent, far less than International Airline Group’s 13.2 percent, according to calculations by Skift Airline Weekly.
“From the investor community, the only people who still care about Air France are in France,” Röska said. “The only airline that is less investable than Air France-KLM right now is Norwegian.”
Some journalists, analysts, and rival airline executives have asked if Smith will be a short-timer. But Shabat said it’s too early to know.
Shabat said a good parallel could be Alan Joyce, an Irish executive tapped to run Qantas, the Australian national carrier, in 2008. Early in his tenure, Joyce was hated by many passengers, investors, and workers formaking tough decisionsthey did not like or understand. Today Qantas is consistently profitable, and Joyce is considered one of the world’s most adept executives.
“These things play out over time,” Shabat said. “Smith is very skilled. He knows what he is doing. With the Dutch thing, he may have done that in a way that was a little bit messy, but I don’t think that’s going to have a deep effect long term.”
Air France-KLM CEO Ben Smith is speaking at Skift Global Forum in NYC. Get tickets now
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UPDATE 1-Japan sending patent officials to U.S. over Kim Kardashian "Kimono" flap
(Recasts with Japanese trade minister's comments, changes dateline from Los Angeles)
TOKYO, July 2 (Reuters) - Japan is to send patent officials to the United States to discuss the flap over Kim Kardashian’s Kimono brand underwear, the trade minister said on Tuesday.
The reality TV star and businesswoman said on Monday she would rename her Kimono shapewear line after people in Japan said her use of the term was disrespectful.
Trade Minister Hiroshige Seko said he was aware of Kardashian's decision but still wanted there to be "a careful examination" of the matter.
"This has become a big deal on social media," Seko said during a regular press conference in Tokyo, adding that trademark issues fell under his jurisdiction.
"The kimono is regarded around the world as a distinct part of our culture," he said. "Even in America, kimono is well known to be Japanese."
Kardashian said that she had announced the Kimono products in June "with the best intentions in mind" and that she appreciated the feedback she had received.
"My brands and products are built with inclusivity and diversity at their core and after careful thought and consideration, I will be launching my Solutionwear brand under a new name," she wrote on Twitter.
In Japanese, kimono means "thing that's worn" and refers to full-length robes with sashes donned for formal occasions such as weddings and funerals. Kardashian's use of the word on undergarments and filing for a trademark annoyed many people.
"Kimono is not underwear! Stop trademark registration! Don't make the word kimono yours!" Twitter user Ruu wrote shortly after the launch announcement, echoing a common theme.
Others said using the word was "a theft of traditional culture" and begged Kardashian to change the name, saying the underwear would sell just as well if it was called something else.
Seko said that he was sending Japanese patent executives to the U.S. Patent and Trademark Office on July 9 to "properly exchange views on the matter", adding that he would be following the situation closely.
(Reporting by Makiko Yamazaki, Malcolm Foster and Lisa Richwine; Editing by Cynthia Osterman and Nick Macfie)
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Should You Think About Buying Hi Sun Technology (China) Limited (HKG:818) Now?
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Hi Sun Technology (China) Limited (HKG:818), which is in the it business, and is based in Hong Kong, saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Hi Sun Technology (China)’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Hi Sun Technology (China)
According to my relative valuation model, the stock seems to be currently fairly priced. 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 12.58x is currently trading slightly above its industry peers’ ratio of 12.07x, which means if you buy Hi Sun Technology (China) today, you’d be paying a relatively reasonable price for it. And if you believe Hi Sun Technology (China) should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Hi Sun Technology (China)’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.
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. Hi Sun Technology (China)’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
Are you a shareholder?It seems like the market has already priced in 818’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 818? 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 818, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for 818, 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 Hi Sun Technology (China). You can find everything you need to know about Hi Sun Technology (China) inthe latest infographic research report. If you are no longer interested in Hi Sun Technology (China), 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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Booking Holdings Delays Charging Hotels Resort Fee Commissions in Major Reversal
Booking Holdings, which had announced it would begin charging hotels in the United States commission on their resort fees, has delayed implementing the new policy, Skift exclusively learned.
The company, which owns brands including Booking.com, Priceline, Agoda, and Kayak, is considering delaying the new commissions until January 1, according to multiple sources. The tentative new schedule for implementation — if the company goes through with it at all — is subject to change.
It is believed that Booking Holdings could be using the pause to reevaluate the whole policy, although an internal source argued that the twist is merely a change in timing to enable relevant partners to alter internal processes.
A Booking Holdings spokesperson declined to comment on the move.
The policy reversal — or pause, at the least — coincides with a leadership change at the holding company’s largest brand, Booking.com. Booking Holdings announced a week ago thatBooking.com CEO Gillian Tans would be leaving her postimmediately and was being replaced by parent company CEO Glenn Fogel, who now holds both positions.
Booking Holdings CEO Glenn Fogel is speaking at Skift Global Forum in NYC. Get tickets now
Skift broke the story in late May thatBooking Holdings would begin on June 1 charging hotels commissions on resort feesfrom those hotels that charge the controversial fees. The new commissions were to begin in the United States, and the plan was to roll out the policy globally thereafter.
Booking Holdings and Expedia Group currently only charge commissions on the hotel rate itself, and Booking felt it was unfairly not getting the compensation it deserved on the full price of the room. Hotels sometimes charge more for resort fees than for the room rate itself.
In the interim, three things happened.
Expedia Group announced itwouldn’t follow Booking and charge commissions on resort feesbut would start dimming hotels — or downgrading them in search results — if they charged resort fees.
Skift exclusively learned that several brands in Las Vegas and elsewhere, including the Golden Nugget (Las Vegas; Atlantic City; Biloxi, Mississippi; and Laughlin, Nevada), Wynn and Encore in Las Vegas, as well as a dozen Red Rock Resorts-affiliated brands in Sin City, dropped out of Booking.com over the resort fees and kept participating in Expedia Group.
Booking Holdings undoubtedly has a smaller share of hotel bookings in Las Vegas than does Expedia Group, and losing partnerships with several Sin City brands wouldn’t materially shake Booking Holdings’ financial results. For example, consider that Wynn and Encore properties in Las Vegas, which have gone missing on Booking.com, generated around $119 million in room revenue for the chain in the first quarter, and that’s perhaps about 7 percent of all of Las Vegas room revenue, according to a Skift Research estimate. Red Rock Resorts took in just $48 million in room revenue in Las Vegas during the same period.
Booking Holdings shook up the management of its Booking.com brand, but it’s unclear whether Tans’ ouster had anything to do with the resort fee commission implementation.
The situation could be in flux. Booking Holdings is not believed to have communicated the delay in implementing the new policy in a comprehensive way to hotel partners, and the timing could change.
It is also possible that Fogel will reverse the commission policy in its entirety and is using the supposed delay as cover for an about-face.
Booking Holdings CEO Glenn Fogel is speaking at Skift Global Forum in NYC. Get tickets now
What’s clear is that Booking Holdings does not appear to be willing to adopt the Expedia tack of dimming resort-fee-imposing hotels in its search results out of fears of diminishing the user experience.
Expedia Group’s Cyril Ranque, who heads the company’s president of Lodging Partner Services, disputed the notion that Expedia intends to dim hotels that charge resort fees in search results.
“To be clear, we absolutely don’t plan to dim any property which applies mandatory resort fees,” Ranque said Tuesday. “It’s simply about leveling the playing field for hotels so that every dollar spent on a resort fee is treated the same for the price component in our algorithm as a dollar spent on a base price.”
Ranque said he doesn’t want to see hotels that include the entire nightly rate in the base price disadvantaged.
“Having our algorithm take mandatory fees into account, in addition to base price, ensures that hotels that break out fees from base price do not get a sort advantage over hotels that do not charge separate mandatory fees,” he said. “This approach is both fair to all our hotel partners and it enhances our customers’ shopping experience by allowing them to compare hotels ‘like-for-like’ based on the total amount they will eventually pay.”
Overall, however, if Booking Holdings ends up abandoning its resort-fee commission policy, the turn of events may help hotels bolster their controversial resort fees, which are a huge source of revenue and profit for some properties.
Booking Holdings CEO Glenn Fogel is speaking at Skift Global Forum in NYC. Get tickets now
Note: This story was updated to insert an Expedia comment about the dimming issue, and to provide some room revenue statistics about Las Vegas properties that dropped out of Booking.com.
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FOREX-Dollar trims gains as trade optimism fades, Aussie near lows post RBA cut
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* RBA expected cuts rates to a record low
* Traders looking for clues on additional RBA cuts
* Greenback pares gains as caution on trade sets in (Adds RBA rate cut, yuan, analyst's comments)
TOKYO, July 2 (Reuters) - The dollar gave up gains on Tuesday as investors curbed earlier enthusiasm about U.S.-China trade progress while the Australian currency barely budged from recent lows after a central bank rate cut decision offered few clues about future easing.
The yuan also shed its early rise to trade lower on the day after U.S. President Donald Trump said any deal with China would need to be somewhat tilted in favour of the United States, suggesting negotiations may not proceed smoothly.
The U.S. dollar index against a basket of six major currencies earlier rose to its highest in a week but retreated as doubt set in about the resumption of U.S.-China efforts to resolve their trade war.
Market focus now shifts to Reserve Bank of Australia Governor Philip Lowe, who speaks to business leaders in the northern Australian city of Darwin at 0930 GMT, which could provide clues on how much further interest rates could fall.
"The tone from the RBA was not that pessimistic, which gives the impression they are somewhat reluctant to cut rates further," said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities in Tokyo.
"Short positions in the Aussie were already so heavy. Now we're in a situation where the main risk is for the Aussie to be bought back."
The Australian dollar was up 0.3% at $0.6983 on Tuesday after slumping 0.9% on Monday, its biggest decline since April 24.
The RBA lowered interest rates by 25 basis points to a record low of 1.00%, matching economists' expectations. In a statement the central said it would lower rates again "if needed," a phrase some analysts took to mean an additional rate cut is less certain than before.
The U.S. dollar index was little changed at 96.790 on Tuesday having posted its biggest increase since March 7 on Monday on hopes Beijing and Washington were making headway in their trade negotiations.
The United States and China have already imposed tariffs of up to 25% on hundreds of billions of dollars of each other's goods in a dispute about China's trade practices that has lasted nearly a year.
The drawn out trade war has slowed global growth and pushed many central banks to cut interest rates to support their economies.
The offshore yuan gave up early gains to trade around 0.2% lower at 6.8690 versus the dollar, on course for its biggest daily decline in a week.
The global investor spotlight will move to U.S. non-farm payrolls data due on Friday, which economists expect to have risen by 160,000 in June, compared with a 75,000 increase in May.
However, analysts expect the dollar will struggle to make substantial gains given expectations the Federal Reserve will cut rates due to low inflation and worries about the U.S.-China trade war.
"It would be a mistake to view the rise in the dollar on Monday as the beginning of a broad-based rally," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.
"Treasury yields are capped around 2%, because there are still expectations for Fed rate cuts."
The euro briefly fell to an eight-day low of $1.1275 before trading little changed at $1.1289. The common currency fell 0.7% on Monday, its biggest-one day decline since March as disappointing economic data triggered a tumble in bond yields and boosted expectations for a European Central Bank rate cut. (Reporting by Stanley White; Editing by Sam Holmes)
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South Korea's Moon calls Trump-Kim summit end of hostility
SEOUL, South Korea (AP) — South Korea's president on Tuesday called a recent U.S.-North Korean summit at the Korean border an end of mutual hostility between the countries, despite skepticism by many experts that it's was a just made-for-TV moment that lacked any substance. During their impromptu third summit at the Korean Demilitarized Zone on Sunday, Trump and Kim reaffirmed their friendships and agreed to resume nuclear talks. Trump's brief stepping across the borderline into North Korea also made him the first sitting U.S. president to set foot in the North's soil. But neither side has still indicated they are any closer to resolving sticking points that collapsed their previous summit. On Tuesday, South Korean President Moon Jae-in told a Cabinet meeting that the summit in the DMZ meant the two countries declared "an end of hostile relations" and the "start of an era of peace." Moon, who briefly chatted with Trump and Kim on a DMZ village before the U.S. and North Korean leaders sat for a two-way meeting, described their summit as "historic." He also called the summit "the fruits of amazing imagination," saying it was arranged due to Trump's "unprecedented" Twitter offer for a meeting and Kim's "bold" decision to accept it. Moon, a liberal who took office in 2017, has lobbied hard to set up diplomacy between Trump and Kim to help find a peaceful settlement of the North Korean nuclear crisis. He met Kim three times last year, and their first and second summits happened at the same DMZ village called Panmunjom. At the start of Sunday's meeting, Trump went across ankle-high concrete slabs that form the military demarcation line at Panmunjom after Kim told him he would become the first U.S. president to be in North Korea if he did so. After walking together toward north several meters (several feet), they turned back to the South for a summit that lasted about 50 minutes. Trump said he was "proud" to step over the borderline and thanked Kim for showing up for the meeting. Kim said he was initially "very surprised" at Trump's tweet Saturday proposing a DMZ meeting and that their summit could not have occurred if the two leaders didn't have "great friendship." Story continues North Korea's state media described Kim's meeting with Trump as "an amazing event" and that both leaders expressed great satisfaction over the result of their talks. Moon's government has also said it hopes the diplomatic momentum created by the latest Trump-Kim meeting would help revive inter-Korean dialogue. U.S. and North Korean officials are expected to sit down for working-level talks in coming weeks to hammer out the terms of a mutually acceptable deal, but many experts say it remains unclear whether the negotiations would successfully address the fundamental differences between Washington and Pyongyang that were exposed in the second Kim-Trump summit in Vietnam in February. The Hanoi summit ended without any agreement after Trump turned down Kim's request for major sanctions relief in return for dismantling his main nuclear materials-making complex while leaving his already-manufactured nuclear bombs and long-range missiles intact. The United States and North Korea have no diplomatic ties and are still technically at war because an armistice that ended their 1950-53 Korean War has yet to be replaced with a peace treaty. About 28,500 U.S. troops are stationed in South Korea as deterrence against potential aggression from North Korea.
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What Do Analysts Think About Boiron SA's (EPA:BOI) Future?
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Since Boiron SA (EPA:BOI) released its earnings in December 2018, it seems that analyst forecasts are fairly pessimistic, as a 7.7% fall in profits is expected in the upcoming year. However, this pessimism is not unfounded, given the negative earnings growth rate over the past five years on average. With trailing-twelve-month net income at current levels of €57m, the consensus growth rate suggests that earnings will decline to €53m by 2020. Below is a brief commentary on the longer term outlook the market has for Boiron. For those keen to understand more about other aspects of the company, you canresearch its fundamentals here.
See our latest analysis for Boiron
The longer term view from the 4 analysts covering BOI is one of negative 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 BOI, 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.
By 2022, BOI's earnings should reach €38m, from current levels of €57m, resulting in an annual growth rate of -14%. EPS reaches €2.15 in the final year of forecast compared to the current €3.23 EPS today. Earnings decline appears to be a result of a falling top-line, with negative growth of -3.7%. By 2022, margins are projected to decline from 9.5% to 7.2% as a result in a faster fall in profits.
Future outlook is only one aspect when you're building an investment case for a stock. For Boiron, there are three fundamental factors 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 Boiron 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 Boiron is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of Boiron? 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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Does Sparebanken Møre's (OB:MORG) Share Price Gain of 78% Match Its Business Performance?
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By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. For example, theSparebanken Møre(OB:MORG) share price is up 78% in the last three years, clearly besting than the market return of around 30% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 25% in the last year, including dividends.
See our latest analysis for Sparebanken Møre
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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, Sparebanken Møre achieved compound earnings per share growth of 5.7% per year. In comparison, the 21% per year gain in the share price outpaces the EPS growth. So it's fair to assume the market has a higher opinion of the business than it did three years ago. That's not necessarily surprising considering the three-year track record of earnings growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It might be well worthwhile taking a look at ourfreereport on Sparebanken Møre's earnings, revenue and cash flow.
When looking at investment returns, it is important to consider the difference betweentotal shareholder return(TSR) andshare price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Sparebanken Møre, it has a TSR of 112% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
It's good to see that Sparebanken Møre has rewarded shareholders with a total shareholder return of 25% in the last twelve months. And that does include the dividend. That gain is better than the annual TSR over five years, which is 16%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. If you would like to research Sparebanken Møre in more detail then you might want totake a look at whether insiders have been buying or selling shares in the company.
Of courseSparebanken Møre may not be the best stock to buy. So you may wish to see thisfreecollection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NO exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Brief Commentary On T.F. & J.H. Braime (Holdings) P.L.C.'s (LON:BMT) Fundamentals
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T.F. & J.H. Braime (Holdings) P.L.C. (LON:BMT) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of BMT, it is a company with great financial health as well as a a great track record of performance. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at thereport on T.F. & J.H. Braime (Holdings) here.
Over the past year, BMT has grown its earnings by 27%, with its most recent figure exceeding its annual average over the past five years. Not only did BMT outperformed its past performance, its growth also surpassed the Trade Distributors industry expansion, which generated a 5.6% earnings growth. This paints a buoyant picture for the company. BMT's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. BMT appears to have made good use of debt, producing operating cash levels of 0.63x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
For T.F. & J.H. Braime (Holdings), I've compiled three relevant factors you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for BMT’s future growth? Take a look at ourfree research report of analyst consensusfor BMT’s outlook.
2. Valuation: What is BMT 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 BMT is currently mispriced by the market.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of BMT? 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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Australia's central bank cuts key interest rate 0.25% to 1%
CANBERRA, Australia (AP) Australia's central bank cut its benchmark interest rate by a quarter of a percentage point on Tuesday to a record low of 1% in a bid to boost the economy. The cut is the second in consecutive months. Previously the Reserve Bank of Australia had not shifted the rate in almost three years. "This easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term target," Reserve Bank Governor Philip Lowe said in a statement. The outlook for the global economy remained reasonable. But uncertainty generated by the trade and technology disputes was affecting investment and meant that the risks to the global economy were tilted to the downside, Lowe said. The changes were widely expected after Lowe said in May that inflation was likely to remain below the bank's target range of 2% to 3% a year and that a decrease in the cash rate would likely be appropriate. The bank's board moves interest rates at monthly meetings to keep inflation within the target range. Inflation is currently running at 1.3%. Lower rates are a boon for borrowers and can help stimulate more business activity. The bank wants Australia's jobless rate to fall below 5.2% so wages can rise faster. With Parliament sitting on Tuesday for the first time since May elections, the government is giving priority to passing tax cuts worth 158 billion Australian dollars ($110 billion) over the next decade to boost economic activity. National Australia Bank economist Ivan Colhoun described Lowe's statement on the economy as positive. "It's talking about an optimistic view of the world, but with some downside risks related to trade wars, and it's a reasonably optimistic view of the Australian economy as well," Colhoun told Australian Broadcasting Corp. "There is a positive spin to the rate cut. We talk about emergency rates. In fact, very low rates are the norm around the world. Australia and New Zealand are coming to that norm a lot later than other countries," Colhoun added. Before the June change, the cash rate last moved in August 2016, when it was reduced by 0.25% to 1.5%. The rate has not been increased since November 2010, when it rose 0.25% to 4.75%. Australia's economy is suffering from the end of a mining boom largely to supply China that carried the country through the global economic crisis without a recession. Australia has not suffered a recession, which is defined as two consecutive quarters of economic contraction, since the June quarter of 1991. View comments
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Introducing Superhouse (NSE:SUPERHOUSE), The Stock That Dropped 42% In The Last Three Years
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Many investors define successful investing as beating the market average over the long term. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long termSuperhouse Limited(NSE:SUPERHOUSE) shareholders have had that experience, with the share price dropping 42% in three years, versus a market return of about 35%. The more recent news is of little comfort, with the share price down 27% in a year. Furthermore, it's down 25% in about a quarter. That's not much fun for holders.
Check out our latest analysis for Superhouse
In his essayThe Superinvestors of Graham-and-DoddsvilleWarren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Superhouse saw its EPS decline at a compound rate of 9.2% per year, over the last three years. This reduction in EPS is slower than the 17% annual reduction in the share price. So it seems the market was too confident about the business, in the past. This increased caution is also evident in the rather low P/E ratio, which is sitting at 4.96.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It might be well worthwhile taking a look at ourfreereport on Superhouse's earnings, revenue and cash flow.
The last twelve months weren't great for Superhouse shares, which cost holders 27%, including dividends, while the market wasupabout 4.0%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 16% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. You might want to assessthis data-rich visualizationof its earnings, revenue and cash flow.
Of courseSuperhouse may not be the best stock to buy. So you may wish to see thisfreecollection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Italy/Germany bond yield gap tightest in 9 months after Italy cuts deficit target
LONDON, July 2 (Reuters) - The gap between Italian and German benchmark bond yields narrowed to its tightest level in over nine months on Tuesday after Rome cut its 2019 budget deficit target overnight in an effort to avoid EU disciplinary action.
The closely-watched Italy/Germany 10-year government bond yield spread tightened to 229 basis points in early European trade, a level last seen in September 2018 when tensions over the 2019 budget first surfaced.
Italian 10-year government bond yields were at 1.938% on Tuesday morning, close to a one-year low hit in the previous session. (Reporting by Abhinav Ramnarayan, Editing by Saikat Chatterjee)
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Should We Worry About Spirax-Sarco Engineering plc's (LON:SPX) P/E Ratio?
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Today, we'll introduce the concept of the P/E ratio for those who are learning about investing. To keep it practical, we'll show how Spirax-Sarco Engineering plc's (LON:SPX) P/E ratio could help you assess the value on offer.Spirax-Sarco Engineering has a P/E ratio of 30.75, based on the last twelve months. That is equivalent to an earnings yield of about 3.3%.
See our latest analysis for Spirax-Sarco Engineering
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Spirax-Sarco Engineering:
P/E of 30.75 = £93.2 ÷ £3.03 (Based on the trailing twelve months to December 2018.)
A higher P/E ratio means that investors are payinga higher pricefor each £1 of company 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.
Probably the most important factor in determining what P/E a company trades on is the earnings growth. When earnings grow, the 'E' increases, over time. 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.
It's nice to see that Spirax-Sarco Engineering grew EPS by a stonking 41% in the last year. And earnings per share have improved by 17% annually, over the last five years. I'd therefore be a little surprised if its P/E ratio was not relatively high.
We can get an indication of market expectations by looking at the P/E ratio. The image below shows that Spirax-Sarco Engineering has a higher P/E than the average (17.9) P/E for companies in the machinery industry.
Its relatively high P/E ratio indicates that Spirax-Sarco Engineering shareholders think it will perform better than other companies in its industry classification. Shareholders are clearly optimistic, but the future is always uncertain. So investors should always consider the P/E ratio alongside other factors, such aswhether company directors have been buying shares.
One drawback of using a P/E ratio is that it considers market capitalization, but not the balance sheet. So it won't reflect the advantage of cash, or disadvantage of debt. The exact same company would hypothetically deserve a higher P/E ratio if it had a strong balance sheet, than if it had a weak one with lots of debt, because a cashed up company can spend on growth.
Such spending might be good or bad, overall, but the key point here is that you need to look at debt to understand the P/E ratio in context.
Spirax-Sarco Engineering has net debt worth just 3.4% of its market capitalization. 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.
Spirax-Sarco Engineering's P/E is 30.7 which is above average (16.4) in the GB market. The company is not overly constrained by its modest debt levels, and its recent EPS growth is nothing short of stand-out. So on this analysis a high P/E ratio seems reasonable.
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.
Of courseyou might be able to find a better stock than Spirax-Sarco Engineering. 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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Delek says pipeline checks done, gas exports to Egypt by year end
JERUSALEM, July 2 (Reuters) - Israel’s Delek Drilling said it has completed testing of a subsea natural gas pipeline to Egypt, but it did not begin commercial sales by the end of June as it had initially hoped.
Delek Drilling and its partner Noble Energy signed a landmark deal early last year to export $15 billion in natural gas from Israeli offshore fields Tamar and Leviathan to a customer in Egypt.
Israeli officials called it the most significant deal to emerge since the neighbors made peace in 1979.
Delek Drilling Deputy CEO Yossi Gvura told Reuters in early June that they hoped to start selling small quantities of gas to Egypt by the end of the month, but the company said on Tuesday exports had not yet begun.
Due to the forecast demand for gas in Israel over the summer, the company expects commercial sales to Egypt to begin only when the Leviathan field comes online by the end of 2019.
Delek and Noble have agreed to buy into the EMG gas pipeline between Ashkelon in Israel and El-Arish in Egypt to transport the gas supplies. Now that the technical examination of the pipeline is complete, Delek expects to close the EMG deal by Aug. 31. (Reporting by Ari Rabinovitch; Editing by Tova Cohen)
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