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How to Start an IRA
IRAs, or Individual Retirement Arrangements, are accounts that provide tax benefits for retirement savings. You can open one in addition to contributing to a workplace 401(k), or you can use one to score tax breaks for retirement investing when you don't have a plan at work.
While there are lots of advantages to opening an IRA, there are eligibility restrictions to be aware of. It can also be confusing to figure out where you should open your IRA or what you can do with it once you've got it.
This guide will walk you through the steps of starting an IRA, which include:
• Deciding what kind of IRA you want:Depending on your situation, you could invest in atraditional IRA, aRoth IRA, aSEP IRA,or aSIMPLE IRA.
• Making sure you're eligible for tax breaks or IRA contributions:There are income limits in some situations.
• Deciding where to open your IRA:You could open an IRA with an online broker; a robo-advisor; a peer-to-peer lender; a bank; or other financial institutions.
• Completing the paperwork to open an IRA:You can usually fill out the paperwork online and get your account open within minutes.
• Funding your account:You can make an initial transfer of funds and may wish to set up automatic contributions.
• Choosing your investments:You could put your money into stocks, bonds or mutual funds or buy other assets.
Image source: Getty Images.
The first thing to know about IRAs is that there are four kinds to choose between, depending on your situation. Options include the following:
A traditional IRA.Traditional IRAs are simple accounts you can open whether you work for yourself or for an employer. If you don't have a workplace retirement plan, you can always get tax breaks for traditional IRA contributions in the year you put money into your account. If you or your spouse has a workplace plan, you may still be able to save on taxes for contributions, depending on income.
There are annual limits to deductible contributions. For 2019, you're limited to claiming tax breaks on a maximum of $6,000 in contributions if you're under 50 and qualify for the full deduction. If you're over 50, you can make an additional $1,000 catch-up contribution.
A Roth IRA.Roth IRAs can also be opened if you work for a company or are self-employed -- but they work differently. You put money into your Roth IRA with after-tax dollars but are allowed to withdraw money tax-free in retirement.
There are also annual limits on contributions. In fact, the same annual limit applies to a traditional and Roth IRA, and it's an aggregate limit. You can contribute atotalof $6,000 (or $7,000 with catch up contributions) to a Roth and/or Traditional IRA. You could put your entire contribution into a Roth IRA; the full amount into a traditional IRA; or some into each account. But you can't put $6,000 or $7,000 into a Roth IRA and another $6,000 or $7,000 into a traditional IRA.
A SIMPLE IRA.The "SIMPLE" stands for Savings Incentive Match Plan for Employees. You can invest in a SIMPLE IRA if your employer offers one or can open one for yourself if you're a sole proprietor or have your own business.
Contribution limits for SIMPLE IRAs are higher than traditional or Roth IRAs. You can contribute up to $13,000 in 2019 and make additional catch-up contributions up to $3,000 if you're over 50. Contributions come out of your salary and are called salary reduction contributions. They can't exceed net earnings from self-employment from the business that created the plan.
Employers also must contribute to a SIMPLE IRA for employees. If you're a sole proprietor or run a business, you're considered to be your own employer. Acting as an employer, you must either match salary reduction contributions on a dollar-for-dollar basis up to 3% of net earnings from self employment or must make a required contribution of 2% of net earnings from self-employment, up to a maximum of $280,000 in net earnings.
A SEP IRA."SEP" IRA stands for Simplified Employee Pension. You can establish a SEP if you're self-employed or run your own company, or an employer can establish one for you.
Only employers can contribute to a SEP, and the maximum contribution for 2019 is the lesser of $56,000 or 25% of employee compensation up to $280,000. If you're self-employed, you can make contributions for yourself up to 25% of net earnings from self-employment or a maximum of $56,000.
If you have a traditional job and earn wages, you'll need to choose between a traditional and a Roth IRA or will need to split contributions among both accounts. To decide:
• Determine whether you need the tax break to help save:Taking a tax break when you make contributions means take-home income isn't reduced as much. If you're in the 22% tax bracket, a $6,000 contribution saves up to $1,320 on taxes, so take-home income is only reduced by $4,680. This makes saving easier and cheaper. But if you have plenty of cash to max out your IRA, you may be better off using a Roth and taking the tax break later.
• Consider whether your tax rate will be lower in the future:If you think you'll be in a higher tax bracket at retirement, open a Roth. But, if you think you'll be in a lower tax bracket later, take the tax savings now at your current higher rate.
• Determine if you want to be required to take money out as a senior:If you contribute to a traditional IRA, you must begin takingrequired minimum distributionsat 70 1/2. You don't have to do this with a Roth IRA. If you don't want to be forced to make withdrawals on a schedule set by the government, a Roth is a better choice.
If you're self-employed, things get more complicated. SIMPLE and SEP IRAs are generally better because they offer higher contribution limits -- but choosing between them is hard. Look at which allows you to contribute the most and, if you have people working for you, whether you'll be required to contribute to their retirement accounts too. Often, it's best to talk with an accountant or other tax professional to help you choose. You can also check out our guide tochoosing between a SIMPLE or SEP IRA.
There are income limits for both traditional and Roth IRAs. You can makenon-deductible contributionsto a traditional IRA if your income exceeds these levels, but you can't take a tax deduction. And if you exceed the maximum income level for a Roth IRA, you aren't allowed to contribute at all.
Income limit for traditional IRAs:The following table shows income levels in 2019 at which your deduction for IRA contributions begins to phase out and the income level at which you lose your deduction entirely if you have access to a workplace retirement plan.
[{"Filing Status": "Single", "If You Make Above This Income, Your Deduction Phases Out": "$64,000", "If You Make Above This Income, You Lose Your Deduction": "$74,000"}, {"Filing Status": "Married filing jointly", "If You Make Above This Income, Your Deduction Phases Out": "$103,000", "If You Make Above This Income, You Lose Your Deduction": "$123,000"}, {"Filing Status": "Married filing separately", "If You Make Above This Income, Your Deduction Phases Out": "$0", "If You Make Above This Income, You Lose Your Deduction": "$10,000"}]
Data source:IRS.
If your spouse has access to a workplace retirement plan but you don't, this table shows the income level in 2019 at which your deduction begins to phase out and is lost.
[{"Filing Status": "Married filing jointly", "If You Make Above This Income, Your Deduction Phases Out": "$193,000", "If You Make Above This Income, You Lose Your Deduction": "$203,000"}, {"Filing Status": "Married filing separately", "If You Make Above This Income, Your Deduction Phases Out": "$0", "If You Make Above This Income, You Lose Your Deduction": "$10,000"}]
Data source:IRS.
Income limits for Roth IRAs:The following table shows how much you can make before your eligibility to contribute to a Roth IRA begins to phase out or is lost entirely.
[{"Filing Status": "Single", "If You Make Above This Income, Your Eligibility Phases Out": "$122,000", "If You Make Above This Income, You Can't Contribute to a Roth": "$137,000"}, {"Filing Status": "Married filing jointly", "If You Make Above This Income, Your Eligibility Phases Out": "$193,000", "If You Make Above This Income, You Can't Contribute to a Roth": "$203,000"}, {"Filing Status": "Married filing separately", "If You Make Above This Income, Your Eligibility Phases Out": "$0", "If You Make Above This Income, You Can't Contribute to a Roth": "$10,000"}]
Data source:IRS.
Once you know what kind of IRA you can open, decide where to open your account. Some of your options include the following:
Online brokerage firm:Online brokerage firms allow you to invest in a mix of assets, including stocks, bonds, mutual funds, and ETFs. Many online brokers allow you to open an IRA for free. To pick one, read our completeguide to how to choose an online brokerage. Essentially, you'll want to look for a broker that provides access to a mix of different investments and charges a low commission for buying and selling assets.
For most people, an online brokerage firm is the right choice. With an online broker, you have flexibility in what you can invest in and can get your money into the stock market -- which has consistently and reliably provided the best returns on investment over time with reasonable risk.
Full-service broker:Full-service brokersalso allow you to invest in a mix of different assets but manage money for you or provide more help in choosing investments. The big downside is that they're often very expensive. You may have to pay high commissions and management fees. Many also require a pretty high minimum balance.
Robo-advisors:Robo-advisorsare relatively new to the financial scene. Essentially, you put your money into an account and answer a few simple questions, and a computer algorithm determines how to allocate your money. You don't have to select investments, so you can be very hands-off. But you'll pay a fee. While you pay less than you would with a full-service broker,even tiny fees can ravage your retirement savings.
Paying a robo-advisor may not be worth it, considering you don'treallyneed one when you can easily build a diversified portfolio byinvesting in ETFs. Some of ourmodel portfolioscan help you get started.
Peer-to-peer lending networks:Peer-to-peer lending networksallow you to invest in loans made to other people. You can choose loans based on parameters including the borrower's credit score and payment history. Many peer-to-peer networks also offer automated investing options, where your money is invested in a portfolio of loans for you.
For most people, investing in the stock market makes more sense. But if you want an alternative investment and/or have a lot of money invested in stocks elsewhere, such as in an employer 401(k), this may be an option worth pursuing.
Banks or credit unions:Somebanks or credit unionsallow you to open an IRA. However, investment options are usually limited to money market accounts, certificates of deposit, or similar investments. You may find you can't build a very diversified portfolio or earn a very good rate of return.
Mutual fund companies:Somemutual fund companiesallow you to open an IRA directly and put your money into their funds. Your money is pooled with the cash of other investors and used to buy a mix of investments. You may have to pay fees, including management fees.
You can also invest in mutual funds through an online brokerage account -- and are probably better off doing so because you won't be limited to one company's funds.
Once you've decided where to open your IRA, you'll need to complete some paperwork. Most IRA providers allow you to do that online in just a few minutes. Typically, the process involves the following:
• Select your account type:Almost all brokers offer traditional and Roth IRAs. If you want to open a SIMPLE or SEP, make sure your brokerage allows it and find out if there are fees.
• Ask about minimum investment requirements:Some have none. Others require you to invest at least $1,000 or at least $5,000. Make sure you have enough money.
• Select "Open Account" or "Apply for Account:"Different places use different language.
• Provide personal details:This includes your name, address, Social Security number, date of birth, and sometimes info about your employment or marital status.
• Complete additional documents:Some IRAs require you to designate a beneficiary if you pass away or submit other forms.
You can usually link a bank account and transfer money wirelessly once you've opened your IRA. You may also be able to send in a check or a money order.
You could also roll over a 401(k) or an IRA from another financial institution, but only if you have one. You can learn more aboutrolling over a 401(k).
For many people, contributing the full amount to an IRA in one lump sum isn't possible. If you make less than your full allowable contribution when opening your account, you may want to set up an automated transfer of funds from your bank account so more money is invested periodically. Automating investments helps you build a more secure future as you can ensure you're investing enough. Consider automating a transfer of funds each month or every payday to make sure you hit the maximum IRA contribution limit for the year.
Once you have money in your IRA, you're not done with the process -- you need to invest in assets that will hopefully produce a good rate of return.
Coming up with an investment strategy can be complicated. You want to take an appropriate level of risk, because higher-risk investments tend to produce higher returns but the chances of loss are greater. The amount of risk you should take will vary depending on your age and your risk tolerance. One good rule of thumb is to subtract your age from 110 to determine the percentage of your portfolio that should be in stocks. If you're 40 years old, you'd invest 70% of your portfolio in the market if you follow this rule. You'll also want to make sure your investments are diversified so you don't put all your eggs in one basket.
You can learn a lot about investing with ourguides to investing strategies. For most people, buying ETFs or mutual funds is a simple way to get started. But picking individual stocks can give you much more control over where your money is going and sometimes allow you to earn higher rates of return.
Whatever approach you take, dosomethingresponsible with the money -- otherwise, it will just sit in your account and do nothing.
Now you know the key steps to starting an IRA. Decide what kind of IRA you want, determine where to open your account, fill out the paperwork, fund your account, and invest the money. Get started today, as the sooner you start saving for retirement, the sooner your money can go to work for you.
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Are Investors Undervaluing Television Broadcasts Limited (HKG:511) By 33%?
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How far off is Television Broadcasts Limited (HKG:511) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by estimating the company's future cash flows and discounting them to their present value. I will be using the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple!
Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. Anyone interested in learning a bit more about intrinsic value should have a read of theSimply Wall St analysis model.
Check out our latest analysis for Television Broadcasts
We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
[{"": "Levered FCF (HK$, Millions)", "2020": "HK$517.0m", "2021": "HK$564.6m", "2022": "HK$604.4m", "2023": "HK$637.8m", "2024": "HK$666.4m", "2025": "HK$691.2m", "2026": "HK$713.4m", "2027": "HK$733.8m", "2028": "HK$752.8m", "2029": "HK$771.0m"}, {"": "Growth Rate Estimate Source", "2020": "Analyst x1", "2021": "Est @ 9.21%", "2022": "Est @ 7.05%", "2023": "Est @ 5.53%", "2024": "Est @ 4.47%", "2025": "Est @ 3.73%", "2026": "Est @ 3.21%", "2027": "Est @ 2.85%", "2028": "Est @ 2.6%", "2029": "Est @ 2.42%"}, {"": "Present Value (HK$, Millions) Discounted @ 9.03%", "2020": "HK$474.2", "2021": "HK$475.0", "2022": "HK$466.3", "2023": "HK$451.4", "2024": "HK$432.5", "2025": "HK$411.5", "2026": "HK$389.6", "2027": "HK$367.5", "2028": "HK$345.8", "2029": "HK$324.9"}]
("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF)= HK$4.1b
After calculating the present value of future cash flows in the intial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 10-year government bond rate (2%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 9%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = HK$771m × (1 + 2%) ÷ (9% – 2%) = HK$11b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= HK$HK$11b ÷ ( 1 + 9%)10= HK$4.72b
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is HK$8.86b. In the final step we divide the equity value by the number of shares outstanding.This results in an intrinsic value estimate of HK$20.22. Compared to the current share price of HK$13.5, the company appears quite good value at a 33% 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 Television Broadcasts as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 9%, which is based on a levered beta of 1.056. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Whilst important, DCF calculation shouldn’t be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. What is the reason for the share price to differ from the intrinsic value? For Television Broadcasts, I've compiled three relevant aspects you should further research:
1. Financial Health: Does 511 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 511'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 511? 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 HKG 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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Here’s What Aarvi Encon Limited’s (NSE:AARVI) Return On Capital Can Tell Us
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Today we are going to look at Aarvi Encon Limited (NSE:AARVI) 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. 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.
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 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 Aarvi Encon:
0.15 = ₹105m ÷ (₹1.0b - ₹321m) (Based on the trailing twelve months to March 2019.)
Therefore,Aarvi Encon has an ROCE of 15%.
Check out our latest analysis for Aarvi Encon
One way to assess ROCE is to compare similar companies. It appears that Aarvi Encon's ROCE is fairly close to the Professional Services industry average of 12%. Setting aside the industry comparison for now, Aarvi Encon's ROCE is mediocre in absolute terms, considering the risk of investing in stocks versus the safety of a bank account. It is possible that there are more rewarding investments out there.
You can click on the image below to see (in greater detail) how Aarvi Encon's past growth compares to other companies.
When considering ROCE, bear in mind that it reflects the past and does not necessarily 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. If Aarvi Encon is cyclical, it could make sense to check out thisfreegraph of past earnings, revenue and cash flow.
Current liabilities are short term bills and invoices that need to be paid in 12 months or less. 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.
Aarvi Encon has total liabilities of ₹321m and total assets of ₹1.0b. Therefore its current liabilities are equivalent to approximately 31% of its total assets. Aarvi Encon's ROCE is improved somewhat by its moderate amount of current liabilities.
With this level of liabilities and a mediocre ROCE, there are potentially better investments out there. Of course,you might also be able to find a better stock than Aarvi Encon. So you may wish to see thisfreecollection of other companies that have grown earnings strongly.
I will like Aarvi Encon better if I see some big insider buys. While we wait, check out thisfreelist of growing companies with considerable, recent, insider buying.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Here's What Advanced Enzyme Technologies Limited's (NSE:ADVENZYMES) ROCE Can Tell Us
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Today we are going to look at Advanced Enzyme Technologies Limited (NSE:ADVENZYMES) 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. Finally, we'll look at how its current liabilities affect 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 Advanced Enzyme Technologies:
0.22 = ₹1.6b ÷ (₹8.1b - ₹705m) (Based on the trailing twelve months to March 2019.)
So,Advanced Enzyme Technologies has an ROCE of 22%.
See our latest analysis for Advanced Enzyme Technologies
ROCE is commonly used for comparing the performance of similar businesses. Using our data, we find that Advanced Enzyme Technologies's ROCE is meaningfully better than the 17% average in the Chemicals industry. We consider this a positive sign, because it suggests it uses capital more efficiently than similar companies. Independently of how Advanced Enzyme Technologies compares to its industry, its ROCE in absolute terms appears decent, and the company may be worthy of closer investigation.
We can see that , Advanced Enzyme Technologies currently has an ROCE of 22%, less than the 38% it reported 3 years ago. So investors might consider if it has had issues recently. You can see in the image below how Advanced Enzyme Technologies'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. Future performance is what matters, and you can see analyst predictions in ourfreereport on analyst forecasts for the company.
Short term (or current) liabilities, are things like supplier invoices, overdrafts, or tax bills that need to be paid within 12 months. Due to the way the ROCE equation works, having large bills due in the near term can make it look as though a company has less capital employed, and thus a higher ROCE than usual. To check the impact of this, we calculate if a company has high current liabilities relative to its total assets.
Advanced Enzyme Technologies has total liabilities of ₹705m and total assets of ₹8.1b. Therefore its current liabilities are equivalent to approximately 8.7% of its total assets. With low current liabilities, Advanced Enzyme Technologies's decent ROCE looks that much more respectable.
This is good to see, and while better prospects may exist, Advanced Enzyme Technologies seems worth researching further. Advanced Enzyme Technologies looks strong on this analysis,but there are plenty of other companies that could be a good opportunity. Here is afree listof companies growing earnings rapidly.
I will like Advanced Enzyme Technologies better if I see some big insider buys. While we wait, check out thisfreelist of growing companies with considerable, recent, insider buying.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Should You Be Tempted To Sell Li & Fung Limited (HKG:494) Because Of Its P/E Ratio?
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The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). We'll apply a basic P/E ratio analysis to Li & Fung Limited's (HKG:494), to help you decide if the stock is worth further research. Looking at earnings over the last twelve months,Li & Fung has a P/E ratio of 10.73. That corresponds to an earnings yield of approximately 9.3%.
Check out our latest analysis for Li & Fung
Theformula for P/Eis:
Price to Earnings Ratio = Share Price (in reporting currency) ÷ Earnings per Share (EPS)
Or for Li & Fung:
P/E of 10.73 = $0.17(Note: this is the share price in the reporting currency, namely, USD )÷ $0.015 (Based on the year to December 2018.)
The higher the P/E ratio, the higher the price tag of a business, relative to its trailing earnings. That isn't a good or a bad thing on its own, but a high P/E means that buyers have a higher opinion of the business's prospects, relative to stocks with a lower P/E.
Companies that shrink earnings per share quickly will rapidly decrease the 'E' in the equation. That means even if the current P/E is low, it will increase over time if the share price stays flat. So while a stock may look cheap based on past earnings, it could be expensive based on future earnings.
Li & Fung shrunk earnings per share by 24% over the last year. And it has shrunk its earnings per share by 27% per year over the last five years. This might lead to muted expectations.
The P/E ratio indicates whether the market has higher or lower expectations of a company. As you can see below Li & Fung has a P/E ratio that is fairly close for the average for the luxury industry, which is 10.
Its P/E ratio suggests that Li & Fung shareholders think that in the future it will perform about the same as other companies in its industry classification. If the company has better than average prospects, then the market might be underestimating it. Further research into factors such asinsider buying and selling, could help you form your own view on whether that is likely.
Don't forget that the P/E ratio considers market capitalization. So it won't reflect the advantage of cash, or disadvantage of debt. 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.
Li & Fung has net debt equal to 28% of its market cap. While it's worth keeping this in mind, it isn't a worry.
Li & Fung's P/E is 10.7 which is about average (11) in the HK market. With modest debt, and a lack of recent growth, it would seem the market is expecting improvement in earnings.
When the market is wrong about a stock, it gives savvy investors an opportunity. If it is underestimating a company, investors can make money by buying and holding the shares until the market corrects itself. So thisfreevisual report on analyst forecastscould hold the key to an excellent investment decision.
You might be able to find a better buy than Li & Fung. 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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Why Shares of Triumph Group Nearly Doubled in the First Half of 2019
What happened Shares of Triumph Group (NYSE: TGI) soared 99.1% in the first six months of 2019, according to data provided by S&P Global Market Intelligence , as the long-struggling aerospace component manufacturer finally showed some progress toward a turnaround. The shares still have a considerable hill to climb before long-term holders are in the green, but at least Triumph finally appears to be heading in the right direction. So what Triumph, a holding company that over the years has rolled up a number of disparate aerospace component businesses, has struggled in recent years to generate solid and consistent profits . But the company is now under new leadership. CEO Daniel J. Crowley was appointed in January 2016 with a mandate to simplify the company's 47 different operating entities spread across 72 locations worldwide. A business jet wing assembly in production. A Triumph Group-made wing assembly. Image source: Triumph Group. It's been a long and arduous process, but Crowley's efforts are slowly beginning to show progress. Triumph hit a major milestone in its restructuring in late January when it signed an agreement for Bombardier to acquire a wing program that had been eating into free cash flow. Triumph sold the business for "nominal cash consideration," eager to get the unit off the books and to close the book on a contentious relationship with Bombardier. The sale was part of a broader effort by Crowley to merge internal units and sell underperformers . The company's shares jumped 25% on the news of the Bombardier sale, and also benefited from news that Triumph had rebuilt a frayed relationship with Northrop Grumman , which had previously made Triumph ineligible to bid on new work. Now what Shares of Triumph, despite the spectacular first-half performance, are still down 67% over the past five years. And the stock, after rocketing higher in the first two months of 2019, has been in a trading pattern ever since. TGI Chart TGI data by YCharts . Crowley has done a good job of reducing the risk in Triumph's portfolio, as well as stabilizing cash flow and increasing working capital flexibility. It's a start, but Triumph is nowhere near the profit-generating machine that other aerospace component roll-ups including TransDigm Group and Heico are. And there are still some programs on the books that are breakeven at best, including work on Boeing fuselages. Story continues Shareholders should rightfully celebrate the progress that the company -- and the stock -- has made in 2019, and take comfort that with the risk reduced, the odds of Triumph revisiting its lows has decreased. But Triumph is still far from a growth story, and investors likely still have a long, slow road ahead of them. More From The Motley Fool 10 Best Stocks to Buy Today The $16,728 Social Security Bonus You Cannot Afford to Miss 20 of the Top Stocks to Buy (Including the Two Every Investor Should Own) What Is an ETF? 5 Recession-Proof Stocks How to Beat the Market Lou Whiteman owns shares of TransDigm Group. The Motley Fool owns shares of and recommends TransDigm Group. The Motley Fool recommends Heico. The Motley Fool has a disclosure policy .
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What Does Aegis Logistics Limited's (NSE:AEGISLOG) P/E Ratio Tell You?
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The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). We'll look at Aegis Logistics Limited's (NSE:AEGISLOG) P/E ratio and reflect on what it tells us about the company's share price. Looking at earnings over the last twelve months,Aegis Logistics has a P/E ratio of 26.54. That means that at current prices, buyers pay ₹26.54 for every ₹1 in trailing yearly profits.
View our latest analysis for Aegis Logistics
Theformula for P/Eis:
Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)
Or for Aegis Logistics:
P/E of 26.54 = ₹200.35 ÷ ₹7.55 (Based on the year to March 2019.)
A higher P/E ratio implies that investors paya higher pricefor the earning power of the business. That isn't necessarily good or bad, but a high P/E implies relatively high expectations of what a company can achieve in the future.
P/E ratios primarily reflect market expectations around earnings growth rates. That's because companies that grow earnings per share quickly will rapidly increase the 'E' in the equation. That means even if the current P/E is high, it will reduce over time if the share price stays flat. And as that P/E ratio drops, the company will look cheap, unless its share price increases.
Notably, Aegis Logistics grew EPS by a whopping 27% in the last year. And its annual EPS growth rate over 5 years is 33%. I'd therefore be a little surprised if its P/E ratio was not relatively high.
The P/E ratio indicates whether the market has higher or lower expectations of a company. You can see in the image below that the average P/E (12.2) for companies in the oil and gas industry is lower than Aegis Logistics's P/E.
That means that the market expects Aegis Logistics will outperform other companies in its industry. 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.
The 'Price' in P/E reflects the market capitalization of the company. Thus, the metric does not reflect cash or debt held by the company. Hypothetically, a company could reduce its future P/E ratio by spending its cash (or taking on debt) to achieve higher earnings.
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.
Since Aegis Logistics holds net cash of ₹2.4b, it can spend on growth, justifying a higher P/E ratio than otherwise.
Aegis Logistics's P/E is 26.5 which is above average (15.3) in the IN market. Its net cash position supports a higher P/E ratio, as does its solid recent earnings growth. Therefore it seems reasonable that the market would have relatively high expectations of the company
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 thisfreevisual report on analyst forecastscould hold the key to an excellent investment decision.
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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Does Timken India Limited's (NSE:TIMKEN) CEO Pay Reflect Performance?
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Sanjay Koul became the CEO of Timken India Limited (NSE:TIMKEN) in 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for Timken India
Our data indicates that Timken India Limited is worth ₹55b, and total annual CEO compensation is ₹28m. (This number is for the twelve months until March 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at ₹14m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of ₹28b to ₹110b. The median total CEO compensation was ₹24m.
That means Sanjay Koul receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see, below, how CEO compensation at Timken India has changed over time.
Timken India Limited has increased its earnings per share (EPS) by an average of 5.9% a year, over the last three years (using a line of best fit). Its revenue is up 35% over last year.
I like the look of the strong year-on-year improvement in revenue. And in that context, the modest EPS improvement certainly isn't shabby. I'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. It could be important to checkthis free visual depiction ofwhat analysts expectfor the future.
With a total shareholder return of 31% over three years, Timken India Limited shareholders would, in general, be reasonably content. 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.
Sanjay Koul is paid around what is normal the leaders of comparable size companies.
We think many would like to see better growth. While there is room for improvement, we haven't seen evidence to suggest the pay is too generous. Shareholders may want tocheck for free if Timken India insiders are buying or selling shares.
Arguably, business quality is much more important than CEO compensation levels. So check out thisfreelist of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Why Shemaroo Entertainment Limited (NSE:SHEMAROO) Looks Like A Quality Company
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Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). To keep the lesson grounded in practicality, we'll use ROE to better understand Shemaroo Entertainment Limited (NSE:SHEMAROO).
Shemaroo Entertainment has a ROE of 15%, based on the last twelve months. One way to conceptualize this, is that for each ₹1 of shareholders' equity it has, the company made ₹0.15 in profit.
See our latest analysis for Shemaroo Entertainment
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Shemaroo Entertainment:
15% = ₹830m ÷ ₹5.7b (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 the capital paid in by shareholders, plus any retained earnings. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
ROE measures a company's profitability against the profit it retains, and any outside investments. The 'return' is the yearly profit. A higher profit will lead to a higher ROE. So, all else equal,investors should like a high ROE. That means ROE can be used to compare two businesses.
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. Pleasingly, Shemaroo Entertainment has a superior ROE than the average (3.3%) company in the Entertainment industry.
That's clearly a positive. I usually take a closer look when a company has a better ROE than industry peers. For exampleyou might checkif insiders are buying shares.
Most companies need money -- from somewhere -- to grow their profits. That cash can come from issuing shares, retained earnings, or debt. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.
Although Shemaroo Entertainment does use debt, its debt to equity ratio of 0.35 is still low. Its ROE isn't particularly impressive, but the debt levels are quite modest, so the business probably has some real potential. 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 one way we can compare the business quality of different companies. In my book the highest quality companies have high return on equity, despite low debt. All else being equal, a higher ROE is better.
But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So you might want to take a peek at thisdata-rich interactive graph of forecasts for the company.
But note:Shemaroo Entertainment 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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Does Sihuan Pharmaceutical Holdings Group Ltd. (HKG:460) Create Value For Shareholders?
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Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). We'll use ROE to examine Sihuan Pharmaceutical Holdings Group Ltd. (HKG:460), by way of a worked example.
Sihuan Pharmaceutical Holdings Group has a ROE of 13%, based on the last twelve months. That means that for every HK$1 worth of shareholders' equity, it generated HK$0.13 in profit.
See our latest analysis for Sihuan Pharmaceutical Holdings Group
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Sihuan Pharmaceutical Holdings Group:
13% = CN¥1.6b ÷ CN¥13b (Based on the trailing twelve months to December 2018.)
Most readers would understand what net profit is, but it’s worth explaining the concept of shareholders’ equity. It is the capital paid in by shareholders, plus any retained earnings. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the profit over the last twelve months. That means that the higher the ROE, the more profitable the company is. So, as a general rule,a high ROE is a good thing. Clearly, then, one can use ROE to compare different companies.
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. You can see in the graphic below that Sihuan Pharmaceutical Holdings Group has an ROE that is fairly close to the average for the Pharmaceuticals industry (13%).
That isn't amazing, but it is respectable. ROE doesn't tell us if the share price is low, but it can inform us to the nature of the business. For those looking for a bargain, other factors may be more important. If you like to buy stocks alongside management, then you might just love thisfreelist of companies. (Hint: insiders have been buying them).
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 case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.
Although Sihuan Pharmaceutical Holdings Group does use a little debt, its debt to equity ratio of just 0.0074 is very low. The fact that it achieved a fairly good ROE with only modest debt suggests the business might be worth putting on your watchlist. Judicious use of debt to improve returns can certainly be a good thing, although it does elevate risk slightly and reduce future optionality.
Return on equity is a useful indicator of the ability of a business to generate profits and return them to shareholders. In my book the highest quality companies have high return on equity, despite low debt. All else being equal, a higher ROE is better.
But when a business is high quality, the market often bids it up to a price that reflects this. 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 you might want to take a peek at thisdata-rich interactive graph of forecasts for the company.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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It’s Risk Off Early as Focus Shifts to Service Sector PMIs Numbers
The economic calendar was on the lighter side through the Asian session in the earlier hours of this morning.
Australia building consents and trade figures and China’s June service sector PMI were in focus through the early part of the day.
Building consents rose by 0.7% in May, month-on-month, partially reversing a 4.7% slide in April. Economists had forecasted for consents to remain unchanged.
According to figures released by theABS,
• Private dwellings excluding houses rose by 1.2%, while private house approvals decreased by 0.3%.
• A 14.4% jump in approvals in Victoria drove the increase in May. Falls in Queensland (-6.3%), Western Australia (-4.7%), South Australia (-2.9%) and Tasmania (-1.2%) partially offset the increase.
Australia’s trade surplus widened from A$4.871bn to A$5.745bn in May. Economists had forecasted for the trade surplus to widen to A$5.250bn.
According to figures released by theABS,
• The exports of goods and services increased by A$1,442m (4%).Non-rural goods exports increased by A$1,316m (5%), with the export of rural goods and non-monetary gold rising by A$46m (1%) and A$22m (1%) respectively.Net exports of goods under merchanting fell by A$1m (5%).Service credits increased by A$58m (1%).
• The imports of goods and services increased by A$515m (1%).Capital goods imports increased by A$348m (5%).There were also increases in the imports of non-monetary gold and intermediate and other merchandise goods of A$68m (17%) and A$66m (1%) respectively.Consumption goods imports fell by A$73m (1%).Service debits rose by A$107m (1%).
The Aussie Dollar moved from $0.6891 to $0.69908 upon release of the figures, which preceded China’s service sector PMI figures.
The Caixin Services PMI fell from 52.7 to 52.0 in June. According to the latestCaixin China Survey,
• Service sector companies reported a moderate pickup in new work in June, supported by state policies. Increased client spending also contributed.
• Employment levels remained unchanged, while the amount of work-on-hand continued to fall.
• Operating costs were on the rise, with higher staff expenses and increased purchasing activity contributing.
• Service sectors increased selling charges at the fastest pace in 3-months.
• Service companies remained strongly optimistic about the economic outlook.
• At composite level, however, optimism fell to a record low, weighed by the manufacturing sector.
• China’s Caixin PMI fell from 51.5 to 50.6 in June, its weakest level since last October.
The Aussie Dollar moved from $0.69908 to $0.69902 upon release of the figures. At the time of writing, theAussie Dollarwas down by 0.03% to $0.6992.
At the time of writing, theKiwi Dollarwas up by 0.13% to $0.6682, with theJapanese Yenup by 0.28% to ¥107.58 against the U.S Dollar.
Risk off sentiment through the earlier part of the day contributed to the moves, dampening the effects of positive numbers out of Australia.
It’s a particularly busy day ahead on the economic data front.
Spanish and Italian service sector PMI numbers are due out ahead of finalized French, German and Eurozone service sector PMI numbers.
We can expect the markets to focus on the Eurozone’s composite. While Germany and Italy’s manufacturing sectors are key to growth, service sector activity has provided much-needed support to the Eurozone economy.
Weak numbers would certainly weigh on the EUR.
At the time of writing, theEURwas up by 0.05% to $1.1291.
The UK services PMI is due out later this morning. We can expect the Pound to respond to the numbers.
Uncertainty over Brexit is expected to weigh on the economy in the 2ndquarter. Weak numbers would further tame any hawkish chatter from the BoE near-term.
Outside of the stats, the leadership race will also remain in focus.
At the time of writing, thePoundwas down by 0.01% to $1.2592.
It’s a busy day ahead on the economic calendar, while it’s a half day for the markets ahead of tomorrow’s 4thJuly holiday.
Key stats due out of the U.S include June ADP nonfarm employment change figures and May trade data in the early afternoon.
Later in the day, factory orders and finalized Markit service sector PMI and the ISM’s June Manufacturing PMI are due out.
We can expect the ISM June manufacturing PMI and ADP numbers to be the key drivers on the day.
Outside of the stats, geopolitical risk will continue to be a key driver mid-week.
At the time of writing, theDollar Spot Indexwas down by 0.02% to 96.705.
May trade data will be of influence mid-week.
We can expect the Lonnie to be particularly sensitive to the numbers ahead of next week’s BoC monetary policy decision.
EIA crude oil inventory numbers will also provide direction late in the day.
TheLooniewas flat at C$1.3108, against the U.S Dollar, at the time of writing.
Thisarticlewas originally posted on FX Empire
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Introducing Donear Industries (NSE:DONEAR), A Stock That Climbed 77% In The Last Five Years
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It hasn't been the best quarter forDonear Industries Limited(NSE:DONEAR) shareholders, since the share price has fallen 23% in that time. On the bright side the returns have been quite good over the last half decade. It has returned a market beating 77% in that time.
View our latest analysis for Donear Industries
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...' 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.
Over half a decade, Donear Industries managed to grow its earnings per share at 31% a year. The EPS growth is more impressive than the yearly share price gain of 12% over the same period. So one could conclude that the broader market has become more cautious towards the stock.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Before buying or selling a stock, we always recommend a close examination ofhistoric growth trends, available here..
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. In the case of Donear Industries, it has a TSR of 83% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!
Investors in Donear Industries had a tough year, with a total loss of 11% (including dividends), against a market gain of about 4.0%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 13% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before spending more time on Donear Industriesit might be wise to click here to see if insiders have been buying or selling shares.
We will like Donear Industries better if we see some big insider buys. While we wait, check out thisfreelist of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on 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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Factbox: 'I Am Chairman Of Chrysler Corporation Always': 8 facts about Lee Iacocca
(Reuters) - Facts about auto industry executive Lee Iacocca: - Born Oct. 15, 1924, in Allentown, Pennsylvania, to Italian immigrants, Iacocca went to work for the Ford Motor Co as an engineer after finishing college. Not long afterward, he switched to Ford's marketing and sales side. - Iacocca quickly rose through the ranks and was made Ford president in 1964. During his tenure, he championed the highly successful Mustang but clashed with Ford chief Henry Ford II, who fired him in 1978 after 32 years with the company. - He took over struggling Chrysler, now part of Fiat Chrysler Automobiles, a few months later and brought the automaker back from the brink of bankruptcy by going to Washington in 1979 and persuading the federal government to guarantee $1.2 billion in loans to the company. He closed plants and cut the workforce and wages at all levels, including his own salary to $1 a year. When the company rebounded, he made $20 million. The moves, along with Chrysler's introduction of fuel-efficient cars and the minivan, led to a corporate comeback. He paid off the loans seven years early. - Chrysler's rebound made Iacocca among the world's best known businessmen. He became a familiar figure through Chrysler TV commercials, telling viewers "If you can find a better car, buy it!" His 1984 autobiography was a long-running best-seller that sold as many as 15,000 copies per day at its peak. - While Ford's Mustang and Chrysler's minivans were huge successes for Iacocca, he also was behind the Ford Pinto, which was recalled because of the danger of exploding gas tanks. - Iacocca considered running for president against George H.W. Bush but changed his mind after conferring with his friend Tip O'Neill, then speaker of the U.S. House of Representatives, who laughed at the prospect and told Iacocca he did not have the temperament for politics. - After stepping down from Chrysler in 1992, Iacocca pursued entrepreneurial ventures including electric bicycles, casinos and a line of imported olive oil products. - Chrysler employees who needed to remember the correct spelling of the chairman's last name often relied on the mnemonic phrase "I Am Chairman Of Chrysler Corporation Always." (Reporting by Bill Trott; Editing by Diane Craft and Lisa Shumaker)
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Does Dhanuka Agritech Limited’s (NSE:DHANUKA) ROCE Reflect Well On The Business?
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Today we'll evaluate Dhanuka Agritech Limited (NSE:DHANUKA) to determine whether it could have potential as an investment idea. 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 of all, we'll work out how to calculate ROCE. Second, we'll look at its ROCE compared 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. All else being equal, a better business will have a higher ROCE. Overall, it is a valuable metric that has its flaws. 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'.
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 Dhanuka Agritech:
0.20 = ₹1.3b ÷ (₹8.4b - ₹1.6b) (Based on the trailing twelve months to March 2019.)
So,Dhanuka Agritech has an ROCE of 20%.
View our latest analysis for Dhanuka Agritech
ROCE can be useful when making comparisons, such as between similar companies. It appears that Dhanuka Agritech's ROCE is fairly close to the Chemicals industry average of 17%. Separate from Dhanuka Agritech's performance relative to its industry, its ROCE in absolute terms looks satisfactory, and it may be worth researching in more depth.
The image below shows how Dhanuka Agritech's ROCE compares to its industry, and you can click it to see more detail on its past growth.
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. 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 Dhanuka Agritech.
Current liabilities include invoices, such as supplier payments, short-term debt, or a tax bill, that need to be paid within 12 months. The ROCE equation subtracts current liabilities from capital employed, so a company with a lot of current liabilities appears to have less capital employed, and a higher ROCE than otherwise. To counter this, investors can check if a company has high current liabilities relative to total assets.
Dhanuka Agritech has total assets of ₹8.4b and current liabilities of ₹1.6b. As a result, its current liabilities are equal to approximately 20% of its total assets. Current liabilities are minimal, limiting the impact on ROCE.
With that in mind, Dhanuka Agritech's ROCE appears pretty good. Dhanuka Agritech 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.
For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
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 Stratasys Stock Soared 63% in the First Half of 2019
Shares of 3D printing companyStratasys(NASDAQ: SSYS)rocketed 63.1% higher in the first half of 2019 (January through June), according to data fromS&P Global Market Intelligence.
For context, shares of rival3D Systems(NYSE: DDD)fell 10.5% and theS&P 500returned 18.5% over this period.
The story is similar over the one-year period through July 2, with Stratasys stock's 39.6% gain handily beating the broader market's 11.3% return, while shares of Triple D are nearly 37% in the red.
Image source: Getty Images.
We can attribute Stratasys stock's outperformance of the market largely to the company continuing to beat Wall Street's consensus earnings estimates. In three of the last four quarters, it has crushed bottom-line expectations, and in the other quarter it slightly beat the consensus.
We'll get into specifics in a moment, but you should know that shares also got a 14.4% boost on the last trading day of June -- Friday the 28th. However, as my colleague Rich Smithwrote, there didn't appear to be any identifiable catalyst for the move. If there is some material news, we should know about it relatively soon. And if not, as Rich noted, shares will give back their gain. In fact, in the first two trading days of July, Stratasys stock has already given back 50% of its spoils from Friday.
Moving to the company's most recent earnings release: In thefirst quarter of 2019, Stratasys' revenue edged up 1% year over year to $155.3 million, reported net loss narrowed considerably, and earnings per share (EPS) adjusted for one-time items doubled to $0.10. Wall Street was looking for adjusted EPS of $0.06 on revenue of $152.8 million, so Stratasys easily beat both expectations.
Underlying revenue growth was better than suggested by the reported number. In constant currency and after adjusting for sales from the company's entities that it divested during 2018, revenue was up 5% year over year. That's still far from strong growth, but it is respectable for a company that's in turnaround mode.
Data by YCharts.
Meanwhile, 3D Systems has missed Wall Street's earnings estimates in two of the last four quarters, withlast quarterbeing a huge disappointment. In Q1, its adjusted loss per share widened by three times to $0.09, whereas the Street was projecting a loss of $0.01 per share. Revenue declined more than 8% year over year to $152 million, falling short of the $164.7 million that analysts were expecting.
Stratasys has made solid progress righting its ship, but "a sustainable turnaround will depend upon the company being able to profitably grow revenue," as I've previously written. Cautious optimism is warranted, giddiness is not -- particularly since the company doesn't yet have a permanent CEO.
Stratasys hasn't yet announced a date for the release of its Q2 results, but it should be sometime very late this month or early next month. Investors should focus on growth in 3D printer and consumables revenue. In the first quarter, both these key metrics grew just 1% year over year.
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Beth McKennahas no position in any of the stocks mentioned. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool has adisclosure policy.
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Could Insecticides (India) Limited's (NSE:INSECTICID) Investor Composition Influence The Stock Price?
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A look at the shareholders of Insecticides (India) Limited (NSE:INSECTICID) can tell us which group is most powerful. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.'
With a market capitalization of ₹13b, Insecticides (India) is a small cap stock, so it might not be well known by many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions own shares in the company. Let's take a closer look to see what the different types of shareholder can tell us about INSECTICID.
View our latest analysis for Insecticides (India)
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.
Insecticides (India) already has institutions on the share registry. Indeed, they own 18% of the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Insecticides (India)'s historic earnings and revenue, below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in Insecticides (India). 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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our information suggests that insiders own more than half of Insecticides (India) Limited. This gives them effective control of the company. So they have a ₹9.0b stake in this ₹13b business. It is good to see this level of investment. You cancheck here to see if those insiders have been buying recently.
With a 12% ownership, the general public have some degree of sway over INSECTICID. 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.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.
I always like to check for ahistory of revenue growth. You can too, by accessing this free chart ofhistoric revenue and earnings in thisdetailed graph.
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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Could The Energy Action Limited (ASX:EAX) Ownership Structure Tell Us Something Useful?
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If you want to know who really controls Energy Action Limited (ASX:EAX), 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. 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.'
Energy Action is a smaller company with a market capitalization of AU$11m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions own shares in the company. Let's take a closer look to see what the different types of shareholder can tell us about EAX.
See our latest analysis for Energy Action
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.
As you can see, institutional investors own 22% of Energy Action. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Energy Action'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 Energy Action. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 insiders maintain a significant holding in Energy Action Limited. Insiders have a AU$3.5m stake in this AU$11m business. This may suggest that the founders still own a lot of shares. You canclick here to see if they have been buying or selling.
With a 14% ownership, the general public have some degree of sway over EAX. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Our data indicates that Private Companies hold 31%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
It's always worth thinking about the different groups who own shares in a company. But to understand Energy Action better, we need to consider many other factors.
I always like to check for ahistory of revenue growth. You can too, by accessing this free chart ofhistoric revenue and earnings in thisdetailed graph.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Cosmo Films (NSE:COSMOFILMS) Shareholders Have Enjoyed An Impressive 209% Share Price Gain
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The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you canmakemore than 100%. For instance, the price ofCosmo Films Limited(NSE:COSMOFILMS) stock is up an impressive 209% over the last five years. It's also good to see the share price up 16% over the last quarter.
View our latest analysis for Cosmo Films
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the five years of share price growth, Cosmo Films moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Thisfreeinteractive report on Cosmo Films'searnings, revenue and cash flowis a great place to start, if you want to investigate the stock further.
When looking at investment returns, it is important to consider the difference betweentotal shareholder return(TSR) andshare price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Cosmo Films the TSR over the last 5 years was 249%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted thetotalshareholder return.
Cosmo Films shareholders have received returns of 3.7% over twelve months (even including dividends), which isn't far from the general market return. We should note here that the five-year TSR is more impressive, at 28% per year. Although the share price growth has slowed, the longer term story points to a business well worth watching. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought.You can find out about the insider purchases of Cosmo Films by clicking this link.
Cosmo Films is not the only stock insiders are buying. So take a peek at thisfreelist of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Demi Lovato Thirsts After The Bachelorette's Mike as He's Sent Home and Fans Totally Ship Them
Hannah Brown said goodbye to Mike Johnson on this week’s episode of The Bachelorette , but that doesn’t mean that the San Antonio, Texas portfolio manager doesn’t have any other potential suitors. Demi Lovato has been a huge Mike fan since the beginning of this season, and now that he’s officially off the market, fans of both the show and the singer would love to see them get together. “Swing me, kiss me! Boo boo,” Lovato, 26, can be heard saying in one of her Instagram Stories from Monday night, as she watched the episode and gave her commentary. She even wrote “Mike I accept your rose” in one of her Stories. On Monday, Johnson sent out a tweet that had many fans gushing — and thinking of Lovato. “Jus saying, my future wife though,” he wrote. “girl you ready for smiles, adventure, comfort, growth, honesty, laughter, me falling using my inhaler and kissing your stretch marks and imperfections. Where u hiding” Mike Johnson, Demi Lovato | Craig Sjodin/ ABC; Timothy Hiatt/Getty Images Fans were quick to point out that Johnson need not look very far. “DEMI LOVATO WANTS YOU. YOU ARE BLESSED. GRAB THE F— OPPORTUNITY BC EVERY QUEEN NEEDS HER KING,” one fan responded to Johnson’s query. “SIR……demi lovato said hey,” another wrote , along with a screengrab of the “Heart Attack” singer’s Story. Jus saying, my future wife though🌹girl you ready for smiles, adventure, comfort, growth, honesty, laughter, me falling using my inhaler and kissing your stretch marks and imperfections. Where u hiding👀 — Mike Johnson (@themikejohnson3) July 2, 2019 Demi Lovato's Instagram | Instagram/Demi Lovato RELATED: Bachelorette Hannah Brown Gushes Over Demi Lovato Compliment: She ‘Called Me Cute!’ Another fan wrote in response to Johnson’s tweet, “her instagram name is @ddlovato, you should really check her out. she’s also a grammy nominated multi platinum singer/songwriter. she’s already willing to accept your rose. we’ll be waiting for your response.” Still another added , “hello sir not to be annoying or anything but i think you got yourself that type of wife already, her name is demi lovato, she’s into crime shows, she likes to cuddle with her dogs she’s also homeschooled but yeah.” A Lovato fan account on Instagram screengrabbed Johnson’s tweet, bringing it to the pop star’s attention — and she eagerly responded. “I’M RIGHT HERE MIKE I’M RIGHT HERE BOO MY MOM ALREADY LOVES YOU TOO,” she commented on the post. Story continues View this post on Instagram lmaoooooo A post shared by luan loves demi (@adoresdevonne) on Jul 1, 2019 at 9:13pm PDT Demi Lovato on Instagram RELATED: Hannah Brown Admits to Having Sex ‘in a Windmill’ in Explosive Bachelorette Promo Lovato has been vocal about her interest in Johnson since the very beginning, calling him out as her pick as she watched an episode early in the season. “He should win,” she could be heard saying in an Instagram Story as Johnson called out Luke Parker for saying he loved Brown on their first group date . Like many viewers of the show, Lovato has also been adamantly against Parker, who has been a constant source of drama during the season. RELATED VIDEO: The Bachelorette: Hannah B. Takes Mike on a Date “Hannah, honey, do not trust him!!!!!!” she wrote in one of her Stories while watching the earlier episode. In another one of her Stories on Monday night, Lovato shouted “Noooo!” as Brown offered Parker a rose. In Monday night’s episode, Brown also sent home Connor Saeli and Garret Powell . The Bachelorette airs Monday nights at 8 p.m. on ABC. View comments
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Here's What Eumundi Group Limited's (ASX:EBG) P/E Ratio 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). We'll apply a basic P/E ratio analysis to Eumundi Group Limited's (ASX:EBG), to help you decide if the stock is worth further research. Looking at earnings over the last twelve months,Eumundi Group has a P/E ratio of 8.37. That means that at current prices, buyers pay A$8.37 for every A$1 in trailing yearly profits.
Check out our latest analysis for Eumundi Group
Theformula for P/Eis:
Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)
Or for Eumundi Group:
P/E of 8.37 = A$0.96 ÷ A$0.11 (Based on the trailing twelve months to December 2018.)
The higher the P/E ratio, the higher the price tag of a business, relative to its trailing 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. 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.
Eumundi Group's 205% EPS improvement over the last year was like bamboo growth after rain; rapid and impressive. The sweetener is that the annual five year growth rate of 47% is also impressive. With that kind of growth rate we would generally expect a high P/E ratio.
One good way to get a quick read on what market participants expect of a company is to look at its P/E ratio. We can see in the image below that the average P/E (17.6) for companies in the hospitality industry is higher than Eumundi Group's P/E.
Eumundi Group's P/E tells us that market participants think it will not fare as well as its peers in the same industry. Since the market seems unimpressed with Eumundi Group, it's quite possible it could surprise on the upside. If you consider the stock interesting, further research is recommended. For example, I often monitordirector buying and selling.
One drawback of using a P/E ratio is that it considers market capitalization, but not the balance sheet. In other words, it does not consider any debt or cash that the company may have on the balance sheet. Theoretically, a business can improve its earnings (and produce a lower P/E in the future) by investing in growth. That means taking on debt (or spending its cash).
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).
Eumundi Group has net debt worth 54% of its market capitalization. This is enough debt that you'd have to make some adjustments before using the P/E ratio to compare it to a company with net cash.
Eumundi Group has a P/E of 8.4. That's below the average in the AU market, which is 16. While the EPS growth last year was strong, the significant debt levels reduce the number of options available to management. If it continues to grow, then the current low P/E may prove to be unjustified.
Investors have an opportunity when market expectations about a stock are wrong. If the reality for a company is not as bad as the P/E ratio indicates, then the share price should increase as the market realizes this. Although we don't have analyst forecasts, you could get a better understanding of its growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
But note:Eumundi Group 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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Introducing CFOAM (ASX:CFO), A Stock That Climbed 19% In The Last Year
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CFOAM Limited(ASX:CFO) shareholders might be concerned after seeing the share price drop 24% in the last quarter. But that doesn't change the reality that over twelve months the stock has done really well. To wit, it had solidly beat the market, up 19%.
View our latest analysis for CFOAM
With just US$1,071,842 worth of revenue in twelve months, we don't think the market considers CFOAM to have proven its business plan. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that CFOAM will significantly advance the business plan before too long.
Companies that lack both meaningful revenue and profits are usually considered high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized).
Our data indicates that CFOAM had US$6,911,567 more in total liabilities than it had cash, when it last reported in December 2018. That makes it extremely high risk, in our view. So the fact that the stock is up 19% in the last year shows that high risks can lead to high rewards, sometimes. It's clear more than a few people believe in the potential. The image below shows how CFOAM's balance sheet has changed over time; if you want to see the precise values, simply click on the image. You can see in the image below, how CFOAM's cash levels have changed over time (click to see the values).
Of course, the truth is that it is hard to value companies without much revenue or profit. However you can take a look at whether insiders have been buying up shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with thisfreechart of insider buying (and selling).
It's nice to see that CFOAM shareholders have gained 19% over the last year. We regret to report that the share price is down 24% over ninety days. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. It is all well and good that insiders have been buying shares, but we suggest youcheck here to see what price insiders were buying at.
CFOAM is not the only stock insiders are buying. So take a peek at thisfreelist of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Investors Who Bought Endurance Technologies (NSE:ENDURANCE) Shares A Year Ago Are Now Down 11%
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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized byEndurance Technologies Limited(NSE:ENDURANCE) shareholders over the last year, as the share price declined 11%. That contrasts poorly with the market return of 3.8%. We wouldn't rush to judgement on Endurance Technologies because we don't have a long term history to look at. Unfortunately the share price momentum is still quite negative, with prices down 8.0% in thirty days.
Check out our latest analysis for Endurance Technologies
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the unfortunate twelve months during which the Endurance Technologies share price fell, it actually saw its earnings per share (EPS) improve by 27%. Of course, the situation might betray previous over-optimism about growth. It's surprising to see the share price fall so much, despite the improved EPS. But we might find some different metrics explain the share price movements better.
With a low yield of 0.5% we doubt that the dividend influences the share price much. Endurance Technologies managed to grow revenue over the last year, which is usually a real positive. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We know that Endurance Technologies has improved its bottom line lately, but what does the future have in store? Thisfreereport showing analyst forecastsshould help you form a view on Endurance Technologies
Given that the market gained 3.8% in the last year, Endurance Technologies shareholders might be miffed that they lost 11% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 5.3%, 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. Is Endurance Technologies cheap compared to other companies? These3 valuation measuresmight help you decide.
We will like Endurance Technologies better if we see some big insider buys. While we wait, check out thisfreelist of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on 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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Why Evrofarma SA’s (ATH:EVROF) Return On Capital Employed Might Be A Concern
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Today we'll evaluate Evrofarma SA (ATH:EVROF) to determine whether it could have potential as an investment idea. 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 of all, we'll work out how to calculate ROCE. Next, we'll compare it to others in its industry. Finally, we'll look at how its current liabilities affect its ROCE.
ROCE measures the 'return' (pre-tax profit) a company generates from capital employed in its business. In general, businesses with a higher ROCE are usually better quality. 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 Evrofarma:
0.066 = €1.9m ÷ (€44m - €16m) (Based on the trailing twelve months to December 2018.)
Therefore,Evrofarma has an ROCE of 6.6%.
Check out our latest analysis for Evrofarma
ROCE can be useful when making comparisons, such as between similar companies. Using our data, Evrofarma's ROCE appears to be significantly below the 8.7% average in the Food industry. This performance could be negative if sustained, as it suggests the business may underperform its industry. Putting aside Evrofarma's performance relative to its industry, its ROCE in absolute terms is poor - considering the risk of owning stocks compared to government bonds. Readers may wish to look for more rewarding investments.
You can click on the image below to see (in greater detail) how Evrofarma's past growth compares to other companies.
Remember that this metric is backwards looking - it shows what has happened in the past, and does not accurately predict the future. 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 only a point-in-time measure. You can check if Evrofarma has cyclical profits by looking at thisfreegraph of past earnings, revenue and cash flow.
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.
Evrofarma has total assets of €44m and current liabilities of €16m. As a result, its current liabilities are equal to approximately 36% of its total assets. In light of sufficient current liabilities to noticeably boost the ROCE, Evrofarma's ROCE is concerning.
This company may not be the most attractive investment prospect. Of course,you might also be able to find a better stock than Evrofarma. So you may wish to see thisfreecollection of other companies that have grown earnings strongly.
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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Have Insiders Been Selling Filatex India Limited (NSE:FILATEX) Shares This Year?
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares inFilatex India Limited(NSE:FILATEX).
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. 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 Filatex India
There wasn't any very large single transaction over the last year, but we can still observe some trading.
We note that in the last year insiders divested 79225 shares for a total of ₹3.6m. Insiders in Filatex India didn't buy any shares in the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you willnotwant to miss thisfreelist of growing companies that insiders are buying.
The last quarter saw substantial insider selling of Filatex India shares. Specifically, insiders ditched ₹3.6m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Filatex India insiders own about ₹3.2b worth of shares. That equates to 39% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
Insiders sold stock recently, but they haven't been buying. And even if we look to the last year, we didn't see any purchases. But it is good to see that Filatex India is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales.I like to dive deeperinto how a company has performed in the past. You can findhistoric revenue and earnings in thisdetailed graph.
If you would prefer 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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If You Had Bought CEAT (NSE:CEATLTD) Shares Five Years Ago You'd Have Made 47%
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WhileCEAT Limited(NSE:CEATLTD) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 17% in the last quarter. But the silver lining is the stock is up over five years. Unfortunately its return of 47% is below the market return of 54%.
See our latest analysis for CEAT
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
CEAT's earnings per share are down 4.0% per year, despite strong share price performance over five years. By glancing at these numbers, we'd posit that the decline in earnings per share is not representative of how the business has changed over the years. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
The modest 1.3% dividend yield is unlikely to be propping up the share price. In contrast revenue growth of 3.6% per year is probably viewed as evidence that CEAT is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
CEAT is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out thisfreereport showing consensus forecasts
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of CEAT, it has a TSR of 55% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
While the broader market gained around 3.8% in the last year, CEAT shareholders lost 27% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 9.1%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before deciding if you like the current share price, check how CEAT scores on these3 valuation metrics.
But note:CEAT may not be the best stock to buy. So take a peek at thisfreelist of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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What Should You Know About The Future Of Fondia Oyj's (HEL:FONDIA)?
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In March 2019, Fondia Oyj (HEL:FONDIA) released its latest earnings announcement, which revealed that the business benefited from a small tailwind, eventuating to a single-digit earnings growth of 8.2%. Below, I've laid out key growth figures on how market analysts predict Fondia Oyj's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
View our latest analysis for Fondia Oyj
Market analysts' prospects for next year seems buoyant, with earnings increasing by a robust 11%. This growth seems to continue into the following year with rates reaching double digit 54% compared to today’s earnings, and finally hitting €3.4m by 2022.
While it’s useful to be aware of the growth rate year by year relative to today’s figure, it may be more insightful to analyze the rate at which the earnings are moving on average every year. The advantage of this technique is that we can get a better picture of the direction of Fondia Oyj'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 appended 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 24%. This means, we can assume Fondia Oyj will grow its earnings by 24% every year for the next few years.
For Fondia Oyj, I've compiled three relevant 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 FONDIA 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 FONDIA is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FONDIA? 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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UPDATE 1-Energy distributor UGI to buy some assets of Columbia Midstream for $1.28 bln
(Adds CEO quote, TC Energy statement and background)
July 2 (Reuters) - Energy distributor UGI Corp said on Tuesday it would buy some assets of Columbia Midstream Group from pipeline operator TC Energy Corp for about $1.28 billion to expand its midstream business.
The Pennsylvania-based company said in a statement that it expected the deal to be neutral to earnings per share in the 2020 fiscal year and accretive from the following year.
Columbia Midstream Group, which operates in the Appalachian Basin, owns four natural gas gathering systems, an interest in a company with gathering, processing and liquids assets, and a pipeline that runs through western Pennsylvania, eastern Ohio and northern West Virginia.
UGI Corp unit UGI Energy Services will acquire these assets from a subsidiary of TC Energy.
The sale does not include any interest in the company's minerals business in the Appalachian basin, Columbia Energy Ventures Company (CEVCO), TC Energy said in a separate statement.
"This transaction expands our midstream capabilities in the prolific gas producing region of the Southwest Appalachian Basin and provides an initial investment into both wet gas gathering and processing," John Walsh, the chief executive officer of UGI, said.
Reuters reported in April that TC Energy, formerly known as TransCanada, was exploring a potential sale of its Columbia Midstream unit.
The unit generates around $100 million of earnings before interest, tax, depreciation and amortization (EBITDA) annually, and could be valued at a multiple of 10 times that amount, three sources had told Reuters at the time.
Calgary, Alberta-based TC Energy is offloading parts of its infrastructure assets to help finance the $8 billion it has earmarked to spend on new projects in 2019, such as the high-profile Coastal GasLink system and the Keystone XL pipeline, which are likely to generate higher returns than these legacy assets. (Reporting by Mekhla Raina and Bhargav Acharya in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)
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If You Had Bought Cortina Holdings (SGX:C41) Shares Five Years Ago You'd Have Made 85%
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Stock pickers are generally looking for stocks that will outperform the broader market. And the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, long termCortina Holdings Limited(SGX:C41) shareholders have enjoyed a 85% share price rise over the last half decade, well in excess of the market return of around -3.8% (not including dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 75%, including dividends.
View our latest analysis for Cortina Holdings
In his essayThe Superinvestors of Graham-and-DoddsvilleWarren Buffett described how share prices do not always rationally reflect the value of a business. 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.
Over half a decade, Cortina Holdings managed to grow its earnings per share at 9.7% a year. This EPS growth is slower than the share price growth of 13% per year, over the same period. 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.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into Cortina Holdings's key metrics by checking this interactive graph of Cortina Holdings'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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Cortina Holdings's TSR for the last 5 years was 122%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
It's good to see that Cortina Holdings has rewarded shareholders with a total shareholder return of 75% in the last twelve months. And that does include the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 17% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. If you would like to research Cortina Holdings in more detail then you might want totake a look at whether insiders have been buying or selling shares in the company.
If you like to buy stocks alongside management, then you might just love thisfreelist 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 SG exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor 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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Tucker Carlson Defends Don Jr. for Retweeting Birther-Style Kamala Harris Smear
Fox News host Tucker Carlson has rallied to the defense of Donald Trump Jr. for retweeting a birther-style smear of Democratic presidential candidate Kamala Harris , arguing on Tuesday night that the presidential son was merely echoing the skepticism many black voters have of Harris. Following Harris’ much-lauded primary debate performance last week, alt-right commentator Ali Alexander claimed that the California senator had no business commenting on racial issues because she wasn’t an “American Black” but “half Indian and half Jamaican.” Don Jr. would soon retweet—and later delete—Alexander’s post, with a spokesman saying he had simply been surprised to learn of Harris’ heritage. According to Carlson, it was not Don Jr.’s retweet that should have sparked condemnation—but Harris’ debate performance. “Sen. Kamala Harris clearly thinks she can become president of the United States by calling other people racists,” he said before showing a clip of Harris’ standout debate moment, in which she took former Vice President Joe Biden to task for opposing school busing during the 1970s. “Oh, barf,” Carlson muttered after playing the clip. Insisting that the media wants to pit “black against white” and “Kamala Harris versus Joe Biden,” Carlson claimed that real life was “far more complicated than that.” Stating that Biden’s strongest voter constituency is black voters while Harris’ is young, white and affluent, the Fox News host asserted that “many black voters appear skeptical of Kamala Harris.” (Post-debate polls, however, show Harris gaining on Biden due to a massive shift in black support .) “One of them recently tweeted that Harris' life story doesn't bear much resemblance to that of most African Americans,” Carlson said, referencing Alexander’s tweet. “Her parents were from India and Jamaica. Donald Trump Jr. retweeted that observation, and for that, CNN denounced him as a terrifying racist.” After showing footage of critics blasting Trump Jr. over the tweet, the conservative media star then took aim at CNN's Don Lemon for seemingly questioning whether Harris should identify herself as African-American several months ago. Story continues “This tape has been floating around Washington, and Don Lemon apparently has been calling other anchors—even on other channels—and asking them not to replay it because he's embarrassed of it,” Carlson mockingly said. “But we think you have a right to see it and you can decide for yourself if Don Lemon is also an anti-black racist.” During a CNN segment earlier this year, Lemon said Harris could brush away any criticism of her racial identity by saying “I’m black but I’m not African American,” noting that Jamaica isn’t America. “Here's Don Lemon telling you that Kamala Harris is not an African American,” Carlson concluded. “He thinks it's important that you know that, and yet that's not racist because Don Lemon is a democratic voter. That's the logic of identity politics.” Read more at The Daily Beast. Get our top stories in your inbox every day. Sign up now! Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.
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Why Globus Spirits Limited's (NSE:GLOBUSSPR) CEO Pay Matters To You
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! The CEO of Globus Spirits Limited ( NSE:GLOBUSSPR ) is Ajay Swarup. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid. View our latest analysis for Globus Spirits How Does Ajay Swarup's Compensation Compare With Similar Sized Companies? At the time of writing our data says that Globus Spirits Limited has a market cap of ₹3.9b, and is paying total annual CEO compensation of ₹11m. (This figure is for the year to March 2018). While we always look at total compensation first, we note that the salary component is less, at ₹8.2m. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO total compensation was ₹1.3m. As you can see, Ajay Swarup is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Globus Spirits Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see, below, how CEO compensation at Globus Spirits has changed over time. NSEI:GLOBUSSPR CEO Compensation, July 3rd 2019 Is Globus Spirits Limited Growing? Over the last three years Globus Spirits Limited has grown its earnings per share (EPS) by an average of 24% per year (using a line of best fit). In the last year, its revenue is up 1.7%. This shows that the company has improved itself over the last few years. Good news for shareholders. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow. Story continues Has Globus Spirits Limited Been A Good Investment? I think that the total shareholder return of 91%, over three years, would leave most Globus Spirits Limited 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. In Summary... We compared total CEO remuneration at Globus Spirits Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group. However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. Shareholders may want to check for free if Globus Spirits insiders are buying or selling shares. Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list 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 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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Do You Like Ban Leong Technologies Limited (SGX:B26) At This P/E Ratio?
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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 Ban Leong Technologies Limited's (SGX:B26) P/E ratio could help you assess the value on offer.Ban Leong Technologies has a price to earnings ratio of 8.16, based on the last twelve months. That corresponds to an earnings yield of approximately 12%.
Check out our latest analysis for Ban Leong Technologies
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Ban Leong Technologies:
P/E of 8.16 = SGD0.25 ÷ SGD0.031 (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 a good or a bad thing on its own, but a high P/E means that buyers have a higher opinion of the business's prospects, relative to stocks with a lower P/E.
Probably the most important factor in determining what P/E a company trades on is the earnings growth. Earnings growth means that in the future the 'E' will be higher. Therefore, even if you pay a high multiple of earnings now, that multiple will become lower in the future. And as that P/E ratio drops, the company will look cheap, unless its share price increases.
Ban Leong Technologies saw earnings per share decrease by 35% last year. But over the longer term (5 years) earnings per share have increased by 20%.
We can get an indication of market expectations by looking at the P/E ratio. We can see in the image below that the average P/E (12.1) for companies in the electronic industry is higher than Ban Leong Technologies's P/E.
This suggests that market participants think Ban Leong Technologies will underperform other companies in its industry. Many investors like to buy stocks when the market is pessimistic about their prospects. It is arguably worth checkingif insiders are buying shares, because that might imply they believe the stock is undervalued.
It's important to note that the P/E ratio considers the market capitalization, not the enterprise value. So it won't reflect the advantage of cash, or disadvantage of debt. In theory, a company can lower its future P/E ratio by using cash or debt to invest in growth.
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 S$9.4m, Ban Leong Technologies has a very strong balance sheet, which may be important for its business. Having said that, at 33% of its market capitalization the cash hoard would contribute towards a higher P/E ratio.
Ban Leong Technologies's P/E is 8.2 which is below average (13) in the SG market. The recent drop in earnings per share would almost certainly temper expectations, but the net cash position means the company has time to improve: if so, the low P/E could be an opportunity.
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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking outthis more detailed historical graphof earnings, revenue and cash flow.
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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Zooming in on ASX:GNG's 9.1% Dividend Yield
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Could GR Engineering Services Limited (ASX:GNG) be an attractive dividend share to own for the long haul? Investors are often drawn to strong companies with the idea of reinvesting the dividends. If you are hoping to live on the income from dividends, it's important to be a lot more stringent with your investments than the average punter.
With a eight-year payment history and a 9.1% yield, many investors probably find GR Engineering Services intriguing. We'd agree the yield does look enticing. Before you buy any stock for its dividend however, you should always remember Warren Buffett's two rules: 1) Don't lose money, and 2) Remember rule #1. We'll run through some checks below to help with this.
Explore this interactive chart for our latest analysis on GR Engineering Services!
Companies (usually) pay dividends out of their earnings. If a company is paying more than it earns, the dividend might have to be cut. As a result, we should always investigate whether a company can afford its dividend, measured as a percentage of a company's net income after tax. In the last year, GR Engineering Services paid out 201% of its profit as dividends. A payout ratio above 100% is definitely an item of concern, unless there are some other circumstances that would justify it.
We also measure dividends paid against a company's levered free cash flow, to see if enough cash was generated to cover the dividend. Unfortunately, while GR Engineering Services pays a dividend, it also reported negative free cash flow last year. While there may be a good reason for this, it's not ideal from a dividend perspective.
Consider gettingour latest analysis on GR Engineering Services'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. Looking at the last decade of data, we can see that GR Engineering Services paid its first dividend at least eight years ago. During the past eight-year period, the first annual payment was AU$0.15 in 2011, compared to AU$0.08 last year. The dividend has shrunk at around 7.4% a year during that period.
When a company's per-share dividend falls we question if this reflects poorly on either the business or management. Either way, we find it hard to get excited about a company with a declining dividend.
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. In the last five years, GR Engineering Services's earnings per share have shrunk at approximately 2.3% per annum. Declining earnings per share over a number of years is not a great sign for the dividend investor. Without some improvement, this does not bode well for the long term value of a company's dividend.
Dividend investors should always want to know if a) a company's dividends are affordable, b) if there is a track record of consistent payments, and c) if the dividend is capable of growing. GR Engineering Services paid out almost all of its cash flow and profit as dividends, leaving little to reinvest in the business. Earnings per share are down, and GR Engineering Services's dividend has been cut at least once in the past, which is disappointing. Using these criteria, GR Engineering Services looks quite suboptimal from a dividend investment perspective.
You can also discover whether shareholders are aligned with insider interests bychecking our visualisation of insider shareholdings and trades in GR Engineering Services stock.
If you are a dividend investor, you might also want to look at ourcurated list of dividend stocks yielding above 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Asian shares fall back after S&P 500 hits fresh record high
TOKYO (AP) — Shares fell back in Asia on Wednesday as the euphoria from President Donald Trump's truce with China's Xi Jinping on trade faded.
The retreat followed yet another all-time high for the S&P 500 index. Trading in U.S. markets is subdued ahead of an early closure on Wednesday for the Independence Day holiday.
The Shanghai Composite index sank 1% to 3,014.68 while Japan's Nikkei 225 index lost 0.7% to 21,608.73. The Hang Seng in Hong Kong declined 0.2% to 28,820.89. South Korea's Kospi lost 0.7% to 2,106.23 but Australia's S&P ASX 200 advanced 0.4% to 6,679.50. Shares fell in Taiwan and most Southeast Asian markets.
Trading was subdued ahead of the Independence Day holiday Thursday in the U.S., where markets will close early on Wednesday.
On Wall Street, stocks shook off an early wobble to eke out small gains Tuesday, nudging the S&P 500 index to an all-time high for the second straight day.
Traders are waiting to see what will come from the latest truce in the U.S.-China trade war. They're also looking ahead to a key government jobs report due out Friday, among other potential market-moving developments in the next few weeks.
The S&P 500 rose 0.3% to 2,973.01, the benchmark index's seventh record high this year. The Dow Jones Industrial Average gained 0.3% to 26,786.68. The Nasdaq composite added 0.2% to 8,109.09. Small-company stocks fell, sending the Russell 2000 index down 0.6% to 1,560.54.
Presidents Donald Trump and Xi Jinping of China agreed over the weekend to resume trade talks. The United States also agreed not to impose additional tariffs on the world's second-largest economy.
The detente is good news for markets, but tariffs in place have already hurt global economic growth, and investors see that the two sides still face the same differences that caused talks to break down earlier.
In commodities trading, benchmark crude oil gained 34 cents to $56.59 per barrel in electronic trading on the New York Mercantile Exchange. It fell $2.84 to settle at $56.25 a barrel.
Brent crude, the international standard, added 47 cents to $62.87 per barrel. It lost $2.66 to close at $62.40 a barrel on Tuesday.
The dollar fell to 107.56 Japanese yen from 108.90 yen on Tuesday. The euro rose to $1.1292 from $1.1286.
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AP Business writers Alex Veiga and Stan Choe contributed to this report.
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Eva Air cancels hundreds more flights as cabin crew strike drags on
By Yimou Lee TAIPEI (Reuters) - Taiwan's Eva Airways <2618.TW> has canceled 550 more flights scheduled through mid-July as a cabin crew strike entered its 14th day, after latest negotiations on work conditions and wages broke down this week. Flight attendants at the Taiwanese airline went on strike on June 20 after a months-long discussion between the two yielded no results, disrupting over 2,000 flights and impacting about 405,000 passengers including the latest cancellations. The strike, the longest in Taiwan's aviation history where labor unrest is uncommon, has led Eva to estimate a revenue loss of about T$1.75 billion ($56 million). "The company is still delaying. We urge them to put down their prejudices and sign an agreement with us as soon as possible," Judy Hsiao, a media liaison officer for the union, said after an 11-hour long talk with Eva broke down on Tuesday. There was no indication of any resolution early on Wednesday with a union representing Eva flight attendants urging the firm to come back to the negotiation table, saying no renewed contacts between the parties had been initiated. Eva said it had no comment when contacted by Reuters. In a statement late on Tuesday, Eva said it had reached "some initial agreements" with the union and that "the company's door is always open for flight attendants to come home". On Tuesday evening, the union said over 1,000 flight attendants and supporters joined a rally in front of Taiwan's presidential office, calling President Tsai Ing-wen to address what it sees as an "autocratic and authoritarian" management. More than 2,000 flight attendants from Eva Air's all-female cabin crew have been taking turns to join demonstrations outside the firm's headquarters near Taoyuan International Airport since June 20. The protests have been marked by signs, speeches and, at times, scuffles between cabin crew and Eva representatives. Eva has filed several lawsuits against the union since the strike began, including asking for a daily compensation of T$34 million ($1 million) for what it sees as an "illegal strike". Eva Air, best known internationally for the Hello Kitty livery on some of its jets, operates flights to many destinations around Asia as well as to North America and Europe. Pilots at rival China Airlines <2610.TW> went on strike in February, leading to 122 flight cancellations and T$220 million in lost revenue. ($1 = 31.0890 Taiwan dollars) (Reporting By Yimou Lee; Editing by Himani Sarkar) View comments
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How To Find The Right Logo Design For Your Specific Product Released By Original Nutter
Original Nutter is a graphic design company that specializes in bespoke logo design. They provide solutions to all your company design, illustration, and creative advertising needs
LEEDS, UK / ACCESSWIRE / July 2, 2019 /Bo Beaumont and his team of designers have successfully provided graphic design, logo, and branding services for hundreds of new starts up. Moreover, they are please to launch their newest website with significantly improved loading speeds and a refreshed portfolio including some of their favorite designs over the last 5 years. For some time, businesses, organizations, and company are aware of the real benefits of quality branding and design to their market to give them an edge against the competition. Benefits derived from this include; driving customers to your brand; making an impression in the midst of an ever expanding sea of competitors; identifying your brand; showing you are a professional in the field which customers naturally love to associate with; and is a very essential tool to promote the products and services your business has to offer.
For more information click herehttps://originalnutterdesign.co.uk
According to the spokesperson for the feed, unique design and logo branding that demonstrate key business create a positive, permanent impression on your potential customers, building an image of trust and professionalism which often leads to closing larger sales.
"Our services include but not limited to" he continueslogo design, flyer design, web design, business card design, brochure design and just about everything else. All our services are offered at an affordable cost for the level of service we provide, so we welcome everybody.
Original Nutter has completed projects for companies and business across the globe, with regular clients in China, Qatar, US, Spain and of course the UK. Continually exploring new things, never afraid to find, try, and do things differently and always providing and presenting the best to their customers. Our designs and logos always bring out real meaning in an out-of-the-box method.
One of our unique offers is that we provide unlimited revisions until our clients are 100% satisfied. That is a demonstration of our confidence to get things right first time. Afterall, we wouldn't still be in business if we were constantly tied down in rounds of revision! Regardless, it is there for your complete peace of mind.
A study reported by fit small business shows that it takes just 10 seconds for any potential customer to make an instant decision if they like your brand or not, so let Original Nutter have the chance to make those 10 seconds count with a professional design touch.
Contact Info:
Name: Bo BeaumontEmail:Send EmailOrganization: Original NutterAddress:https://youtu.be/BWgKtZqQMRAPhone: +44 333 050 1245Website:https://originalnutterdesign.co.ukVideo URL:https://youtu.be/BWgKtZqQMRA
SOURCE:Bo Beaumont
View source version on accesswire.com:https://www.accesswire.com/550720/How-To-Find-The-Right-Logo-Design-For-Your-Specific-Product-Released-By-Original-Nutter
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New Age Paranormal Books Win National Finalist Award in Non-Fiction Category
The Psychic Detective Guidebook, by Dan Baldwin, and Conversations With Spirits of the Southwest, by Dan Baldwin and Dwight and Rhonda Hull, were awarded finalists in the National Indie Excellence®Awards competition in the New Age Non-Fiction category
MESA, AZ / ACCESSWIRE / July 2, 2019 /The Psychic Detective Guidebook by Dan Baldwin and Conversations With Spirits of the Southwest by Dan Baldwin and Dwight and Rhonda Hull are Finalists in the National Indie Excellence Awards competition in the New Age Non-Fiction category. See the link below for more information.
https://fourknightspress.com/announcements
The Psychic Detective Guidebook is a how-to book for the novice who wants information on the basics of psychic detecting and working with psychics, psychic groups and law enforcement. It also covers the challenges and opportunities of psychic detecting. The book features case studies, interviews with respected international psychics and the text of Baldwin's The Practical Pendulum Workbook, a guide to pendulum dowsing designed for those who wish to develop or expand their psychic abilities. Information provided in the book is very precise and meticulous introduction into a fascinating topic, too often misunderstood and misrepresented. It provides an overview of what a psychic detective is, the tools and techniques at his or her disposal and the steps needed to develop one's own abilities.
Conversations With Spirits of the Southwest - More Adventures Into the Paranormal details the authors' experiences making contact with spirits inhabiting "Wild West" ghost towns, ranches, mines and businesses. Each chapter contains a history of the site investigated, experiences at the site and transcripts of conversations with those who have crossed over. "What better source of historical research on the old West than the people who lived it," Baldwin says.
The authors have appeared on Coast-2-Coast AM with George Noory, The Mancow Show on WLS, The House of Mystery, X-Zone Radio, Exploring Unexplained Phenomena and other television, radio and podcast programs.
https://fourknightspress.com/announcements
The National Indie Excellence®Awards are open to recent English language books in print from independent, university and self-publishers. Winners are determined on a basis of superior written matter coupled with excellent presentation in every facet of the final published product.
Contact Info:Name: Dan BaldwinEmail:Send EmailOrganization: Four Knights PressAddress: undefined, Mesa, AZ 85215, United StatesPhone: +1-480-807-9682Website:https://www.fourknightspress.com
SOURCE:Four Knights Press
View source version on accesswire.com:https://www.accesswire.com/550717/New-Age-Paranormal-Books-Win-National-Finalist-Award-in-Non-Fiction-Category
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Water Leak Detection Service Company ADI Leak Detection Offers No Find No Fee
Service with a guarantee, if no leak is found, there is no charge
BUCKINGHAMSHIRE, UK / ACCESSWIRE / July 2, 2019 /ADI Leak Detection, an excellent plumbing company, is now offering a service with no fees attached. When there are problems are in the house and home, it can be challenging to call for help. Paying for a serviceman to show up just to take a look is frustrating. ADI Leak Detection knows this doesn't serve the customer, as it gets them no closer to solving their problem. Acknowledging this issue in the industry, ADI Leak Detection has moved forward with a No Find No Fee service. If the service personnel finds no leak during the walkthrough of your premise, there is no fee.
Additional details are available athttp://www.adileakdetection.co.uk
Large bodies of water are fun to splash around in but require a ton of maintenance. When you install water based accessories like a pool or a jacuzzi, it's important for owners to remember that leaks do happen eventually with erosion and time. Apart from the regular busted pipes that most associate with leaks, the foundation of a pool might offer opportunities for water to seep out and away as well. Cracks in the poured pool bowl might create small areas for water to escape.
Worn or damaged equipment might need replacements but cause leaks before they are repaired. Any place there are fittings attached to the surface, like metals that heat up and cool down to expand, might eventually pull away from the structure it is connected to. This doesn't happen in one shot, but rather from everyday stress caused by time and pressure. ADI Leak Detection is experienced in working with all sorts of pool and spa equipment to detect and fix leaks.
A big problem that home-owners may encounter are broken taps and dripping water. A dripping faucet often comes from the tap itself not functioning correctly due to people not turning them off. If a tap is leaking even though it was shut properly, you may have some erosion or debris stuck in the tap.
Turning a tap really quickly, or rapidly may also damage a tap quicker than gently twisting or closing a tap. That goes for taps at the sink, in the bathtub, and even outside for your hose. ADI is adept at water leak detection under any kind of floor material to identify the source of erosion or debris. If nothing is found during an inspection, there is no fee.
Some leaks come from merely utilizing equipment longer than its lifespan. Many calls come in for leaking garden hoses. But a standard rubber garden hose should last 5-10 years maximum. Remember to replace the tools you use to keep damage from occurring or unnecessary calls.
Location details are available atADI Leak Detection
Contact Info:
Name: Adrian MorganEmail:Send EmailOrganization: ADI Leak DetectionAddress: 44 Wellesbourne Crescent High Wycombe, Buckinghamshire, HP13 5HFPhone: 0800 731 3843Website:http://www.adileakdetection.co.uk/
SOURCE:ADI Leak Detection
View source version on accesswire.com:https://www.accesswire.com/550721/Water-Leak-Detection-Service-Company-ADI-Leak-Detection-Offers-No-Find-No-Fee
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Does Colour Life Services Group Co., Limited (HKG:1778) Have A Volatile Share Price?
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Anyone researching Colour Life Services Group Co., Limited (HKG:1778) might want to consider the historical volatility of the share price. Volatility is considered to be a measure of risk in modern finance theory. Investors may think of volatility as falling into two main categories. 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 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 mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one.
Check out our latest analysis for Colour Life Services Group
With a beta of 0.94, (which is quite close to 1) the share price of Colour Life Services Group has historically been about as voltile as the broader 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. 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 Colour Life Services Group's revenue and earnings in the image below.
With a market capitalisation of HK$6.9b, Colour Life Services Group is a small cap stock. However, it is big enough to catch the attention of professional investors. Small companies often have a high beta value because the stock price can move on relatively low capital flows. So it's interesting to note that this stock historically has a beta value quite close to one.
Colour Life Services Group has a beta value quite close to that of the overall market. That doesn't tell us much on its own, so it is probably worth considering whether the company is growing, if you're looking for stocks that will go up more than the overall market. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Colour Life Services 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 1778’s future growth? Take a look at ourfree research report of analyst consensusfor 1778’s outlook.
2. Past Track Record: Has 1778 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 1778's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how 1778 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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Global Association of Economics Education Launches ‘GAEE’s Silk Road Plan’
The global expansion plan of the Global Association of Economics Education, GAEE's Silk Road Plan, is launched today with the ambitious goal of expanding its network to 18 countries across the globe.
BOSTON, MA / ACCESSWIRE / July 2, 2019 /TheGlobal Association of Economics Education(GAEE) and founder Le Dong Hai "DoHa" Nguyen is pleased to announce the global expansion plan of the organization, GAEE's Silk Road Plan, that seeks to connect five thousand junior economists, financiers and entrepreneurs across four continents by 2021 through a network of its affiliated academic clubs, workshops, and hackathons.
Recently, the organization launched the BETA test of its GAEE's Home App to selected users among the current 1500+ students in its network. The App featured video lessons meticulously crafted by its dedicated Education Team as well as interactive minigames, debates guidelines and assessments of the learner's comprehensiveness. It has received positive feedback from most of its BETA testers, and the final version of the app is expected to launch on the App Store and Google Play early next year.
Since its establishment in 2017,GAEEhas received valuable financial and logistical assistance as well as partnerships from top-notch corporations and organizations, including Microsoft, IBM, Google, AIESEC, Facebook and the International Association of Economics. Within only two years, the organization has already operated across eight countries, including the US, UK, Germany, Morocco, China, Kazakhstan, Vietnam and the Philippines. With the mission of empowering youth generations with the fundamentals of economics, finance and entrepreneurship fundamentals, its ambitious "GAEE's Silk Road Plan" puts an emphasis on further extending its network and is expected to achieve by 2021 through three major phases.
In the first phase, GAEE will strengthen its base operations in the existing eight countries with the goal of having 150+ GAEE-affiliated academic clubs and 50+ GAEE Workshops and Hackathons. This will act as a foundation for the organization's second step, which involves expanding to neighboring countries of current ones. By the end of 2020, GAEE expects to have expanded to five additional countries and to boast at least three thousand members.
With the ultimate touch of the third phase in 2021, GAEE will grow into a global nonprofit featuring 18 countries and five thousand students in its network. Along with other existing organization in this sector of the nonprofit industry, such as the Council on Economics Education, Foundation for Economics Education, Rethinking Economics, GAEE is expected to make powerful contributions to the reform of economics education on a global scale.
Further information is available athttps://gaee.org
Le Dong Hai "DoHa" Nguyen, Founder & Executive Director of the Global Association of Economics Education and a member of the UK's Royal Economic Society, believes in the importance of economics education and reinforces the vitality of GAEE's Silk Road Plan, "It will make a lasting impact on the youth generations, who decides the health and efficiency of our future economy" he stated. "We expect to have our GAEE-affiliated clubs and events as educational hubs that make positive impacts on the regional economies. Our youth generations will be empowered with the fundamentals of economics, and as a result, make more rational and efficient choices."
The Global Association of Economics Education (GAEE) has been a major force in the reform of economics education on a global scale. Founded in 2017, GAEE has been recognized as a 501(c)(3) nonprofit organization by the US Internal Revenue Service and successfully established its massive network of economics, financial and entrepreneurial learners via its GAEE-affiliated academic clubs and events. It boasts an innovative approach in teaching basic economic principles, financial literacies, and entrepreneurship skills by transforming traditional academic curricula into interactive and dynamic learning platforms.
Facebook:https://www.facebook.com/GAEE.orgLinkedIn:https://linkedin.com/company/gaeeorgInstagram:https://instagram.com/gaeeorgTwitter:https://twitter.com/gaeeorg
Contact Info:Name: Le Dong Hai "DoHa" NguyenEmail:Send EmailOrganization: Global Association of Economics EducationAddress: Emerson House, 2001 Washington Street, Greater Boston Area, MA 02184, United StatesPhone: +1 (339) 200-9537Website:https://gaee.org
Video URL:https://www.youtube.com/watch?v=8JbY6AruAqg
SOURCE:Global Association of Economics Education
View source version on accesswire.com:https://www.accesswire.com/550719/Global-Association-of-Economics-Education-Launches-GAEEs-Silk-Road-Plan
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US-China Truce Talks Begin: ETFs to Shine
The trade tussle between the world’s strongest economies has finally come to a point that investors were hoping for. The positive outcome of the Group of 20 summit in Japan between Presidents Donald Trump and Xi Jinping has been largely cheered by investors.
Buoyed by the positive talks, Asian markets were observed to be trading higher with Japan’s NIKKEI 225 Index rising 2.13% and Shanghai Composite Index climbing 2.2%. Indices in Taiwan, Singapore, Indonesia and Australia also moved up.
Studying the current scenario, Stephen Innes, managing partner at Vanguard Markets, said “after spending the better part of two months in trade war purgatory and with G-20 done and dusted, risk markets have responded to Saturday’s events in a reveller tone. Indeed, investors heaved a massive, but exhausted, sigh of relief.”
What’s on the Peace Agreement?
Trump and Jinping have agreed to resume trade talks and head for a truce. In this regard, Trump is set to postpone the imposition of tariffs on the remaining $300 billion of Chinese imports which cover almost all exports from China to the United States. However, the recently revised higher tariffs will remain intact. Moreover, Trump has agreed to allow U.S. companies to resume sales to China’s most prominent telecommunications equipment maker — Huawei.
Meanwhile, Trump has mentioned that China is expected to buy good quantities of food and agricultural products from the United States to settle the bilateral trade imbalance.
Will the Truce Talk be Successful?
If statistics are to be believed, 11 rounds of talks between the presidents have failed so far. The failure was usually followed by a revision of existing or imposition of new tariffs. In this regard, Trump mentioned in his statement that the tariffs are being postponed for the “time being” and any failure in resolution might lead to imposition of fresh tariffs.
In this regard, Patrick Wacker, a fund manager for emerging-markets fixed income at UOB Asset Management in Singapore pointed out that the agreement did not address any major issue behind the trade dispute. He added, “we are likely to see a similar pattern following the G20 in Buenos Aires: a truce followed by further escalation.”
However, the economies have been facing high tariffs with certain important economic fundamentals like manufacturing levels, consumer sentiment and trade deficit being hurt in the past year. In such a scenario, a truce is necessary for both the economies. Some analysts are of opinion that Trump will be trying to resolve the trade issues with China by the end of this year as it might hamper his election campaign in 2020.
Moreover, China’s technological advancement pace will suffer a blow if the trade war continues because of its dependency on U.S. technology companies.
ETFs to Gain
Here we list certain ETFs which are set to gain on easing Sino-US trade tensions:
iShares PHLX Semiconductor ETFSOXX
This ETF offers exposure to 30 U.S. companies that design, manufacture and distribute semiconductors by tracking the PHLX SOX Semiconductor Sector Index. The fund has amassed $1.48 billion in its asset base and charges a fee of 47 bps a year. It has a Zacks ETF Rank of 2 (Buy) with a High risk outlook (read: Trump Bans More Chinese Tech Companies: ETFs in Focus).
VanEck Vectors Semiconductor ETFSMH
This ETF has AUM of $1.14 billion. The fund provides exposure to 25 global securities by tracking the MVIS US Listed Semiconductor 25 Index. The fund charges an expense ratio of 0.35%. It has a Zacks ETF Rank #2 with a High risk outlook (read: Will Semiconductor ETFs Survive the Huawei Ban?).
Technology Select Sector SPDR FundXLK
The Technology Select Sector SPDR Fund seeks to provide investment results which, before expenses, correspond generally to the price and yield performance of the Technology Select Sector Index. This ETF has AUM of $21.24 billion. The fund charges an expense ratio of 0.13%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Top Sectors of 1H & Their Top Stocks).
Vanguard Information Technology ETFVGT
The Vanguard Information Technology ETF seeks to track the performance of the MSCI US Investable Market Information Technology 25/50 Transition Index. This ETF has AUM of $20.41 billion. The fund charges an expense ratio of 0.10%. It has a Zacks ETF Rank #1 with a Medium risk outlook (read: Tech Stocks Log Seven-Year Best Spell: ETF Winners).
Reality Shares Nasdaq NexGen Economy China ETFBCNA
This fund seeks long-term growth by tracking the investment returns, before fees and expenses, of the Reality Shares Nasdaq Blockchain China Index. It comprises 40 holdings. The fund’s AUM is $2.2 million and expense ratio is 0.78% (read: Top and Flop ETFs So Far in Q2).
Global X MSCI China Communication Services ETFCHIC
This fund tracks the MSCI China Communication Services 10/50 Index. It comprises 27 holdings. The fund’s AUM is $22.7 million and expense ratio is 0.65%.
Vanguard FTSE Pacific ETFVPL
The Vanguard FTSE Pacific ETF tracks the performance of the FTSE Developed Asia Pacific All Cap Index. The fund charges an expense ratio of 0.09%. It has a Zacks ETF Rank #3 (Hold) with a Low risk outlook.
iShares S&P 500 Growth ETFIVW
The iShares S&P 500 Growth ETF seeks investment results that match the price and yield performance of S&P 500 Growth Index. This ETF has AUM of $23.49 billion. The fund charges an expense ratio of 0.18%. It has a Zacks ETF Rank #2 with a Medium risk outlook.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free reportVanguard Information Technology ETF (VGT): ETF Research ReportsiShares PHLX Semiconductor ETF (SOXX): ETF Research ReportsTechnology Select Sector SPDR Fund (XLK): ETF Research ReportsVanguard FTSE Pacific ETF (VPL): ETF Research ReportsVanEck Vectors Semiconductor ETF (SMH): ETF Research ReportsiShares S&P 500 Growth ETF (IVW): ETF Research ReportsReality Shares NASDAQ NexGen Economy China ETF (BCNA): ETF Research ReportsGlobal X MSCI China Communication Services ETF (CHIC): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment ResearchWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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Here's What China Overseas Property Holdings Limited's (HKG:2669) 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 show how you can use China Overseas Property Holdings Limited's (HKG:2669) P/E ratio to inform your assessment of the investment opportunity.China Overseas Property Holdings has a price to earnings ratio of 32.62, based on the last twelve months. In other words, at today's prices, investors are paying HK$32.62 for every HK$1 in prior year profit.
See our latest analysis for China Overseas Property Holdings
Theformula for price to earningsis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for China Overseas Property Holdings:
P/E of 32.62 = HK$3.99 ÷ HK$0.12 (Based on the year to December 2018.)
A higher P/E ratio means that investors are payinga higher pricefor each HK$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.
Generally speaking the rate of earnings growth has a profound impact on a company's P/E multiple. If earnings are growing quickly, then the 'E' in the equation will increase faster than it would otherwise. That means even if the current P/E is high, it will reduce over time if the share price stays flat. And as that P/E ratio drops, the company will look cheap, unless its share price increases.
Notably, China Overseas Property Holdings grew EPS by a whopping 31% in the last year. And it has bolstered its earnings per share by 36% per year over the last five years. So we'd generally expect it to have a relatively high 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 (6.6) for companies in the real estate industry is a lot lower than China Overseas Property Holdings's P/E.
That means that the market expects China Overseas Property Holdings will outperform other companies in its industry. Clearly the market expects growth, but it isn't guaranteed. So investors should delve deeper. I like to checkif company insiders have been buying or selling.
Don't forget that the P/E ratio considers market capitalization. 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.
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.
With net cash of HK$2.5b, China Overseas Property Holdings has a very strong balance sheet, which may be important for its business. Having said that, at 18% of its market capitalization the cash hoard would contribute towards a higher P/E ratio.
China Overseas Property Holdings's P/E is 32.6 which is above average (11.1) in the HK market. Its net cash position is the cherry on top of its superb EPS growth. To us, this is the sort of company that we would expect to carry an above average price tag (relative to earnings).
When the market is wrong about a stock, it gives savvy investors an opportunity. As value investor Benjamin Graham famously said, 'In the short run, the market is a voting machine but in the long run, it is a weighing machine.' So thisfreevisual report on analyst forecastscould hold the key to an excellent investment decision.
You might be able to find a better buy than China Overseas Property Holdings. 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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Exclusive: In blow to Singapore's expansion, Malaysia bans sea sand exports
By Fathin Ungku and Rozanna Latiff
SINGAPORE/KUALA LUMPUR (Reuters) - Malaysia, Singapore's biggest source for sea sand, has banned the export of the commodity, according to officials in Kuala Lumpur, a move that traders said could complicate the island-state's ambitious expansion plans on reclaimed land.
Those plans include the development of the Tuas mega port, slated to be the world's biggest container terminal. Singapore has increased its land area by a quarter since independence in 1965, mostly by using sand to reclaim coastal areas.
Malaysian Prime Minister Mohamad Mahathir, who came to power in a shock election last year, imposed a ban on all sea sand exports on October 3, two senior government sources with direct knowledge of the decision told Reuters.
The government sources, asking not to be named due to the sensitivity of the matter, said Mahathir was upset that Malaysia's land was being used to increase the size of its wealthier neighbour. He was also concerned corrupt Malaysian officials were benefiting from the secretive business.
Endie Shazlie Akbar, Mahathir's press secretary, confirmed that the government had put a stop to sand exports last year. However, he denied that it was aimed at curbing Singapore's expansion plans, saying it was a move to clamp down on illegal sand smuggling.
The ban was never made public because of the potential diplomatic fallout, the sources said. Singapore has not made any public comment on the ban.
Singapore and Malaysia were part of British-ruled Malaya and became distinct countries in 1965. They often have strained relations due to disputes over territory and shared resources, such as water.
Singapore's Ministry of National Development, which oversees sand imports, did not directly respond to questions about a ban by Malaysia but said it had multiple sources of sand and was cutting back its use of the commodity.
"Sand is imported on a commercial basis from various countries to ensure resilience in our sand supply," the ministry said in response to questions from Reuters.
"The government has also been encouraging the industry to reduce the reliance on sand."
Two traders importing sand to Singapore, who both asked not to be named, said the commodity is becoming scarcer and driving Singapore to source sand from as far as India, which would push up costs. Shipping is the biggest single cost in acquiring sand.
The traders added Singapore has been stockpiling sand in recent years which could provide a buffer against any immediate bottleneck in supplies.
EXPANDING BORDERS
The sand industry is opaque with no international price index, making it difficult to gauge the financial impact of a ban by Malaysia.
Sea sand is mostly used for land reclamation, while river sand is a core component in constructions materials like cement.
Singapore imported 59 million tonnes of sand from Malaysia in 2018, at a cost of $347 million, according to United Nations Comtrade data, which is based on information provided by individual countries' customs offices.
That accounted for 97% of Singapore's total sand imports in the year by volume, and 95% of Malaysia's global sand sales.
The data does not distinguish between types of sand.
Mahathir, who put in place a similar sea sand ban when he was prime minister in the 1990s, has also tightened regulations on river and estuary sand exports, the government sources added.
When Indonesia banned exports to Singapore in 2007, citing environmental concerns, it caused a "sand crisis" in the city-state that saw building activity almost come to a halt. Singapore has since bolstered its stockpiles.
Unsustainable sand dredging disrupts sediment flows and fishing grounds, destroying livelihoods and polluting water sources in some of the poorest communities in Asia.
But Singapore criticised Indonesia for allegedly using the ban as leverage in negotiations over an extradition treaty and border delineation.
SINGAPORE NEEDS SAND
Singapore has already reclaimed its continental shelf, which means the depth of sea that is needed to be filled with sand for reclamation has significantly increased, said C.M. Wang, an engineering professor who has advised on Singapore projects.
Singapore now needs more sand or new methods of reclamation, like using polders and "Very Large Floating Structures".
Also, the pace of Singapore's expansion is accelerating.
In 2018, Singapore grew 2.7 square kilometres, the biggest annual expansion in a decade, official data shows.
One of the reclamation projects is the Tuas "mega port", which will open in phases until 2040.
The first of four construction phases at Tuas, due for completion in 2021 at a cost of around $1.8 billion, will use 88 million cubic metres of materials to reclaim an area equivalent to 383 soccer fields, authorities have said.
Singapore has said the Tuas port project, including the reclamation, is progressing on schedule.
"Besides sand, the MPA uses materials from a variety of sources to reclaim the land. These include dredged materials from navigational channels and fairways," said a spokeswoman for the Maritime and Port Authority of Singapore (MPA).
($1 = 1.36 Singapore dollars)
(Reporting by Fathin Ungku in Singapore and Rozanna Latiff in Kuala Lumpur; additional reporting by John Geddie; Editing by Joe Brock and Raju Gopalakrishnan)
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Can Unilever N.V.'s (AMS:UNA) ROE Continue To Surpass The Industry 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. By way of learning-by-doing, we'll look at ROE to gain a better understanding of Unilever N.V. (AMS:UNA).
Our data showsUnilever has a return on equity of 80%for the last year. That means that for every €1 worth of shareholders' equity, it generated €0.80 in profit.
Check out our latest analysis for Unilever
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Unilever:
80% = €9.4b ÷ €12b (Based on the trailing twelve months to December 2018.)
Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. It is all the money paid into the company from shareholders, plus any earnings retained. You can calculate shareholders' equity by subtracting the company's total liabilities from its total assets.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the profit over the last twelve months. 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. Clearly, then, one can use ROE to compare different companies.
By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. As is clear from the image below, Unilever has a better ROE than the average (13%) in the Personal Products industry.
That is a good sign. I usually take a closer look when a company has a better ROE than industry peers. One data point to check is ifinsiders have bought shares recently.
Most companies need money -- from somewhere -- to grow their profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the use of debt will improve the returns, but will not change the equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
Unilever clearly uses a significant amount of debt to boost returns, as it has a debt to equity ratio of 2.02. There's no doubt its ROE is impressive, but the company appears to use its debt to boost that metric. Investors should think carefully about how a company might perform if it was unable to borrow so easily, because credit markets do change over time.
Return on equity is a useful indicator of the ability of a business to generate profits and return them to shareholders. A company that can achieve a high return on equity without debt could be considered a high quality business. All else being equal, a higher ROE is better.
But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So you might want to check this FREEvisualization of analyst forecasts for the company.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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The Ypsomed Holding (VTX:YPSN) Share Price Is Up 62% And Shareholders Are Holding On
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Stock pickers are generally looking for stocks that will outperform the broader market. And in our experience, buying the right stocks can give your wealth a significant boost. For example, long termYpsomed Holding AG(VTX:YPSN) shareholders have enjoyed a 62% share price rise over the last half decade, well in excess of the market return of around 15% (not including dividends).
View our latest analysis for Ypsomed Holding
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During five years of share price growth, Ypsomed Holding achieved compound earnings per share (EPS) growth of 35% per year. The EPS growth is more impressive than the yearly share price gain of 10% over the same period. Therefore, it seems the market has become relatively pessimistic about the company.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Ypsomed Holding has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Ypsomed Holding willgrow revenue in the future.
When looking at investment returns, it is important to consider the difference betweentotal shareholder return(TSR) andshare price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Ypsomed Holding's TSR for the last 5 years was 67%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted thetotalshareholder return.
Ypsomed Holding shareholders are down 3.3% for the year (even including dividends), but the market itself is up 15%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 11% 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 forming an opinion on Ypsomed Holding you might want to consider these3 valuation metrics.
But note:Ypsomed Holding 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 CH 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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Europe Thinks Like China in Building Its Own Battery Industry
The European Union is starting to act like China when it comes to building the batteries that will drive the next generation of cars and trucks.
In the past few months, government officials led by European Commission Vice President Maros Sefcovic have joined with manufacturers, development banks and commercial lenders on measures that will channel more than 100 billion euros ($113 billion) into a supply chain for the lithium-ion packs that will power electric cars.
Germany and France are prodding for action out of concern that China is racing ahead in new technologies sweeping the auto industry. With 13.8 million jobs representing 6.1% of employment linked to traditional auto manufacturing in the EU, authorities want to ensure that manufacturers can pivot toward supplying electric cars and batteries.
“We are walking the talk,” Sefcovic said in remarks to Bloomberg. “We have overcome an initial resignation that this battle would be a lost one for Europe.”
A number of trends are catalyzing the program, starting with the determination by EU nations to rein in greenhouse gases and fight climate change. They’re increasingly focused on reducing pollution from diesel engines and alarmed at the head start Chinese companies have in greener technologies. French President Emmanuel Macron in February said he “cannot be happy with a situation where 100% of the batteries of my electric vehicles are produced in Asia.”
Drive Trains Go Electric
So far, the EU’s program is starting to work and putting Europe on track to wrest market share away from China. By 2025, European companies that currently lack a single large battery maker will rival the U.S. in terms of capacity, according to forecasts from BloombergNEF. Measures that will spur investment include:
France and Germany are working on measures to channel billions of euros into the battery industry. Sefcovic has said the EC may be able to embrace the state-aid proposal as a special project by the end of October. The two nations are seeking to draw in additional support from Spain, Sweden and Poland.The European Investment Bank gave preliminary approval in May to a 350 million-euro loan supporting NorthVolt AB’s bid to build a battery gigafactory in Sweden after the company completed a fund raising. The EIB along with the European Bank for Reconstruction & Development are working on a “raw materials investment facility” that will help to build a supply chain for rare Earth metals needed for batteries, according to Sefcovic who says he hopes the program will be launched by the end of the year. The EU in May started a 100 million-euro Breakthrough Energy Ventures fund with Microsoft Corp. founder Bill Gates and other investors to advance the energy transition, which is likely to include batteries. The EC has gathered at least 260 industrial companies including Peugeot SA, Total SA and Siemens AG in an alliance aimed at building capacity to make the energy storage devices in Europe.
“A year or two ago, everyone was under the impression that it was already too late for Europe,” said James Frith, an energy storage analyst at BloombergNEF in London. “But they’ve made a commitment, and Europe is in a strong position now.”
By 2025, Europe may control 11% of global battery cell manufacturing capacity, up from 4% now, according to Frith. That will pare back China’s market share and rival the U.S. command of the industry. The EC estimates the battery market may be worth 250 billion euros a year by then. It estimates at least 100 billion euros already has been committed to battery factories or their suppliers in Europe.
The goal is to build enterprises in Europe that could supply the region’s automakers without requiring imports from the major battery manufacturing centers in Asia. Currently, Contemporary Amperex Technology Co., or CATL, and BYD Co. dominate production in China. Elon Musk’s Tesla Inc. is also building battery gigafactories in the U.S.
So far, Europe has no established battery supply chain, though it has drawn investment in local factories from Korean firms including LG Chem Ltd. and Samsung SDI Co. as well as CATL.
The new ambition of the commission is to stimulate companies big enough to supply the likes of BMW AG and Volkswagen AG, which plan a massive increase in electric car production. Across the industry, the outlook is for a rising portion of cars to run on batteries in the coming years.
No single company will get the lion’s share of the investment or aid. Instead, dozens will benefit in addition to Peugeot and Total, which are building a cell plant in Kaiserslautern, Germany. Funds will also trickle into suppliers of parts or raw materials including Siemens, Umicore SA, Solvay SA and Manz AG.
Scarred by losing control of the solar industry in the last decade, Germany is leading the push. The nation was the biggest producer of solar cells in the early 2000s before Chinese companies backed by government loans took the lead.
When it comes to batteries, Economy and Energy Minister Peter Altmaier is focused on the 800,000 jobs in Germany tied directly to car manufacturing. Batteries account for about a third of the value of an electric car, and without facilities to make those in Europe, more jobs will go to Asia, Altmaier has said.
“There’s going to be huge demand in Europe for battery cells,” Altmaier said on ARD Television in June. “We must have the ambition to build the best battery cells in the world in Europe and Germany.”
Sefcovic envisions 10 or 20 “gigafactories” making battery cells across Europe and with his support the European Battery Alliance is seeking to coordinate research that will be the foundation of the plan. NorthVolt intends to be one of the major battery makers, feeding BMW and other major automakers.
“If we want to be one of the major manufacturers in Europe by 2030 we need to build about 150 gigawatt-hours of capacity,’’ said NorthVolt Chief Executive Officer Peter Carlsson. “The customer demand is so strong that we are accelerating our plans. We have taken a huge step on the way to create a new Swedish industry that will have a big impact in cutting our dependence of fossil fuels.’’
To contact the reporters on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net;Jesper Starn in Stockholm at jstarn@bloomberg.net
To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Brian Parkin
For more articles like this, please visit us atbloomberg.com
©2019 Bloomberg L.P.
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Bureau Veritas SA (EPA:BVI) Delivered A Better ROE Than Its Industry
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One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. We'll use ROE to examine Bureau Veritas SA (EPA:BVI), by way of a worked example.
Bureau Veritas has a ROE of 35%, based on the last twelve months. Another way to think of that is that for every €1 worth of equity in the company, it was able to earn €0.35.
Check out our latest analysis for Bureau Veritas
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Bureau Veritas:
35% = €333m ÷ €1.0b (Based on the trailing twelve months to December 2018.)
Most readers would understand what net profit is, but it’s worth explaining the concept of shareholders’ equity. It is the capital paid in by shareholders, plus any retained earnings. You can calculate shareholders' equity by subtracting the company's total liabilities from its total assets.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the amount earned after tax over the last twelve months. The higher the ROE, the more profit the company is making. So, all else equal,investors should like a high ROE. That means ROE can be used to compare two businesses.
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. 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, Bureau Veritas has a better ROE than the average (16%) in the Professional Services industry.
That is a good sign. I usually take a closer look when a company has a better ROE than industry peers. One data point to check is ifinsiders have bought shares recently.
Virtually all companies need money to invest in the business, to grow profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
It seems that Bureau Veritas uses a lot of debt to fund the business, since it has a high debt to equity ratio of 3.13. Its ROE is clearly quite good, but it would probably be significantly lower without all the debt.
Return on equity is useful for comparing the quality of different businesses. A company that can achieve a high return on equity without debt could be considered a high quality business. All else being equal, a higher ROE is better.
But when a business is high quality, the market often bids it up to a price that reflects this. It is important to consider other factors, such as future profit growth -- and how much investment is required going forward. So you might want to check this FREEvisualization of analyst forecasts for the company.
Of courseBureau Veritas may not be the best stock to buy. So you may wish to see thisfreecollection of other companies that have high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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GIC, Temasek set for muted returns on impact of trade war, slower growth
By Anshuman Daga and Joe Brock
SINGAPORE (Reuters) - Singapore sovereign wealth fund GIC Pte Ltd, among the world's biggest investors, said it is now more cautious about markets compared to last year and is bracing for low returns due to high valuations and slowing economic growth.
Smaller investor Temasek Holdings is expected to report muted returns and issue a cautious outlook when it unveils its annual performance scorecard next week, analysts said.
While GIC is worried about heightened political and policy uncertainty, including the Sino-U.S. trade war, it is positioning itself to cushion the impact by investing in countries such as Vietnam which are benefiting from a shift in supply chains.
"We are more concerned, even more concerned compared to last year because the developments over the last 12 months have been more negative than even what we were thinking about," CEO Lim Chow Kiat told Reuters in an interview as GIC announced its annual performance.
GIC is ranked the world's eighth-biggest sovereign investor, managing $390 billion in assets, according to the Sovereign Wealth Fund Institute.
It manages most of the government's financial assets, invests in a wide range of assets and has a long-term goal of beating global inflation.
When asked for a comment on analysts' forecasts of muted returns and cautious outlook for it, Temasek concurred.
"While low inflation and low interest rates are great for borrowers, it's not wonderful for investors looking to squeeze returns," said Song Seng Wun, economist at CIMB Private Banking.
Underscoring its cautious stance, GIC's allocation to bonds and cash rose to a record 39% in the year that ended in March from 37% in the previous year and 31% five years ago.
Washington and Beijing have slapped tariffs on billions of dollars of each other's imports, stoking worries that the nearly year-long trade war would escalate. Those tariffs remain in place while negotiations resume.
"There are developments or events that could cause investment losses or lower returns," said GIC's Lim.
GIC's portfolio returned 4.9% per annum in nominal U.S. dollar terms over a five-year period that ended in March 2019, versus 6.6% in the period that ended in March 2018.
The firm's reference portfolio of 65% global equities and 35% bonds returned an annualised 5% in the five years that ended in March 2019. GIC reported an annualised rolling 20-year real return - its main performance gauge - of 3.4% for the latest year, the same as reported in the previous year.
Financial markets have rallied this year, with the S&P 500 and China's biggest markets surging by nearly 20% in the first half, replacing last year's big drops in European, Asian and U.S. equity markets and reviving hopes the decade-long global bull-run may not have ended after all.
But Lim said the valuation expansion and increase in uncertainty had made GIC more cautious.
Temasek, whose portfolio includes stakes in Singapore companies and Chinese banks, cautioned last year it was looking to temper its pace of investments after reporting a 12% rise in its portfolio value to a record S$308 billion ($227.2 billion) in the year that ended in March 2018.
VIETNAM, EMERGING MARKETS
Jeffrey Jaensubhakij, GIC's chief investment officer, said GIC still liked emerging markets such as Vietnam, where it has exposure to the home building and banking sector.
He said Vietnam was benefiting from an acceleration in Chinese companies looking to relocate their production facilities overseas to escape U.S. tariffs, while U.S. multinationals in China were also seeking to relocate elsewhere.
The share of developed market equities in its portfolio fell to 19% last year from 23% a year ago.
This week, GIC and Canada's Brookfield Asset Management Inc agreed to buy U.S. freight railroad owner Genesee & Wyoming Inc for about $6.4 billion.
($1 = 1.3558 Singapore dollars)
(Reporting by Anshuman Daga and Joe Brock; Editing by Muralikumar Anantharaman)
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With A -12% Earnings Drop, Is Bulten AB (publ)'s (STO:BULTEN) A Concern?
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Assessing Bulten AB (publ)'s (STO:BULTEN) performance as a company requires looking at more than just a years' earnings data. Below, I will run you through a simple sense check to build perspective on how Bulten is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its auto components industry peers.
See our latest analysis for Bulten
BULTEN's trailing twelve-month earnings (from 31 March 2019) of kr140m has declined by -12% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 11%, indicating the rate at which BULTEN is growing has slowed down. Why is this? Well, let’s take a look at what’s going on with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Bulten has fallen short of achieving a 20% return on equity (ROE), recording 8.8% instead. However, its return on assets (ROA) of 5.4% exceeds the SE Auto Components industry of 5.1%, indicating Bulten has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Bulten’s debt level, has declined over the past 3 years from 14% to 9.2%.
Bulten's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. You should continue to research Bulten to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for BULTEN’s future growth? Take a look at ourfree research report of analyst consensusfor BULTEN’s outlook.
2. Financial Health: Are BULTEN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out ourfinancial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore ourfree list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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World Cup 2019: Christen Press stars in place of Megan Rapinoe
LYON, France — With red-hot Megan Rapinoe sidelined by a sore hamstring, reserve forward Christen Press was a surprise starter in the United States’ epic World Cup semifinal win over England on Tuesday and made it count, scoring on a pinpoint header less than 10 minutes into the eventual 2-1 victory. The goal helped put the Americans into Sunday’s finale here, giving the U.S. a chance to repeat as champions. That’s not the only reason the strike was special for Press, the normally bubbly 30-year-old who choked back tears as she spoke to reporters after the match. “I was thinking of my mom,” said Press, whose mother, Stacy, passed away at age 58 earlier this year. “I think my whole career I played for my mom.” Overcome with emotion, Press apologized and excused herself. As if she had anything to be sorry for. On a team filled with what coach Jill Ellis likes to call “elite people,” Press still stands out. She’s one of the finest strikers on the planet, sure, but the Americans’ otherworldly depth has rendered her a cheerleader for most of this tournament. Tuesday marked just her second start in six games, and first in the knockout stage. For some all-world athletes, that would be too much to take. Press doesn’t see it that way. “I came into this World Cup with the understanding anything can happen,” the Los Angeles native said on the eve of the match. “I’m ready for any role.” Christen Press, left, celebrates with United States' Lindsey Horan after scoring her side's first goal during the Women's World Cup semifinal soccer match between England and the United States. (AP) She proved it by stepping into a starring one; along with her early tally, she also set up Alex Morgan’s game-winner and never let England right back Lucy Bronze — who Lionesses coach Phil Neville called “the best player in the world” earlier in the week — get into the game. The English had been preparing for the more cunning and opportunistic Rapinoe. They didn’t have any answers for Press’ hard running, heart and soul, all-action game. “She put in a great shift defensively,” defender Becky Sauerbrunn said. “She was stretching the back line,” Morgan added. “She had a tremendous game.” Story continues To those who know her best, her contribution came as no surprise. “She’s fantastic,” Ellis said. “I’ve said this: I have multiple starters in multiple positions. I knew and trusted she was ready for the moment because that’s what I’ve seen in the past, and her training focus has been fantastic.” So has her attitude. On a team that is clearly as tight as any in the program’s glorious history, Press’ optimism is contagious. And it paid off handsomely at Stade de Lyon, where the U.S. was without its hottest player and, thanks to Press, still didn’t miss a beat. “I think as a forward, you believe that the ball is going to find you on your run every time,” Press said, before being asked why she pointed to the sky during her goal celebration, before she had to retreat to the American dressing room. “That’s what your job is, is to be optimistic. And honestly, I feel like most of the time it doesn’t. “But you have to keep believing,” she continued. “And you have to believe that it doesn’t matter if the stakes are higher, it doesn’t matter if the opponents are better. It’s just going to happen. You stay committed to what you’re doing and it’s going to happen, and it did. I think belief scored that goal.” Considering all it meant, it’s one Press won’t ever forget. More from Yahoo Sports: Nike pulls shoe after Kaepernick raises racial concerns Angels pitcher, family man Skaggs gone too soon Yankees’ Stanton posts heartfelt message after Skaggs’ death Broncos preview: Replacing Manning has been tough
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CPH Chemie + Papier Holding AG (VTX:CPHN) Has A ROE Of 10%
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One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. We'll use ROE to examine CPH Chemie + Papier Holding AG (VTX:CPHN), by way of a worked example.
CPH Chemie + Papier Holding has a ROE of 10%, based on the last twelve months. Another way to think of that is that for every CHF1 worth of equity in the company, it was able to earn CHF0.10.
Check out our latest analysis for CPH Chemie + Papier Holding
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for CPH Chemie + Papier Holding:
10% = CHF42m ÷ CHF407m (Based on the trailing twelve months to December 2018.)
It's easy to understand the 'net profit' part of that equation, but 'shareholders' equity' requires further explanation. It is all the money paid into the company from shareholders, plus any earnings retained. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
Return on Equity measures a company's profitability against the profit it has kept for the business (plus any capital injections). The 'return' is the amount earned after tax over the last twelve months. A higher profit will lead to a higher ROE. So, all else being equal,a high ROE is better than a low one. That means ROE can be used to compare two businesses.
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. If you look at the image below, you can see CPH Chemie + Papier Holding has a similar ROE to the average in the Forestry industry classification (10%).
That isn't amazing, but it is respectable. ROE can give us a view about company quality, but many investors also look to other factors, such as whether there are insiders buying shares. If you like to buy stocks alongside management, then you might just love thisfreelist of companies. (Hint: insiders have been buying them).
Most companies need money -- from somewhere -- 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 used for growth will improve returns, but won't affect the total equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.
While CPH Chemie + Papier Holding does have some debt, with debt to equity of just 0.60, we wouldn't say debt is excessive. Although the ROE isn't overly impressive, the debt load is modest, suggesting the business has potential. Careful use of debt to boost returns is often very good for shareholders. However, it could reduce the company's ability to take advantage of future opportunities.
Return on equity is useful for comparing the quality of different businesses. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE.
Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. So you might want to take a peek at thisdata-rich interactive graph of forecasts for the company.
Of course,you might find a fantastic investment by looking elsewhere.So take a peek at thisfreelist of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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A Closer Look At Self Storage Group ASA's (OB:SSG) Impressive ROE
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Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). We'll use ROE to examine Self Storage Group ASA (OB:SSG), by way of a worked example.
Over the last twelve monthsSelf Storage Group has recorded a ROE of 13%. That means that for every NOK1 worth of shareholders' equity, it generated NOK0.13 in profit.
View our latest analysis for Self Storage Group
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Self Storage Group:
13% = øre81m ÷ øre635m (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.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the profit over the last twelve months. 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.
By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. Pleasingly, Self Storage Group has a superior ROE than the average (9.8%) company in the Commercial Services industry.
That's clearly a positive. I usually take a closer look when a company has a better ROE than industry peers. For exampleyou might checkif insiders are buying shares.
Companies usually need to invest money to grow their profits. That cash can come from issuing shares, retained earnings, or debt. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the use of debt will improve the returns, but will not change the equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
Self Storage Group has a debt to equity ratio of 0.91, which is far from excessive. Its very respectable ROE, combined with only modest debt, suggests the business is in good shape. Judicious use of debt to improve returns can certainly be a good thing, although it does elevate risk slightly and reduce future optionality.
Return on equity is useful for comparing the quality of different businesses. In my book the highest quality companies have high return on equity, despite low debt. If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE.
But when a business is high quality, the market often bids it up to a price that reflects this. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. So you might want to 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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Here's What Snam S.p.A.'s (BIT:SRG) P/E Ratio 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). We'll look at Snam S.p.A.'s (BIT:SRG) P/E ratio and reflect on what it tells us about the company's share price.Snam has a P/E ratio of 15.05, based on the last twelve months. That means that at current prices, buyers pay €15.05 for every €1 in trailing yearly profits.
See our latest analysis for Snam
Theformula for P/Eis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Snam:
P/E of 15.05 = €4.47 ÷ €0.30 (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 a good or a bad thing on its own, but a high P/E means that buyers have a higher opinion of the business's prospects, relative to stocks with a lower P/E.
Generally speaking the rate of earnings growth has a profound impact on a company's P/E multiple. Earnings growth means that in the future the 'E' will be higher. Therefore, even if you pay a high multiple of earnings now, that multiple will become lower in the future. A lower P/E should indicate the stock is cheap relative to others -- and that may attract buyers.
It's great to see that Snam grew EPS by 13% in the last year. And it has improved its earnings per share by 17% per year over the last three years. So one might expect an above average P/E ratio.
We can get an indication of market expectations by looking at the P/E ratio. You can see in the image below that the average P/E (16) for companies in the gas utilities industry is roughly the same as Snam's P/E.
Its P/E ratio suggests that Snam shareholders think that in the future it will perform about the same as other companies in its industry classification. So if Snam actually outperforms its peers going forward, that should be a positive for the share price. I would further inform my view by checkinginsider buying and selling., among other things.
It's important to note that the P/E ratio considers the market capitalization, not the enterprise value. In other words, it does not consider any debt or cash that the company may have on the balance sheet. Hypothetically, a company could reduce its future P/E ratio by spending its cash (or taking on debt) to achieve higher earnings.
While growth expenditure doesn't always pay off, the point is that it is a good option to have; but one that the P/E ratio ignores.
Net debt totals 78% of Snam's market cap. If you want to compare its P/E ratio to other companies, you should absolutely keep in mind it has significant borrowings.
Snam's P/E is 15.1 which is about average (16) in the IT market. The significant levels of debt do detract somewhat from the strong earnings growth. The P/E suggests the market isn't confident that growth will be sustained, though.
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 thisfreevisual report on analyst forecastscould hold the key to an excellent investment decision.
You might be able to find a better buy than Snam. 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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Should You Consider China Everbright Greentech Limited (HKG:1257)?
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China Everbright Greentech Limited (HKG:1257) 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 1257, it has a a strong track record of performance as well as a buoyant future outlook going forward. Below, I've touched on some key aspects you should know on a high level. For those interested in digger a bit deeper into my commentary, read the fullreport on China Everbright Greentech here.
One reason why investors are attracted to 1257 is its notable earnings growth potential in the near future of 20%. The optimistic bottom-line growth is supported by an outstanding revenue growth of 66% over the same time period, which indicates that earnings is driven by top-line activity rather than purely unsustainable cost-reduction initiatives. In the previous year, 1257 has ramped up its bottom line by 39%, with its latest earnings level surpassing its average level over the last five years. Not only did 1257 outperformed its past performance, its growth also surpassed the Renewable Energy industry expansion, which generated a 2.6% earnings growth. This is what investors like to see!
For China Everbright Greentech, there are three important 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 1257 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 1257 is currently mispriced by the market.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of 1257? 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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Portofino Reports Positive Geophysical Survey Hombre Muerto Salar-Argentina
Vancouver, British Columbia--(Newsfile Corp. - July 3, 2019) -PORTOFINO RESOURCES INC. (TSXV: POR) (FSE: POT)("Portofino" or the "Company") is pleased to announce geophysical survey results completed on its Hombre Muerto West lithium brine project ("the Project").
Project Highlights Include:
• Conductivity anomalies, (interpreted as potential Lithium brine-bearing strata), extend from surface to a depth of 250 meters and for at least 2.5 kilometers across the Project
• Elevated near-surface lithium values
• Multiple drill targets identified
The recently completed geophysical survey comprised Vertical Electric Soundings ("VES") at a total of 26 locations (17 on the Condor claim block and 9 on the Pucara claim block). The geophysical survey was completed by Keon S.A., a geological consulting group based in La Plata, Argentina. The results were interpreted by Dr. Isidoro Shalamuk, the Company's Argentine geological consultant. The geophysical survey follows the Company's 2018 near-surface brine sampling program at the Project, which identified values up to 1,031mg/L lithium and 9,511 mg/L potassium, as well as favourable magnesium to lithium average ratio of 1.99. (News Release - July 10, 2018).
Interpretation of the new VES data indicates multiple zones of low resistivity (i.e. conductivity) underlying the Company's concessions. Given the setting, the most likely cause of the conductivity is interpreted to be (potentially lithium-bearing) brines. The conductive anomalies were found to extend from surface to a depth of approximately 250 meters and appear to extend horizontally for at least 2.5km (across the Condor concession). Based upon the previously identified near surface Li-brine results and the new VES geophysical survey results, the Company has identified multiple promising drill targets.
Project compilation figures, showing the locations of the new VES survey sites along with the previously reported near-surface brine sampling results, and a cross-section with typical VES survey profiles can be viewedhere.
The VES technique is a type of resistivity survey that is commonly used to investigate both geological and hydrogeological characteristics in the subsurface and is particularly effective with horizontal layering, which is a typical characteristic of a salar (evaporitic basin) setting. The survey comprises a simple linear array of electrodes, centered at each test site, comprising an inner pair of potential (voltage measuring) electrodes and an outer pair of current electrodes. The distance between the current electrodes is gradually increased, to allow for increased depth penetration, and the voltage electrodes measure the potential of the secondary field produced by the primary current electrodes. The resulting data is then modeled to produce a resistivity profile beneath each test site.
Environmental Impact Study
The Company is also pleased to report that it expects to complete a previously announced Environmental Impact Study ("EIS") for the Project during this month. The EIS is required by the provincial mining authorities to support drill permit applications.
Hombre Muerto West Project, Catamarca
Portofino has the right to acquire a 100% interest in 2 mineral concessions, the Pucara and Condor claim blocks that comprise 1,804 hectares located at the Salar del Hombre Muerto. Livent Corporation is currently producing lithium carbonate at its Fenix Operation within the salar approximately 15km to the southeast, and Galaxy Resources is developing its world-class, Sal de Vida project, approximately 25km to the northeast of the Project.
Qualified Person
The technical content of this news release has been reviewed and approved by Andrew J. Turner, B.Sc., P.Geol. of APEX Geoscience Ltd., who is the Company's Geological Consultant and is a Qualified Person as defined by National Instrument 43-101, Standards of Disclosure for Mineral Projects.
About Portofino Resources Inc.
Portofino is a Vancouver-based Canadian company focused on acquiring, exploring and developing mineral resource projects in the Americas. The Company maintains an interest in several prospective lithium salar properties located within the world-renowned "Lithium Triangle" in Catamarca, Argentina.
On Behalf of the Board,
"David G. Tafel"Chief Executive Officer
For Further Information Contact:David TafelCEO, Director604-683-1991
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release may contain forward looking statements concerning future operations of Portofino Resources Inc. (the "Company"). All forward- looking statements concerning the Company's future plans and operations, including management's assessment of the Company's project expectations or beliefs may be subject to certain assumptions, risks and uncertainties beyond the Company's control. Investors are cautioned that any such statements are not guarantees of future performance and that actual performance and exploration and financial results may differ materially from any estimates or projections.
To view the source version of this press release, please visithttps://www.newsfilecorp.com/release/46049
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Silver One Announces Private Placement Financing
Vancouver, British Columbia--(Newsfile Corp. - July 3, 2019) -Silver One Resources Inc. (TSXV: SVE) (OTCQB: SLVRF) (FSE: BRK1)("Silver One") is pleased to announce that it will conduct a non-brokered private placement of up 20,000,000 units ("Units") at a price of $0.125 per Unit for gross proceeds of up to $2,500,000 (the "Offering").
Each Unit will be comprised of one common share and one-half of one common share purchase warrant ("Warrant"), with each whole Warrant entitling the holder to purchase one additional common share at $0.20 per share for a period of three (3) years from the date of issue.
All securities issued in connection with the Offering will be subject to a four‐month statutory hold period. A finder's fee may be payable on the private placement.
Proceeds of the financing will be used for exploration activities and ongoing metallurgical studies on the historical mine at the Candelaria Silver Project, additional exploration activities to further define the high-grade silver-gold-copper vein systems at the Cherokee Project, and for working capital purposes.
Completion of the private placement remains subject to the approval of the TSX Venture Exchange.
About Silver One
Silver One is focused on the exploration and development of quality silver projects. The Company holds an option to acquire a 100%-interest in its flagship project, the past-producing Candelaria Mine located in Nevada. The Company is currently conducting metallurgical tests to determine the best methods for and potential recoveries of silver from the historic leach pads. Additional opportunities lie in previously identified high-grade silver intercepts down-dip and potentially increasing the substantive silver mineralization along-strike from the two past-producing open pits.
The Company has staked 636 lode claims and entered into a Lease/Purchase Agreement to acquire five patented claims on its Cherokee project located in Lincoln County, Nevada, host to multiple silver-copper-gold vein systems, traced to date for over 11 km along-strike.
In addition, the Company also holds a 100% interest in three significant silver assets located in Mexico - Peñasco Quemado, Sonora; La Frazada, Nayarit; and Pluton, Durango, acquired from First Mining Gold, one of the Company's largest shareholders.
For more information, please contact:
Silver One Resources Inc.Gary LindseyPhone: (720) 273-6224Email:gary@strata-star.com
Forward-Looking Statements
Information set forth in this news release contains forward-looking statements that are based on assumptions as of the date of this news release. These statements reflect management's current estimates, beliefs, intentions and expectations. They are not guarantees of future performance. Silver One cautions that all forward looking statements are inherently uncertain and that actual performance may be affected by a number of material factors, many of which are beyond Silver One's control. Such factors include, among other things: risks and uncertainties relating to Silver One's limited operating history, ability to obtain sufficient financing to carry out its exploration and development objectives on its mineral properties, obtaining the necessary permits to carry out its activities and the need to comply with environmental and governmental regulations. Accordingly, actual and future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward-looking information. Except as required under applicable securities legislation, Silver One undertakes no obligation to publicly update or revise forward-looking information.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITYFOR THE ADEQUACY OR ACCURACYOF THIS RELEASE.
To view the source version of this press release, please visithttps://www.newsfilecorp.com/release/46047
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eToro Adds First Ethereum Tokens to Its Wallet – 120 of Them
The eToro cryptocurrency wallet is adding support for 120 ERC-20 standard tokens.
First to be included in the wallet from Tuesday are Maker (MKR), Basic Attention Token (BAT), OmiseGO (OMG), with the others to follow in the “near future,” according to a press release emailed to CoinDesk. ERC-20 is a technical standard that sets rules for tokens launched on ethereum or related blockchains.
Doron Rosenblum, managing director of eToroX, said:
Related:tZero’s New Wallet Lets Users Trade Bitcoin and Ethereum
Within the US, the wallet is managed by eToro US LLC. eToroX alsolauncheda cryptocurrency exchange and eight eToro-branded stablecoins back in April.
eToro CEO and co-founder, Yoni Assia, said at the time:
“Just as eToro has opened up traditional markets for investors, we want to do the same in the tokenized world. […] Blockchain will eventually ‘eat’ traditional financial services through tokenization.”
Related:Opera’s Browser With Built-In Crypto Wallet Launches for iPhones
Parent firm eToro itselflauncheda cryptocurrency buying and selling platform and wallet service in the U.S. in February, having first dived into the crypto space with the launch of bitcoin trading on its platform back in 2014.
eToro image via Shutterstock
• Breez Reveals Lightning-Powered Bitcoin Payments App for iPhone
• BRD Partners With Wyre to Build Bank Transfer Wallet Feature
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These Fundamentals Make Amper, S.A. (BME:AMP) 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 Amper, S.A. (BME:AMP), it is a financially-healthy company with an impressive history and an optimistic 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, take a look at thereport on Amper here.
AMP is expected to churn out cash in the short term, with its operating cash flow predicted to expand at a triple-digit growth rate. This underlies the notable 24% return on equity over the next few years leading up to 2022. AMP delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 33%, which is what investors like to see!
AMP'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. AMP's has produced operating cash levels of 0.38x total debt over the past year, which implies that AMP's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
For Amper, I've put together three important aspects you should further examine:
1. Valuation: What is AMP 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 AMP is currently mispriced by the market.
2. Dividend Income vs Capital Gains: Does AMP return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Ourhistorical dividend yield visualizationquickly tells you what your can expect from AMP as an investment.
3. Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of AMP? 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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Brunello Cucinelli (BIT:BC) Shareholders Have Enjoyed A 90% Share Price Gain
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By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. For example,Brunello Cucinelli S.p.A.(BIT:BC) shareholders have seen the share price rise 90% over three years, well in excess of the market return (13%, not including dividends).
View our latest analysis for Brunello Cucinelli
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Brunello Cucinelli was able to grow its EPS at 15% per year over three years, sending the share price higher. In comparison, the 24% per year gain in the share price outpaces the EPS growth. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. That's not necessarily surprising considering the three-year track record of earnings growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Thisfreeinteractive report on Brunello Cucinelli'searnings, revenue and cash flowis a great place to start, if you want to investigate the stock further.
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. As it happens, Brunello Cucinelli's TSR for the last 3 years was 95%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted thetotalshareholder return.
Investors in Brunello Cucinelli had a tough year, with a total loss of 19% (including dividends), against a market gain of about 1.2%. 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 13% 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 forming an opinion on Brunello Cucinelli you might want to consider these3 valuation metrics.
For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IT 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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Can Aurea SA (EPA:AURE) Improve Its Returns?
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One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. By way of learning-by-doing, we'll look at ROE to gain a better understanding of Aurea SA (EPA:AURE).
Our data showsAurea has a return on equity of 3.5%for the last year. That means that for every €1 worth of shareholders' equity, it generated €0.035 in profit.
Check out our latest analysis for Aurea
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Aurea:
3.5% = €2.8m ÷ €79m (Based on the trailing twelve months to December 2018.)
Most readers would understand what net profit is, but it’s worth explaining the concept of shareholders’ equity. It is all the money paid into the company from shareholders, plus any earnings retained. You can calculate shareholders' equity by subtracting the company's total liabilities from its total assets.
ROE measures a company's profitability against the profit it retains, and any outside investments. The 'return' is the yearly profit. A higher profit will lead to a higher ROE. So, all else equal,investors should like a high ROE. That means it can be interesting to compare the ROE of different companies.
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. 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, Aurea has a lower ROE than the average (9.8%) in the Commercial Services industry classification.
That's not what we like to see. We prefer it when the ROE of a company is above the industry average, but it's not the be-all and end-all if it is lower. Nonetheless, it might be wise tocheck if insiders have been selling.
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 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.
While Aurea does have some debt, with debt to equity of just 0.43, we wouldn't say debt is excessive. I'm not impressed with its ROE, but the debt levels are not too high, indicating the business has decent prospects. Conservative use of debt to boost returns is usually a good move for shareholders, though it does leave the company more exposed to interest rate rises.
Return on equity is a useful indicator of the ability of a business to generate profits and return them to shareholders. 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.
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 you might want to check this FREEvisualization of analyst forecasts for the company.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Do You Like HELMA Eigenheimbau Aktiengesellschaft (ETR:H5E) At This P/E Ratio?
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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 HELMA Eigenheimbau Aktiengesellschaft's (ETR:H5E), to help you decide if the stock is worth further research. Looking at earnings over the last twelve months,HELMA Eigenheimbau has a P/E ratio of 10.99. That means that at current prices, buyers pay €10.99 for every €1 in trailing yearly profits.
See our latest analysis for HELMA Eigenheimbau
Theformula for P/Eis:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for HELMA Eigenheimbau:
P/E of 10.99 = €39.8 ÷ €3.62 (Based on the year to December 2018.)
A higher P/E ratio means that buyers have to paya higher pricefor each €1 the company has earned over the last year. All else being equal, it's better to pay a low price -- but as Warren Buffett said, 'It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.'
Probably the most important factor in determining what P/E a company trades on is the earnings growth. That's because companies that grow earnings per share quickly will rapidly increase the 'E' in the equation. That means unless the share price increases, the P/E will reduce in a few years. A lower P/E should indicate the stock is cheap relative to others -- and that may attract buyers.
It's great to see that HELMA Eigenheimbau grew EPS by 11% in the last year. And it has bolstered its earnings per share by 14% per year over the last five years. With that performance, you might expect an above average P/E ratio.
The P/E ratio indicates whether the market has higher or lower expectations of a company. We can see in the image below that the average P/E (23.4) for companies in the consumer durables industry is higher than HELMA Eigenheimbau's P/E.
HELMA Eigenheimbau'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. 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.
HELMA Eigenheimbau has net debt worth a very significant 100% of its market capitalization. This level of debt justifies a relatively low P/E, so remain cognizant of the debt, if you're comparing it to other stocks.
HELMA Eigenheimbau's P/E is 11 which is below average (20.1) in the DE market. The company may have significant debt, but EPS growth was good last year. 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 it is underestimating a company, investors can make money by buying and holding the shares until the market corrects itself. So thisfreevisual report on analyst forecastscould hold the key to an excellent investment decision.
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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What Kind Of Shareholder Owns Most Publicis Groupe S.A. (EPA:PUB) Stock?
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A look at the shareholders of Publicis Groupe S.A. (EPA:PUB) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.'
With a market capitalization of €11b, Publicis Groupe is rather large. We'd expect to see institutional investors on the register. Companies of this size are usually well known to retail investors, too. 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 PUB.
View our latest analysis for Publicis Groupe
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.
As you can see, institutional investors own 45% of Publicis Groupe. This suggests some credibility amongst professional investors. But we can't rely on that fact alone, since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Publicis Groupe, (below). Of course, keep in mind that there are other factors to consider, too.
Publicis Groupe is not owned by hedge funds. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own a reasonable proportion of Publicis Groupe S.A.. Insiders own €1.1b worth of shares in the €11b company. That's quite meaningful. It is good to see this level of investment. You cancheck here to see if those insiders have been buying recently.
The general public, with a 45% stake in the company, will not easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
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.
Ultimatelythe future is most important. You can access thisfreereport on analyst forecasts for the company.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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How Financially Strong Is Hoftex Group AG (MUN:NBH)?
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Hoftex Group AG (MUN:NBH) is a small-cap stock with a market capitalization of €75m. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Evaluating financial health as part of your investment thesis is essential, as mismanagement of capital can lead to 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 just a partial view of the stock, and I suggest youdig deeper yourself into NBH here.
Over the past year, NBH has maintained its debt levels at around €56m which accounts for long term debt. At this stable level of debt, NBH currently has €31m remaining in cash and short-term investments , ready to be used for running the business. On top of this, NBH has produced cash from operations of €18m in the last twelve months, leading to an operating cash to total debt ratio of 33%, indicating that NBH’s current level of operating cash is high enough to cover debt.
At the current liabilities level of €26m, it seems that the business has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 3.57x. The current ratio is the number you get when you divide current assets by current liabilities. However, a ratio greater than 3x may be considered by some to be quite high, however this is not necessarily a negative for the company.
NBH is a relatively highly levered company with a debt-to-equity of 53%. This is somewhat unusual for small-caps companies, since lenders are often hesitant to provide attractive interest rates to less-established businesses. We can check to see whether NBH 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 NBH's, case, the ratio of 9.59x suggests that interest is appropriately covered, which means that lenders may be inclined to lend more money to the company, as it is seen as safe in terms of payback.
Although NBH’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. This is only a rough assessment of financial health, and I'm sure NBH has company-specific issues impacting its capital structure decisions. I recommend you continue to research Hoftex 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 NBH’s future growth? Take a look at ourfree research report of analyst consensusfor NBH’s outlook.
2. Valuation: What is NBH 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 NBH 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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Can Kulmbacher Brauerei Aktien-Gesellschaft (MUN:KUL) Maintain Its Strong Returns?
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One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. To keep the lesson grounded in practicality, we'll use ROE to better understand Kulmbacher Brauerei Aktien-Gesellschaft (MUN:KUL).
Our data showsKulmbacher Brauerei Aktien-Gesellschaft has a return on equity of 12%for the last year. One way to conceptualize this, is that for each €1 of shareholders' equity it has, the company made €0.12 in profit.
Check out our latest analysis for Kulmbacher Brauerei Aktien-Gesellschaft
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Kulmbacher Brauerei Aktien-Gesellschaft:
12% = €9.3m ÷ €79m (Based on the trailing twelve months to December 2018.)
Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. It is all the money paid into the company from shareholders, plus any earnings retained. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
ROE measures a company's profitability against the profit it retains, and any outside investments. The 'return' is the yearly profit. The higher the ROE, the more profit the company is making. So, as a general rule,a high ROE is a good thing. 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, Kulmbacher Brauerei Aktien-Gesellschaft has a better ROE than the average (9.5%) in the Beverage industry.
That's clearly a positive. In my book, a high ROE almost always warrants a closer look. One data point to check is ifinsiders have bought shares recently.
Companies usually need to invest money to grow their profits. That cash can come from issuing shares, retained earnings, or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the use of debt will improve the returns, but will not change the equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same.
While Kulmbacher Brauerei Aktien-Gesellschaft does have a tiny amount of debt, with debt to equity of just 0.019, we think the use of debt is very modest. The combination of modest debt and a very respectable ROE suggests this is a business worth watching. Careful use of debt to boost returns is often very good for shareholders. However, it could reduce the company's ability to take advantage of future opportunities.
Return on equity is useful for comparing the quality of different businesses. A company that can achieve a high return on equity without debt could be considered a high quality business. All else being equal, a higher ROE is better.
But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. You can see how the company has grow in the past by looking at this FREEdetailed graphof past earnings, revenue and cash flow.
Of courseKulmbacher Brauerei Aktien-Gesellschaft may not be the best stock to buy. So you may wish to see thisfreecollection of other companies that have high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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'Difficulties on the road to AI': man pours water on Baidu chief at conference
By Josh Horwitz and Yilei Sun
SHANGHAI/BEIJING (Reuters) - A man poured a bottle of water over Baidu Inc Chief Executive Robin Li on Wednesday at the opening of an annual conference for the Chinese search giant.
Li was speaking of applications for artificial intelligence (AI) in a speech when the young man approached him, spilled the liquid over Li's head, and walked away.
"What's your problem?" Li shouted in English.
"There are many difficulties on the road to achieve AI, but it will not impact Baidu's determination," Li calmly said to the applause of the audience.
He then went on with the lecture.
The incident took place at the start of Baidu Create 2019, a yearly gathering where the company shows off its advances in AI.
The identity and motive of the man who poured the water were not known and he could not be reached for comment.
The company later said the someone had "poured cold water" on AI but it would press forward and never change.
Baidu and Li have long been targets of public anger over perceived problems linked to searches.
The company faced a major public backlash in 2016 when a Chinese student died after seeking a medical treatment advertised on Baidu's search pages.
This year, a journalist's lengthy criticism of the quality of Baidu's search results went viral.
Some commentators made fun of the incident on the Weibo social media platform.
"No matter how much you hate Robin Li, this is a waste of water," one Weibo user wrote.
(Reporting by Josh Horwitz and Yilei Sun; Editing by Robert Birsel)
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Is IAR Systems Group AB (publ) (STO:IAR B) Excessively Paying Its CEO?
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Stefan Skarin became the CEO of IAR Systems Group AB (publ) (STO:IAR B) in 2008. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for IAR Systems Group
Our data indicates that IAR Systems Group AB (publ) is worth kr3.7b, and total annual CEO compensation is kr5.5m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at kr3.2m. We looked at a group of companies with market capitalizations from kr1.9b to kr7.5b, and the median CEO total compensation was kr3.6m.
Thus we can conclude that Stefan Skarin receives more in total compensation than the median of a group of companies in the same market, and of similar size to IAR Systems Group AB (publ). However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at IAR Systems Group has changed from year to year.
IAR Systems Group AB (publ) has increased its earnings per share (EPS) by an average of 8.5% a year, over the last three years (using a line of best fit). Its revenue is up 14% over last year.
This revenue growth could really point to a brighter future. And the modest growth in earnings per share isn't bad, either. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. You might want to checkthis free visual report onanalyst forecastsfor future earnings.
Most shareholders would probably be pleased with IAR Systems Group AB (publ) for providing a total return of 89% 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.
We compared the total CEO remuneration paid by IAR Systems Group AB (publ), and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. So you may want tocheck if insiders are buying IAR Systems Group shares with their own money (free access).
Important note:IAR Systems Group may not be the best stock to buy. You might find somethingbetterinthis list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Compagnie d'Entreprises CFE SA (EBR:CFEB): What Does Its Beta Value Mean For Your Portfolio?
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If you're interested in Compagnie d'Entreprises CFE SA (EBR:CFEB), 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 second sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.
Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). While we should keep in mind that Warren Buffett has cautioned that 'Volatility is far from synonymous with risk', beta is still a useful factor to consider. To make good use of it you must first know that the beta of the overall market is one. A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one.
Check out our latest analysis for Compagnie d'Entreprises CFE
Zooming in on Compagnie d'Entreprises CFE, we see it has a five year beta of 0.85. This is below 1, so historically its share price has been rather independent from the market. If history is a good guide, owning the stock should help ensure that your portfolio is not overly sensitive to market volatility. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. Take a look at how Compagnie d'Entreprises CFE fares in that regard, below.
Compagnie d'Entreprises CFE is a reasonably big company, with a market capitalisation of €2.1b. Most companies this size are actively traded with decent volumes of shares changing hands each day. When large companies like this one have a low beta value, there is usually some other factor that is having an outsized impact on the share price. For example, a business with significant fixed regulated assets might earn a reasonably predictable return, regardless of broader macroeconomic factors. Alternatively, lumpy earnings might mean minimal share price correlation with the broader market.
The Compagnie d'Entreprises CFE doesn't usually show much sensitivity to the broader market. This could be for a variety of reasons. Typically, smaller companies have a low beta if their share price tends to move a lot due to company specific developments. Alternatively, an strong dividend payer might move less than the market because investors are valuing it for its income stream. In order to fully understand whether CFEB is a good investment for you, we also need to consider important company-specific fundamentals such as Compagnie d'Entreprises CFE’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 CFEB’s future growth? Take a look at ourfree research report of analyst consensusfor CFEB’s outlook.
2. Past Track Record: Has CFEB 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 CFEB's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how CFEB 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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Maja Salvador to star in new ABS-CBN drama, "The Killer Bride"
3 Jul – After the success of "Wildflower", Maja Salvador is set to return to television yet again with a new drama, "The Killer Bride". As reported on ABS-CBN News, the actress, who appeared at the press conference of the upcoming project recently, shared that she will play the role of Camilla, a woman "whose forbidden love with the scion of a rival family results in her apparent death on their wedding day". On the other hand, Janella Salvador will play the role of Emma, who claims to be possessed by Camilla's ghost. Asked how she would compare the new drama to her previous hit show, Salvador said that the new series would be "much wilder". "It will be different from other series," she added. Aside from the two Salvadors, the upcoming project will be joined by Geoff Eigenmann and Joshua Garcia – the latter who is teaming up with Janella as a love team for the first time ever. The upcoming show is directed by Dado Lumibao and is scheduled to premiere in August. (Photo Source: PBS )
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What Are Analysts Saying About Cipla Limited's (NSE:CIPLA) Growth?
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Based on Cipla Limited's (NSE:CIPLA) earnings update in March 2019, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 24% in the upcoming year compared with the past 5-year average growth rate of 0.6%. Currently with trailing-twelve-month earnings of ₹15b, we can expect this to reach ₹19b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Cipla in the longer term. Investors wanting to learn more about other aspects of the company shouldresearch its fundamentals here.
View our latest analysis for Cipla
The 29 analysts covering CIPLA view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of CIPLA's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2022, CIPLA's earnings should reach ₹25b, from current levels of ₹15b, resulting in an annual growth rate of 17%. This leads to an EPS of ₹30.97 in the final year of projections relative to the current EPS of ₹18.97. With a current profit margin of 9.3%, this movement will result in a margin of 11% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Cipla, I've compiled 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 Cipla 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 Cipla is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of Cipla? 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 Azimut Holding S.p.A. (BIT:AZM) Have A Volatile Share Price?
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If you're interested in Azimut Holding S.p.A. (BIT:AZM), 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. 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 sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.
Some stocks are more sensitive to general market forces than others. Beta is a widely used metric to measure a stock's exposure to market risk (volatility). Before we go on, it's worth noting that Warren Buffett pointed out in his 2014 letter to shareholders that 'volatility is far from synonymous with risk.' Having said that, beta can still be rather useful. The first thing to understand about beta is that the beta of the overall market is one. A stock with a beta below one is either less volatile than the market, or more volatile but not corellated with the overall market. In comparison a stock with a beta of over one tends to be move in a similar direction to the market in the long term, but with greater changes in price.
View our latest analysis for Azimut Holding
Looking at the last five years, Azimut Holding has a beta of 1.84. The fact that this is well above 1 indicates that its share price movements have shown sensitivity to overall market volatility. Based on this history, investors should be aware that Azimut Holding are likely to rise strongly in times of greed, but sell off in times of fear. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. Take a look at how Azimut Holding fares in that regard, below.
Azimut Holding is a fairly large company. It has a market capitalisation of €2.4b, which means it is probably on the radar of most investors. It takes a lot of money to influence the share price of large companies like this one. That makes it interesting to note that its share price has a history of sensitivity to market volatility. There might be some aspect of the business that means profits are leveraged to the economic cycle.
Since Azimut Holding tends to moves up when the market is going up, and down when it's going down, potential investors may wish to reflect on the overall market, when considering the stock. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Azimut Holding’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 AZM’s future growth? Take a look at ourfree research report of analyst consensusfor AZM’s outlook.
2. Past Track Record: Has AZM 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 AZM's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how AZM 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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Should You Buy Bellevue Group AG (VTX:BBN) For Its Dividend?
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Is Bellevue Group AG (VTX:BBN) 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 high yield and a long history of paying dividends is an appealing combination for Bellevue Group. We'd guess that plenty of investors have purchased it for the income. The company also bought back stock during the year, equivalent to approximately 5.5% of the company's market capitalisation at the time. When buying stocks for their dividends, you should always run through the checks below, to see if the dividend looks sustainable.
Explore this interactive chart for our latest analysis on Bellevue Group!
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. So we need to form a view on if a company's dividend is sustainable, relative to its net profit after tax. Bellevue Group paid out 74% of its profit as dividends, over the trailing twelve month period. 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.
We update our data on Bellevue Group every 24 hours, so you can always getour latest analysis of its financial health, here.
Before buying a stock for its income, we want to see if the dividends have been stable in the past, and if the company has a track record of maintaining its dividend. Bellevue Group has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of payments. During the past ten-year period, the first annual payment was CHF4.00 in 2009, compared to CHF1.10 last year. Dividend payments have fallen sharply, down 73% over that time.
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.
Examining whether the dividend is affordable and stable is important. However, it's also important to assess if earnings per share (EPS) are growing. Growing EPS can help maintain or increase the purchasing power of the dividend over the long run. Strong earnings per share (EPS) growth might encourage our interest in the company despite fluctuating dividends, which is why it's great to see Bellevue Group has grown its earnings per share at 19% per annum over the past five years. Earnings per share have been growing rapidly, but given that it is paying out more than half of its earnings as dividends, we wonder how Bellevue Group will keep funding its growth projects in the 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. First, we think Bellevue Group has an acceptable payout ratio. Next, earnings growth has been good, but unfortunately the dividend has been cut at least once in the past. While we're not hugely bearish on it, overall we think there are potentially better dividend stocks than Bellevue Group out there.
Now, if you want to look closer, it would be worth checking out ourfreeresearch on Bellevue Groupmanagement tenure, salary, and performance.
If you are a dividend investor, you might also want to look at ourcurated list of dividend stocks yielding above 3%.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Economic Data, Brexit and Carney Line Up Against the Pound
The Pound continued on its downward trajectory on Tuesday, with sentiment towards Brexit and adovish Bank of England Governor Carneyinfluencing on the day.
Just a month ago, BoE Governor Carney had warned the markets of underpricing rate hikes over the remainder of the year.
In Tuesday’s speech, Carey did not actually suggest that the BoE will be cutting rates any time soon. Carney did highlight the downside risks to the UK economy and global economies, however.
Expectations are for growth in the 2ndquarter to slow. Both global trade and uncertainty over Brexit remain negatives for UK growth near-term.
As the Conservative Party leadership race continues, the prospects of a no deal departure from the EU continues to rise. At the start of the week, news hit the wires of a number of Labour Party MPs looking to avoid voting in favor of blocking a no-deal Brexit. 12 opposition party MPs are reportedly in favor of Britain leaving the EU, with or without a deal.
Members of Parliament could end up having to vote on Theresa May’s negotiated.
That is if the Labour Party isn’t able to muster the necessary support to block a no-deal Brexit. It is also assuming that Theresa May’s successor is unable to renegotiate with the EU, MPs would likely be given one last chance to prevent a no-deal Brexit.
For those looking for Britain to leave with a deal, Jeremy Hunt would be the one to vote for, though even Hunt would lead Britain out of the EU without a deal should no solution be in sight by the 31stOctober.
Interestingly, while Opposition Party leader Corbyn will be hoping for a lack of progress to force a vote of no confidence, division in the Labour Party ranks is also evident. As the deadline approaches, a greater division could play into the hands of the next Tory Party leader.
That won’t help on the Brexit front, but would at least ease some political uncertainty. In the event of a no-deal departure, political stability would be a must…
Unless there is a material change in stance on Brexit by, either Johnson, Hunt or both, upside for the Pound will continue to be limited.
Brexit and political uncertainty coupled with particularly weak economic indicators don’t bode well for the UK’s economic outlook.
With domestic consumption having provided much-needed support, today’s service sector PMI will be of particular importance.
1stquarter growth was attributed to the 31stMarch Brexit deadline. Uncertainty over what lies ahead and softer demand will be a test.
BoE Governor Carney and members of the MPC will be wanting to stand pat on policy. The MPC has continued to state that Brexit remains the key focus near-term.
A material slowdown in the UK economy, however, could force the Bank of England’s hand early. A pre-Brexit move would certainly complicate matters…
At the time of writing, the Pound was down by just 0.01% to $1.25908.
Thisarticlewas originally posted on FX Empire
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Here's Why I Think Boustead Projects (SGX:AVM) Is An Interesting Stock
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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. And in their study titledWho Falls Prey to the Wolf of Wall Street?'Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.
In contrast to all that, I prefer to spend time on companies likeBoustead Projects(SGX:AVM), which has not only revenues, but also profits. 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 Boustead Projects
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. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years Boustead Projects grew its EPS by 11% per year. That growth rate is fairly good, assuming the company can keep it up.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. On the one hand, Boustead Projects's EBIT margins fell over the last year, but on the other hand, revenue grew. So if EBIT margins can stabilize, this top-line growth should pay off for shareholders.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
Since Boustead Projects is no giant, with a market capitalization of S$295m, so you shoulddefinitely check its cash and debtbeforegetting too excited about its prospects.
I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. As a result, I'm encouraged by the fact that insiders own Boustead Projects shares worth a considerable sum. Indeed, they hold S$60m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 20% of the company, demonstrating a degree of high-level alignment with shareholders.
One positive for Boustead Projects is that it is growing EPS. That's nice to see. If that's not enough on its own, there is also the rather notable levels of insider ownership. That combination appeals to me, for one. So yes, I do think the stock is worth keeping an eye 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 Boustead Projects is trading on a high P/E or a low P/E, relative to its industry.
You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here isa list of companies with insider buying in the last three months.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Here's What Avadh Sugar & Energy Limited's (NSE:AVADHSUGAR) ROCE Can Tell Us
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Today we are going to look at Avadh Sugar & Energy Limited (NSE:AVADHSUGAR) 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.
Firstly, we'll go over how we calculate ROCE. Next, we'll compare it to others in its industry. Last but not least, we'll look at what impact its current liabilities have on its ROCE.
ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. In general, businesses with a higher ROCE are usually better quality. 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.'
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 Avadh Sugar & Energy:
0.25 = ₹2.5b ÷ (₹26b - ₹16b) (Based on the trailing twelve months to March 2019.)
So,Avadh Sugar & Energy has an ROCE of 25%.
Check out our latest analysis for Avadh Sugar & Energy
One way to assess ROCE is to compare similar companies. In our analysis, Avadh Sugar & Energy's ROCE is meaningfully higher than the 12% average in the Food industry. We consider this a positive sign, because it suggests it uses capital more efficiently than similar companies. Independently of how Avadh Sugar & Energy compares to its industry, its ROCE in absolute terms appears decent, and the company may be worthy of closer investigation.
Avadh Sugar & Energy reported an ROCE of 25% -- better than 3 years ago, when the company didn't make a profit. That suggests the business has returned to profitability. You can see in the image below how Avadh Sugar & Energy's ROCE compares to its industry. Click to see more on past growth.
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. ROCE is, after all, simply a snap shot of a single year. If Avadh Sugar & Energy is cyclical, it could make sense to check out thisfreegraph of past earnings, revenue and cash flow.
Short term (or current) liabilities, are things like supplier invoices, overdrafts, or tax bills that need to be paid within 12 months. Due to the way ROCE is calculated, a high level of current liabilities makes a company look as though it has less capital employed, and thus can (sometimes unfairly) boost the ROCE. To check the impact of this, we calculate if a company has high current liabilities relative to its total assets.
Avadh Sugar & Energy has total liabilities of ₹16b and total assets of ₹26b. Therefore its current liabilities are equivalent to approximately 61% of its total assets. Avadh Sugar & Energy has a relatively high level of current liabilities, boosting its ROCE meaningfully.
The ROCE would not look as appealing if the company had fewer current liabilities. There might be better investments than Avadh Sugar & Energy out there,but you will have to work hard to find them. These promising businesses withrapidly growing earningsmight be right up your alley.
For those who like to findwinning investmentsthisfreelist of growing companies with recent insider purchasing, could be just the ticket.
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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Banque Cantonale Vaudoise (VTX:BCVN): What Are The Future Prospects?
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Based on Banque Cantonale Vaudoise's (VTX:BCVN) earnings update in December 2018, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 1.6% next year against the higher past 5-year average growth rate of 5.2%. With trailing-twelve-month net income at current levels of CHF350m, we should see this rise to CHF355m in 2020. Below is a brief commentary around Banque Cantonale Vaudoise'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.
See our latest analysis for Banque Cantonale Vaudoise
The view from 2 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. To understand the overall trajectory of BCVN's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 2.4% based on the most recent earnings level of CHF350m to the final forecast of CHF379m by 2022. This leads to an EPS of CHF43.75 in the final year of projections relative to the current EPS of CHF40.63. Margins are currently sitting at 36%, which is expected to expand to 37% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Banque Cantonale Vaudoise, I've put together three important aspects you should further examine:
1. Financial Health: Does it have a healthy balance sheet? Take a look at ourfree balance sheet analysis with six simple checkson key factors like leverage and risk.
2. Valuation: What is Banque Cantonale Vaudoise 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 Banque Cantonale Vaudoise is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of Banque Cantonale Vaudoise? 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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Imagine Owning Aurionpro Solutions (NSE:AURIONPRO) And Wondering If The 45% Share Price Slide Is Justified
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In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment inAurionpro Solutions Limited(NSE:AURIONPRO), since the last five years saw the share price fall 45%. And some of the more recent buyers are probably worried, too, with the stock falling 45% in the last year. Furthermore, it's down 21% in about a quarter. That's not much fun for holders.
See our latest analysis for Aurionpro Solutions
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
Looking back five years, both Aurionpro Solutions's share price and EPS declined; the latter at a rate of 6.9% per year. This reduction in EPS is less than the 11% annual reduction in the share price. This implies that the market was previously too optimistic about the stock. The low P/E ratio of 4.56 further reflects this reticence.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Aurionpro Solutions's key metrics by checking this interactive graph of Aurionpro Solutions'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. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Aurionpro Solutions the TSR over the last 5 years was -42%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
Investors in Aurionpro Solutions had a tough year, with a total loss of 45% (including dividends), against a market gain of about 3.8%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Before spending more time on Aurionpro Solutionsit might be wise to click here to see if insiders have been buying or selling shares.
If you like to buy stocks alongside management, then you might just love thisfreelist 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 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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If You Had Bought B&C Speakers (BIT:BEC) Stock Three Years Ago, You Could Pocket A 79% Gain Today
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By buying an index fund, you can roughly match the market return with ease. But if you choose individual stocks with prowess, you can make superior returns. For example, theB&C Speakers S.p.A.(BIT:BEC) share price is up 79% in the last three years, clearly besting than the market return of around 13% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 0.4%, including dividends.
See our latest analysis for B&C Speakers
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
B&C Speakers was able to grow its EPS at 25% per year over three years, sending the share price higher. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 21% average annual increase in the share price. This observation indicates that the market's attitude to the business hasn't changed all that much. Rather, the share price has approximately tracked EPS growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that B&C Speakers has improved its bottom line lately, but is it going to grow revenue? You could check out thisfreereport showing analyst revenue forecasts.
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for B&C Speakers the TSR over the last 3 years was 109%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted thetotalshareholder return.
B&C Speakers shareholders are up 0.4% for the year (even including dividends). But that return falls short of the market. On the bright side, the longer term returns (running at about 17% a year, over half a decade) look better. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. Importantly, we haven't analysed B&C Speakers's dividend history. Thisfreevisual report on its dividendsis a must-read if you're thinking of buying.
If you like to buy stocks alongside management, then you might just love thisfreelist 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 IT 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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Can Johnson Service Group PLC (LON:JSG) Maintain Its Strong Returns?
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One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. By way of learning-by-doing, we'll look at ROE to gain a better understanding of Johnson Service Group PLC (LON:JSG).
Our data showsJohnson Service Group 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.
View our latest analysis for Johnson Service Group
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Johnson Service Group:
14% = UK£27m ÷ UK£190m (Based on the trailing twelve months to December 2018.)
It's easy to understand the 'net profit' part of that equation, but 'shareholders' equity' requires further explanation. It is all the money paid into the company from shareholders, plus any earnings retained. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
ROE 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. Clearly, then, one can use ROE to compare different companies.
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. As you can see in the graphic below, Johnson Service Group has a higher ROE than the average (9.8%) in the Commercial Services industry.
That's what I like to see. In my book, a high ROE almost always warrants a closer look. One data point to check is ifinsiders have bought shares recently.
Companies usually need to invest money to grow their profits. That cash can come from issuing shares, retained earnings, 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. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
Although Johnson Service Group does use debt, its debt to equity ratio of 0.55 is still low. The combination of modest debt and a very respectable ROE suggests this is a business worth watching. Conservative use of debt to boost returns is usually a good move for shareholders, though it does leave the company more exposed to interest rate rises.
Return on equity is a useful indicator of the ability of a business to generate profits and return them to shareholders. In my book the highest quality companies have high return on equity, despite low debt. All else being equal, a higher ROE is better.
But when a business is high quality, the market often bids it up to a price that reflects this. 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.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Is Gestamp Automoción, S.A.'s (BME:GEST) 2.4% Dividend Worth Your Time?
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Could Gestamp Automoción, S.A. (BME:GEST) be an attractive dividend share to own for the long haul? Investors are often drawn to strong companies with the idea of reinvesting the dividends. Yet sometimes, investors buy a stock for its dividend and lose money because the share price falls by more than they earned in dividend payments.
Some readers mightn't know much about Gestamp Automoción's 2.4% dividend, as it has only been paying distributions for a year or so. When buying stocks for their dividends, you should always run through the checks below, to see if the dividend looks sustainable.
Explore this interactive chart for our latest analysis on Gestamp Automoción!
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 28% of Gestamp Automoción'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. Besides, if reinvestment opportunities dry up, the company has room to increase the dividend.
Another important check we do is to see if the free cash flow generated is sufficient to pay the dividend. Last year, Gestamp Automoción paid a dividend while reporting negative free cash flow. While there may be an explanation, we think this behaviour is generally not sustainable.
As Gestamp Automoción has a meaningful amount of debt, we need to check its balance sheet to see if the company might have debt risks. A quick check of its financial situation can be done with two ratios: net debt divided by EBITDA (earnings before interest, tax, depreciation and amortisation), and 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). With net debt of 3.15 times its EBITDA, investors are starting to take on a meaningful amount of risk, should the business enter a downturn.
We calculated its interest cover by measuring its earnings before interest and tax (EBIT), and dividing this by the company's net interest expense. With EBIT of 4.18 times its interest expense, Gestamp Automoción's interest cover is starting to look a bit thin.
Remember, you can always get a snapshot of Gestamp Automoción's latest financial position,by checking our visualisation of its financial health.
Before buying a stock for its income, we want to see if the dividends have been stable in the past, and if the company has a track record of maintaining its dividend. Its most recent annual dividend was €0.13 per share, effectively flat on its first payment one years ago.
It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.
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 Gestamp Automoción has grown its earnings per share at 18% per annum over the past five years. Earnings per share have been growing at a good rate, and the company is paying less than half its earnings as dividends. We generally think this is an attractive combination, as it permits further reinvestment in the business.
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. Gestamp Automoción has a low payout ratio, which we like, although it paid out virtually all of its generated cash. We were also glad to see it growing earnings, although its dividend history is not as long as we'd like. Ultimately, Gestamp Automoción 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.
Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 12 analysts we track are forecasting for Gestamp Automociónfor freewith publicanalyst estimates 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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Is Babcock International Group PLC's (LON:BAB) CEO Paid At A Competitive Rate?
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Archie Bethel has been the CEO of Babcock International Group PLC (LON:BAB) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Babcock International Group
Our data indicates that Babcock International Group PLC is worth UK£2.4b, and total annual CEO compensation is UK£2.0m. (This is based on 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 UK£780k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of UK£1.6b to UK£5.1b. The median total CEO compensation was UK£1.9m.
That means Archie Bethel receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Babcock International Group has changed from year to year.
On average over the last three years, Babcock International Group PLC has shrunk earnings per share by 8.9% each year (measured with a line of best fit). In the last year, its revenue is down -4.0%.
Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to checkthis free visual report onanalyst forecastsfor future earnings.
With a three year total loss of 44%, Babcock International Group PLC would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
Archie Bethel is paid around the same as most CEOs of similar size companies.
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Whatever your view on compensation, you might want tocheck if insiders are buying or selling Babcock International Group shares (free trial).
Important note:Babcock International Group may not be the best stock to buy. You might find somethingbetterinthis list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Does John Wood Group PLC (LON:WG.) Have A Place In Your Dividend Stock Portfolio?
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Is John Wood Group PLC (LON:WG.) a good dividend stock? How can we tell? Dividend paying companies with growing earnings can be highly rewarding in the long term. If you are hoping to live on your dividends, it's important to be more stringent with your investments than the average punter. Regular readers know we like to apply the same approach to each dividend stock, and we hope you'll find our analysis useful.
With John Wood Group yielding 6.0% and having paid a dividend for over 10 years, many investors likely find the company quite interesting. We'd guess that plenty of investors have purchased it for the income. 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
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. Although John Wood Group pays a dividend, it was loss-making during the past year. This is a middling range that strikes a nice balance between paying dividends to shareholders, and retaining enough earnings to invest in future growth. Besides, if reinvestment opportunities dry up, the company has room to increase the dividend.
The company paid out 51% of its free cash flow, which is not bad per se, but does start to limit the amount of cash John Wood Group has available to meet other needs.
As John Wood Group 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). John Wood Group has net debt of 2.99 times its EBITDA. Using debt can accelerate business growth, but also increases the risks.
Net interest cover can be calculated by dividing earnings before interest and tax (EBIT) by the company's net interest expense. Interest cover of 3.23 times its interest expense is starting to become a concern for John Wood Group, and be aware that lenders may place additional restrictions on the company as well.
Remember, you can always get a snapshot of John Wood Group's latest financial position,by checking our visualisation of its financial health.
Before buying a stock for its income, we want to see if the dividends have been stable in the past, and if the company has a track record of maintaining its dividend. John Wood Group has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of payments. During the past ten-year period, the first annual payment was US$0.10 in 2009, compared to US$0.35 last year. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time.
John Wood 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. Growing EPS can help maintain or increase the purchasing power of the dividend over the long run. Over the past five years, it looks as though John Wood Group's EPS have declined at around 66% a year. 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.
To summarise, shareholders should always check that John Wood Group's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. We're a bit uncomfortable with the company paying a dividend while being loss-making, although at least the dividend was covered by free cash flow. Earnings per share have been falling, and the company has cut its dividend at least once in the past. From a dividend perspective, this is a cause for concern. In this analysis, John Wood Group doesn't shape up too well as a dividend stock. We'd find it hard to look past the flaws, and would not be inclined to think of it as a reliable dividend-payer.
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 14analysts 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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Rory Stewart insists he can still be Prime Minister in 10 years as he makes first overseas trip
Rory Stewart on his first trip as Secretary of State for International Development visits Jordan - JULIAN SIMMONDS Rory Stewart has said he still believes he could be prime minister in ten years, as he made his first overseas trip since becoming International Development Secretary in May. Mr Stewart was in Jordan to promote solar energy in the Middle East, part of his attempt to build a legacy since crashing out of the leadership race. The MP has ruled out serving in cabinet under Boris Johnson, and will return to the back benches if Mr Johnson becomes prime minister later this month. Mr Stewart, who was briefly polling second only to Boris Johnson among Tory members, said the prospect of becoming prime minister was now "much more long term." "Whoever becomes prime minister, Boris Johnson or Jeremy Hunt, is highly likely to remain until there is another election. If they win the election they then stay on. If they lose the election then by definition you are in opposition. So you are talking ten years," he said. "But I do think there is a deep hole at the centre of British politics between Jeremy Corbyn and Nigel Farage. I think there are obviously people who are keen to have politicians admitting that they don’t know the answer to everything." “So who knows, if these are still the issues in ten years’ time.” At Zaatri Refugee camp neat the Syrian border, Mr Stewart meets an elderly refugee who tells him about her broken freezer Credit: JULIAN SIMMONDS Mr Stewart was visiting Jordan to highlight British military, humanitarian, and commercial development programs in the country. Mr Stewart warned that a failure to challenge the developing world’s dependence on oil and gas could fuel instability in the Middle East and threaten British national security. “The stability of Jordan is central to the stability of the whole region. If Jordan falls there would be very, very serious consequences for the region," he said. "But if you are looking for ideas about how to save the planet, very, very exciting things are happening here very quickly." Over the past three years, Jordan has emerged as one of the most efficient and cheapest producers of solar energy generation on the planet. Story continues A proliferation of solar power plants - essentially hillsides covered in massed ranks of blue solar panels – now account for 20 per cent of the country's energy needs. But a series of long-term contracts for fossil fuel imports signed after supplies were interrupted in 2012 mean it must continue to buy oil and gas even though the rapid expansion of solar power has reduced the need. Energy imports also account for about 80 per cent of the national current account deficit. Mr Stewart said he would like to see some of those contracts addressed. Mr Stewart meeting members of the Female Empowerment Team women soldiers Credit: JULIAN SIMMONDS That contributes to sluggish economic growth and high youth unemployment. More than 670,000 refugees have sought refuge in Jordan since the beginning of the war in Syrian in 2012. “We are at a very odd time in human history. On the one hand, in three and a half years Jordan discovers it can generate all its power from Solar. At the same time it is paying 500 million pounds a year for shale oil,” he said. “Ultimately the contracts will be decided by smart firms of lawyers in the city of London, and the Jordanian government will have to pay for that. But what we can do is talk to these companies individually and persuade them there is a case for restructuring this,” said Mr Stewart. Theresa May committed Britain to achieving net zero carbon emissions by 2050 at the G20 in Osaka last week, and pledged that overseas aid spending will be compliant with the goals of the Paris climate accord. It is a policy Mr Stewart says grew out of his own pledge to double the proportion of aid funding spent on environmental and climate projects. “That is a big policy victory for me. If I have achieved nothing else, I have achieved that,” he said. “I was lucky because the prime minister has done much more than just delegate to me - she put her own weight behind it and really used the instruments of government to make this happen In February the UK guaranteed to underwrite a $250 million loan from the World Bank to Jordan and committed another £650 million in grants for economic development. Britain also runs military training programs and is one of the largest contributors to the UNHCR's refugee camp missions in the country.
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Five reasons to hire a buying agent when purchasing a home
A good buying agent understands the industry and the market. Photo: Tolga Akmen/AFP/Getty Images Hiring a buying agent could be the shrewdest decision a property hunter could make if they’re looking to spend hundreds of thousands of pounds, if not millions. Buying agents act on behalf of purchasers, helping to source potential properties and take part in negotiations once the ideal home is found. They are typically found at the higher end of the property market, though some offer streamlined affordable services to assist mid-market buyers too. There are many buying agents working in the UK housing market. Here are five reasons to consider hiring one when you’re looking to buy a new home: Expertise Buying agents are property experts. Often they have worked on the other side of the deal as estate agents. A good buying agent understands the industry and the market — and can tell you what is a good price for a property. READ MORE: The most expensive properties for sale right now in London Contacts Agents tend to be well-connected in the markets they serve. That can help in negotiations if they already have a rapport with the estate agent on the seller’s side. Moreover, these buying agents can access off-market properties through their agency contacts. These properties are for sale but not publicly listed, broadening the pool of homes for your consideration. Time saver A buying agent will carry out the necessary local market research on your behalf, saving you time that might otherwise be spent doing all the homework yourself. Using their expertise, they will assess the state of the current market, taking in recent sales, prices, and the broader economic considerations that help determine a good offer, as well as what price should make a potential buyer walk away. READ MORE: Britain's biggest rents: Would you pay £65,000 a week just to rent a home? Negotiator Estate agents work for the seller, not the buyer. Their goal is to achieve a sale at the highest possible price for their client. A buying agent levels the playing field for you by acting solely in your interest. They understand the dynamics at play and can tell when an estate agent is going beyond what is a reasonable price for the property. Story continues Save money Most importantly of all, a buying agent can save you a lot of money through comprehensive research and shrewd negotiating. You will end up with much more cash in your wallet at the end of the process than if you went in alone. That’s the bottom line — a good buying agent is an investment.
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Is Ariana Resources plc's (LON:AAU) 11% ROE Strong Compared To Its Industry?
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While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. By way of learning-by-doing, we'll look at ROE to gain a better understanding of Ariana Resources plc (LON:AAU).
Ariana Resources has a ROE of 11%, based on the last twelve months. That means that for every £1 worth of shareholders' equity, it generated £0.11 in profit.
See our latest analysis for Ariana Resources
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Ariana Resources:
11% = UK£2.2m ÷ UK£20m (Based on the trailing twelve months to December 2018.)
It's easy to understand the 'net profit' part of that equation, but 'shareholders' equity' requires further explanation. It is all the money paid into the company from shareholders, plus any earnings retained. Shareholders' equity can be calculated by subtracting the total liabilities of the company from the total assets of the company.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the amount earned after tax over the last twelve months. That means that the higher the ROE, the more profitable the company is. So, all else being equal,a high ROE is better than a low one. That means ROE can be used to compare two businesses.
By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. If you look at the image below, you can see Ariana Resources has a similar ROE to the average in the Metals and Mining industry classification (13%).
That's neither particularly good, nor bad. ROE doesn't tell us if the share price is low, but it can inform us to the nature of the business. For those looking for a bargain, other factors may be more important. I will like Ariana Resources better if I see some big insider buys. While we wait, check out thisfreelist of growing companies with considerable, recent, insider buying.
Virtually all companies need money to invest in the business, to grow profits. That cash can come from issuing shares, retained earnings, or debt. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the use of debt will improve the returns, but will not change the equity. That will make the ROE look better than if no debt was used.
Ariana Resources is free of net debt, which is a positive for shareholders. Its respectable ROE suggests it is a business worth watching, but it's even better the company achieved this without leverage. After all, with cash on the balance sheet, a company has a lot more optionality in good times and bad.
Return on equity is useful for comparing the quality of different businesses. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have the same ROE, then I would generally prefer the one with less debt.
Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. 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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Why We Think Bakkavor Group plc (LON:BAKK) Could Be Worth Looking At
Want to participate in a short research study ? Help shape the future of investing tools and you could win a $250 gift card! Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Bakkavor Group plc ( LON:BAKK ) due to its excellent fundamentals in more than one area. BAKK is a company with an impressive history of performance, trading at a great value. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Bakkavor Group here . Solid track record and good value Over the past few years, BAKK has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. Not only did BAKK outperformed its past performance, its growth also exceeded the Food industry expansion, which generated a 2.0% earnings growth. This is an optimistic signal for the future. BAKK's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Also, relative to the rest of its peers with similar levels of earnings, BAKK's share price is trading below the group's average. This further reaffirms that BAKK is potentially undervalued. LSE:BAKK Income Statement, July 3rd 2019 Next Steps: For Bakkavor Group, there are three essential aspects you should further research: Future Outlook : What are well-informed industry analysts predicting for BAKK’s future growth? Take a look at our free research report of analyst consensus for BAKK’s outlook. Financial Health : Are BAKK’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here . Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of BAKK? Explore our interactive list of stocks with large potential to 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 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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Does Sylvania Platinum Limited (LON:SLP) Create Value For Shareholders?
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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 Sylvania Platinum Limited (LON:SLP).
Sylvania Platinum has a ROE of 11%, based on the last twelve months. Another way to think of that is that for every £1 worth of equity in the company, it was able to earn £0.11.
See our latest analysis for Sylvania Platinum
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Sylvania Platinum:
11% = US$13m ÷ US$115m (Based on the trailing twelve months to December 2018.)
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. You can calculate shareholders' equity by subtracting the company's total liabilities from its total assets.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the profit over the last twelve months. 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 it can be interesting to compare the ROE of different companies.
By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. You can see in the graphic below that Sylvania Platinum has an ROE that is fairly close to the average for the Metals and Mining industry (13%).
That's neither particularly good, nor bad. ROE can give us a view about company quality, but many investors also look to other factors, such as whether there are insiders buying shares. If you are like me, then you willnotwant to miss thisfreelist of growing companies that insiders are buying.
Virtually all companies need money to invest in the business, to grow profits. That cash can come from issuing shares, retained earnings, or debt. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the use of debt will improve the returns, but will not change the equity. That will make the ROE look better than if no debt was used.
While Sylvania Platinum does have a tiny amount of debt, with debt to equity of just 0.003, we think the use of debt is very modest. Its very respectable ROE, combined with only modest debt, suggests the business is in good shape. Careful use of debt to boost returns is often very good for shareholders. However, it could reduce the company's ability to take advantage of future opportunities.
Return on equity is useful for comparing the quality of different businesses. 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. 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 courseSylvania Platinum may not be the best stock to buy. So you may wish to see thisfreecollection of other companies that have high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Jury to decide SEAL's punishment for posing with corpse
SAN DIEGO (AP) The same military jurors who acquitted a decorated Navy SEAL of murder in the killing of a wounded Islamic State captive under his care in Iraq in 2017 will return to court Wednesday to decide whether he should serve any jail time for the single charge he was convicted of: posing with the 17-year-old militant's corpse. The final step comes after the verdict Tuesday was met with an outpouring of emotion as the jury also cleared Special Operations Chief Edward Gallagher of attempted murder in the shootings of two civilians and all other charges. The outcome dealt a major blow to one of the Navy's most high-profile war crimes cases and exposed a generational conflict within the ranks of the elite special operations forces. Gallagher could face up to four months imprisonment for the single conviction along with a reduction in rank, forfeiture of two-thirds of his pay and a reprimand. Having already served seven months in confinement ahead of the trail, the Bronze Star recipient is expected to go home a free man, his defense lawyers said. In the military justice system, the jury decides the sentence. After the verdict was read, the defense attorneys jumped up from their seats as Gallagher turned and embraced his wife over the bar of the gallery. Gallagher, dressed in his Navy whites sporting a chest full of medals, told reporters outside court that he was happy and thankful. "I thank God, and my legal team and my wife," he said. He declined to address questions about his SEAL team. His lawyers said he might talk after the jury decides his sentence. His wife, Andrea Gallagher, who was by his side throughout the court-martial, said she was elated. "I was feeling like we're finally vindicated after being terrorized by the government that my husband fought for for 20 years," Andrea Gallagher said before the couple drove away from Naval Base San Diego in a white convertible Mustang to start celebrating. Story continues She vowed to continue to take action over what she has described as prosecutorial misconduct and a shoddy investigation that led to her husband going to trial. She said she wants Naval Special Warfare Group 1 Commodore Capt. Matthew D. Rosenbloom to resign, among other things. Defense lawyers said Gallagher was framed by junior disgruntled platoon members who fabricated the allegations to oust their chief and the lead investigator built the probe around their stories instead of seeking the truth. They said there was no physical evidence to support the allegations because no corpse was ever recovered and examined by a pathologist. The prosecution said Gallagher was incriminated by his own text messages and photos, including one of him holding the dead militant up by the hair and clutching a knife in his other hand. "Got him with my hunting knife," Gallagher wrote in a text with the photo. The defense said it was just gallows humor and pointed out that almost all platoon members who testified against him also posed with the corpse. Gallagher's family championed a "Free Eddie" campaign that won the support of dozens of congressional Republicans who brought the case to the attention of President Donald Trump. Trump had Gallagher moved from the brig to more favorable confinement at a Navy hospital this spring and was reportedly considering a pardon for him. The panel of five Marines and two sailors, including a SEAL, were mostly seasoned combat veterans who served in Iraq and several had lost friends in war. Most of the witnesses were granted immunity to protect them from being prosecuted for acts they described on the stand. Lt. Jacob Portier, the officer in charge of the platoon, has been charged separately for overseeing Gallagher's re-enlistment ceremony next to the corpse and not reporting the alleged stabbing. The Navy is still pursuing the case against Portier, defense lawyer Jeremiah J. Sullivan III said.
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India's services activity contracts in June for first time in a year
BENGALURU, (Reuters) - India's dominant services activity contracted for the first time in more than a year in June, dragged down by slowing new business growth which in turn curtailed hiring, a private survey showed on Wednesday.
The Nikkei/IHS Markit Services Purchasing Managers' Index fell to 49.6 last month from 50.2 in May, sliding below the 50-mark threshold that separates contraction from growth after remaining in expansion territory for the previous 12 months.
"In the service sector there was an outright contraction in business activity, which was prompted by broadly stagnant sales," said Pollyanna De Lima, principal economist at IHS Markit, in a press release.
"It's somewhat surprising to see some companies linking subdued demand to high tax rates, two years on from the GST (Goods and Services Tax) implementation, with the hotel tax mentioned in particular."
Overall demand in the sector - measured by the new business index - expanded at the weakest pace in nine months while foreign demand grew at the slowest rate since February.
That was partly due to a slight increase in price pressures. However, the marginal pick up in the rate of price rises is unlikely to give a big boost to overall retail inflation, which has stayed below the Reserve Bank of India's medium-term target of 4% for almost a year.
Weak demand, along with fading optimism about future activity, led services firms to hire at the slowest pace in nearly two years.
A composite index tracking both factory and services activity sank to a 13-month low in June due to the services sector contraction and weaker expansion in manufacturing, indicating a further slowdown in the economy.
The composite PMI fell to 50.8 in June from 51.7 in May.
That might encourage the central bank, which has already cut rates three times this year, to deliver more policy easing to prop-up the slowing economy.
"Services companies are hoping that some stimulus will boost demand in the coming months, translating into output growth, though confidence about the future also started to fade," said De Lima.
(Reporting by Indradip Ghosh; Editing by Shri Navaratnam)
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A Closer Look At Continental Aktiengesellschaft's (FRA:CON) Impressive ROE
Want to participate in ashort research study? Help shape the future of investing tools and you could win a $250 gift card!
One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. By way of learning-by-doing, we'll look at ROE to gain a better understanding of Continental Aktiengesellschaft (FRA:CON).
Over the last twelve monthsContinental has recorded a ROE of 15%. That means that for every €1 worth of shareholders' equity, it generated €0.15 in profit.
Check out our latest analysis for Continental
Theformula for return on equityis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Continental:
15% = €2.7b ÷ €19b (Based on the trailing twelve months to March 2019.)
Most readers would understand what net profit is, but it’s worth explaining the concept of shareholders’ equity. It is all the money paid into the company from shareholders, plus any earnings retained. You can calculate shareholders' equity by subtracting the company's total liabilities from its total assets.
ROE looks at the amount a company earns relative to the money it has kept within the business. The 'return' is the profit over the last twelve months. A higher profit will lead to a higher ROE. So, all else being equal,a high ROE is better than a low one. That means it can be interesting to compare the ROE of different companies.
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. As you can see in the graphic below, Continental has a higher ROE than the average (9.4%) in the Auto Components industry.
That is a good sign. We think a high ROE, alone, is usually enough to justify further research into a company. For example,I often check if insiders have been buying shares.
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 case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. That will make the ROE look better than if no debt was used.
Although Continental does use debt, its debt to equity ratio of 0.33 is still low. The fact that it achieved a fairly good ROE with only modest debt suggests the business might be worth putting on your watchlist. Conservative use of debt to boost returns is usually a good move for shareholders, though it does leave the company more exposed to interest rate rises.
Return on equity is a useful indicator of the ability of a business to generate profits and return them to shareholders. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have the same ROE, then I would generally prefer the one with less debt.
But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. It is important to consider other factors, such as future profit growth -- and how much investment is required going forward. So you might want to check this FREEvisualization of analyst forecasts for the company.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Samsung Electronics' second-quarter profit likely halved as Huawei woes worsen chip glut
By Ju-min Park and Sangmi Cha
SEOUL (Reuters) - Samsung Electronics is likely to say second-quarter profit more than halved when it reports preliminary earnings on Friday, data showed, as a drop in memory chip shipments to China's embattled Huawei exacerbated a price-squeezing supply glut.
The quarterly result would be the South Korean firm's lowest in nearly three years, with the prospect of an earnings recovery still some quarters away as a period of oversupply continues unabated amid a broader slowdown in tech markets, analysts said.
The world's biggest supplier of DRAM and NAND memory chips is also the world's largest maker of smartphones, a market where chip client Huawei is second place. Companies worldwide have been forced to restrict business with Huawei to comply with U.S. trade sanctions on a company Washington deems a security risk.
"How much Huawei will use chips ahead is definitely a swing factor in prices," said analyst Jay Kim at Sangsangin Investment & Securities. "When there's not many players that can buy chips instead of Huawei, then Samsung has to cut prices to sell them."
Though chip earnings took a hit from reduced Huawei custom, Samsung Electronics Co Ltd's <005930.KS> smartphone business is likely to benefit from a drop of as much as 40% in international sales of Huawei handsets. So far, however, Huawei Technologies Co Ltd [HWT.UL] has strong enough support at home in the world's largest smartphone market to retain its global ranking.
Even so, selling chips brings in most of Samsung's profit - over two-thirds - and a saturated smartphone market and falling demand from data centers have pulled prices down.
Prices for DRAM chips, which provide devices with temporary workspaces and allow them to multi-task, are unlikely to rebound in the second half of the year, said analyst Avril Wu at tech researcher TrendForce. Moreover, she said, it will be difficult for Samsung to clear its inventory until the first half of 2020.
TrendForce estimates DRAM prices in the three months through June fell 25%. Last month, it lowered its forecast for the July-September quarter to a decline of 15% to 20%, from 10%.
On Friday, Samsung is likely to flag a 60% decline in April-June operating profit at 6 trillion won ($5.14 billion), according to Refinitiv SmartEstimate, which is based on the estimates of 29 analysts, with the estimates of analysts historically more accurate given greater weighting.
The tech firm booked 14.9 trillion won in the same period a year earlier. It is due to publish final second-quarter figures later this month. Its shares rose 5.3% over the three months.
TRADE TROUBLES
Huawei is the world's largest maker of telecommunications equipment, and just as the impact of its U.S. predicament ripples through both the chip and smartphone sectors, tech firms such as Samsung have also become collateral damage in a broader Sino-U.S. trade war punctuated by tit-for-tat import tariffs.
Samsung could also be on the receiving end of Japanese curbs on exports to South Korea of high-tech materials used in chips and smartphones - a retaliatory measure to South Korean wartime compensation claims that Japan says were resolved decades ago.
Still, in the long run, the good news for Samsung could lie in Huawei's troubles. If U.S. sanctions remain, Samsung could sell 37 million more smartphones annually, said senior analyst Song Myung-sup at HI Investment & Securities. Moreover, it would likely install its own chips in those handsets, Song said.
Last year, Samsung shipped 292 million handsets to Huawei's 205 million, showed data from market tracker Counterpoint.
In April, Samsung said it expected both smartphone and chip sales to pick up in the second half of the year, while U.S. chip rival Micron Technology Inc <MU.O> likewise said demand would recover later this year.
"Earnings recovery for memory chipmakers will come, but it won't be fast and it won't be a big leap," Song said.
($1 = 1,166.2800 won)
(Reporting by Ju-min Park and Sangmi Cha; Editing by Sayantani Ghosh and Christopher Cushing)
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Don't Sell SinterCast AB (publ) (STO:SINT) Before You Read This
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The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). To keep it practical, we'll show how SinterCast AB (publ)'s (STO:SINT) P/E ratio could help you assess the value on offer. Based on the last twelve months,SinterCast's P/E ratio is 30.74. That is equivalent to an earnings yield of about 3.3%.
View our latest analysis for SinterCast
Theformula for price to earningsis:
Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)
Or for SinterCast:
P/E of 30.74 = SEK160 ÷ SEK5.2 (Based on the trailing twelve months to March 2019.)
A higher P/E ratio means that buyers have to paya higher pricefor each SEK1 the company has earned over the last year. That is not a good or a bad thingper se, but a high P/E does imply buyers are optimistic about the future.
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. 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.
In the last year, SinterCast grew EPS like Taylor Swift grew her fan base back in 2010; the 87% gain was both fast and well deserved. The cherry on top is that the five year growth rate was an impressive 33% per year. With that kind of growth rate we would generally expect a high P/E ratio.
We can get an indication of market expectations by looking at the P/E ratio. You can see in the image below that the average P/E (16) for companies in the machinery industry is lower than SinterCast's P/E.
That means that the market expects SinterCast will outperform other companies in its industry. Clearly the market expects growth, but it isn't guaranteed. So investors should always consider the P/E ratio alongside other factors, such aswhether company directors have been buying shares.
It's important to note that the P/E ratio considers the market capitalization, not the enterprise value. Thus, the metric does not reflect cash or debt held by the company. The exact same company would hypothetically deserve a higher P/E ratio if it had a strong balance sheet, than if it had a weak one with lots of debt, because a cashed up company can spend on growth.
While growth expenditure doesn't always pay off, the point is that it is a good option to have; but one that the P/E ratio ignores.
Since SinterCast holds net cash of kr40m, it can spend on growth, justifying a higher P/E ratio than otherwise.
SinterCast's P/E is 30.7 which is above average (17) in the SE market. The excess cash it carries is the gravy on top its fast EPS growth. So based on this analysis we'd expect SinterCast to have a high P/E ratio.
Investors have an opportunity when market expectations about a stock are wrong. 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 SinterCast. 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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Dwayne Johnson stops by 'Songland'
A few winning contestants on Songland have already experienced success. Tebby Burrowss We Need Love , selected and recorded by guest judge John Legend, went to No. 10 on the iTunes chart; Adam Friedmans Be Nice for the Black Eyed Peas went to No. 17; and Able Hearts Greenlight for the Jonas Brothers and Darius Colemans Better Luck Next Time for Kelsea Ballerini both climbed the charts to No. 2. But this weeks Songland episode, featuring Aloe Blacc, offered the biggest opportunity yet: The winners entry would be placed in an epic battle scene of the forthcoming Fast & Furious Presents: Hobbs & Shaw starring Jason Statham, Idris Elba and Dwayne The Rock Johnson. Music placements in mainstream film and television are most songwriters holy grails these days, and The Rock himself, making a surprise FaceTime appearance to encourage this weeks aspiring silver-screen songwriters, seemed just as super-excited as Hobbs & Shaw director David Leitch about finding a super-anthemic song with swagger. Our music for Hobbs & Shaw is our soul, and its a lifeline of our movie, he said. Thank you so much for sharing your passion. Go out there and have fun. And by the way, the world doesnt know you but theyre about to! David Leitch, director of Fast & Furious Presents: Hobbs & Shaw , and Aloe Blacc on Songland . (Photo: Trae Patton/NBC/NBCU Photo Bank) Interestingly, the contestant that I thought rocked the competition the hardest this week was the one that Blacc and Leitch opted not to advance to the second round. Afikas overcoming-adversity anthem Chosen was the only entry that didnt sound like an Imagine Dragons outtake or an American Idol coronation song, with a chanty intro that recalled Kanye Wests Power (judge Ester Dean also name-checked Kendrick Lamar) and what Blacc described as vibeywith a nice energy. It was quite easy to imagine this bombastic blockbuster blasting out of some 5.1 surround sound speakers at the local megaplex. View this post on Instagram A post shared by Songland (@nbcsongland) on Jul 2, 2019 at 7:13pm PDT Read more from Yahoo Entertainment: A 'Songland' explainer: Why this new talent show is 'Shark Tank' for songwriters Final 'Hobbs & Shaw' trailer: Dwayne Johnson and Jason Statham cowboy up, but Vanessa Kirby steals the show A progressive twist: Country star Kelsea Ballerini picks R&B tune on Songland will.i.am just cant get enough of 'Songland,' picks 3 winning songs for Black Eyed Peas album Songlands Shane McAnally jokes: My name isnt George and Im not straight! Follow Lyndsey on Facebook , Twitter , Instagram , Amazon , Spotify. Want daily pop culture news delivered to your inbox? Sign up here for Yahoo Entertainment & Lifestyles newsletter.
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Timeline: 'Sewing Circle' to murder case against Navy SEAL
The case against Special Operations Chief Edward Gallagher, a sniper and medic accused of stabbing to death a wounded Islamic State fighter, caused fissures in the normally cohesive and secretive community of Navy SEALS, some of the world's best trained troops who often are called on for the most difficult assignments in Iraq, Afghanistan and other places. Other SEALS were responsible for providing incriminating information that led to a formal investigation that produced murder and other charges against Gallagher. Just before the trial began, President Donald Trump considered a pardon for Gallagher but demurred as critics said it would undermine the military justice system. On Tuesday, a jury acquitted Gallagher of murder, attempted murder for allegedly shooting Iraqi civilians and other charges. Key dates in the case against Gallagher: MAY 3, 2017 Iraqi troops capture an IS fighter, wounded in an airstrike, and bring him to the SEAL compound for medical treatment. Gallagher is the first to treat him. Video shot by a fellow medic shows Gallagher kneeling at the fighter's side and rendering aid. Two SEALs would testify that they saw him unexpectedly plunge his hunting knife into the militant's neck. JUNE 18, 2017 Two SEAL snipers hear shots from the neighboring sniper tower where Gallagher was positioned. Looking through their scopes they see an old man carting a water jug fall to the ground with a blood stain on his back, according to testimony. The snipers then say they heard Gallagher say over the radio, "You guys missed him but I got him." The SEALs did not see Gallagher pull the trigger. After their deployment ended, a WhatsApp chat group of SEALS who served under Gallagher and called themselves "The Sewing Circle" was formed to discuss alleged war crimes they said Gallagher committed. Their discussions eventually led to formal allegations that Gallagher murdered the wounded Islamic State captive in his care and shot Iraqi civilians. Story continues JAN. 4, 2019 Gallagher pleads not guilty to premeditated murder and other charges. JAN. 22, 2019 The Navy officer who supervised Gallagher, Lt. Jacob Portier, is charged with various offenses tied to the case, including allegations he conducted the SEAL's re-enlistment ceremony next to the corpse of the captured IS fighter and encouraged enlisted personnel to pose for photos with the body. Portier also is accused of failing to report a war crime, destroying evidence and impeding the investigation of Gallagher. According to his attorney, Portier was the first to report the alleged war crimes to superiors. MARCH 30, 2019 President Donald Trump intervenes to move Gallagher from the brig to less restrictive confinement in a Navy hospital. Trump said in a tweet that it was to honor his past service to the country. MAY 8, 2019 Republican U.S. Rep. Duncan Hunter of California, a former combat Marine who served in Iraq, says he will ask Trump to pardon Gallagher if he is found guilty of murder. MAY 24, 2019 Trump says he has been considering pardons for several American military members accused of war crimes. Memorial Day is seen as likely timing for any pardons but it passes with no action from the president. MAY 25, 2019 Hunter acknowledges during a town hall in his San Diego-area district that he took a photo with a dead combatant during his time as a Marine. JUNE 18, 2019 Gallagher's trial begins. During opening statements, prosecutor Lt. Brian John projects photos of the dead Islamic State fighter in the military courtroom, along with a text message Gallagher sent to friends with the image. "Good story behind this," Gallagher wrote. "Got him with my hunting knife." The defense tells the jury that Gallagher treated the militant's wounds, didn't kill him and is being framed by disgruntled SEALs who wanted to oust their platoon chief. JUNE 19, 2019 A former comrade testifies that Gallagher told fellow troops before the deployment that if they encountered a wounded enemy, he wanted medics to know how "to nurse him to death." JUNE 20, 2019 Another Navy SEAL stuns the courtroom by saying he actually killed the wounded fighter, not Gallagher. Special Operator 1st Class Corey Scott says he asphyxiated the teen in an act of mercy after Gallagher unexpectedly stabbed him in the neck area. Prosecutors accuse him of lying. The Navy says he could face a perjury charge. JUNE 21, 2019 Two Navy SEALs testify that Gallagher gunned down a young girl and an elderly man in Iraq in 2017 from his sniper's perch, though neither witnessed him pull the trigger. A defense attorney says the testimony is unreliable because no witness reported seeing Gallagher fire. He accuses the SEALs of organizing a smear campaign through "The Sewing Circle." JUNE 27, 2019 An Iraqi general who had handed over the wounded fighter to the SEALs testifies Gallagher did not stab him. A Marine attached to the team also says he watched the prisoner being treated and never saw Gallagher stab him. JULY 2, 2019 After less than two days of deliberations, a jury of five Marines and two sailors — one of them a SEAL —acquits Gallagher of murder, two attempted murder counts and three other charges. He's convicted of posing for a photo with the body of the IS fighter.
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Imagine Owning Mind Gym (LON:MIND) And Wondering If The 30% Share Price Slide Is Justified
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Investors can approximate the average market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. For example, theMind Gym PLC(LON:MIND) share price is down 30% in the last year. That falls noticeably short of the market return of around 3.8%. Mind Gym hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time.
Check out our latest analysis for Mind Gym
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.
Unfortunately Mind Gym reported an EPS drop of 17% for the last year. This reduction in EPS is not as bad as the 30% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Mind Gym has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Mind Gym stock, you should check out thisFREEdetailed report on its balance sheet.
Given that the market gained 3.8% in the last year, Mind Gym shareholders might be miffed that they lost 30% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 2.5% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. Is Mind Gym cheap compared to other companies? These3 valuation measuresmight help you decide.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss thisfreelist of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Should You Be Concerned About Banca Generali S.p.A.'s (BIT:BGN) Historical Volatility?
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If you're interested in Banca Generali S.p.A. (BIT:BGN), 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 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 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 greater than one is more sensitive to broader market movements than a stock with a beta of less than one.
Check out our latest analysis for Banca Generali
Looking at the last five years, Banca Generali has a beta of 1.6. The fact that this is well above 1 indicates that its share price movements have shown sensitivity to overall market volatility. If the past is any guide, we would expect that Banca Generali shares will rise quicker than the markets in times of optimism, but fall faster in times of pessimism. Beta is worth considering, but it's also important to consider whether Banca Generali is growing earnings and revenue. You can take a look for yourself, below.
With a market capitalisation of €3.0b, Banca Generali is a pretty big company, even by global standards. It is quite likely well known to very many investors. It takes deep pocketed investors to influence the share price of a large company, so it's a little unusual to see companies this size with high beta values. It may be that that this company is more heavily impacted by broader economic factors than most.
Beta only tells us that the Banca Generali 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 Banca Generali’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 BGN’s future growth? Take a look at ourfree research report of analyst consensusfor BGN’s outlook.
2. Past Track Record: Has BGN 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 BGN's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how BGN 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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Does British Land Company Plc's (LON:BLND) CEO Salary Compare Well With Others?
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In 2009 Chris Grigg was appointed CEO of British Land Company Plc (LON:BLND). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for British Land
Our data indicates that British Land Company Plc is worth UK£5.2b, and total annual CEO compensation is UK£2.0m. (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 UK£857k. When we examined a selection of companies with market caps ranging from UK£3.2b to UK£9.5b, we found the median CEO total compensation was UK£2.8m.
That means Chris Grigg receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at British Land, below.
Over the last three years British Land Company Plc has shrunk its earnings per share by an average of 66% per year (measured with a line of best fit). In the last year, its revenue is up 31%.
Investors should note that, over three years, earnings per share are down. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. You might want to checkthis free visual report onanalyst forecastsfor future earnings.
British Land Company Plc has generated a total shareholder return of 15% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Chris Grigg is paid around what is normal the leaders of comparable size companies.
The company isn't showing particularly great growth, and shareholder turns haven't been particularly inspiring in the last few years. While the CEO may not be underpaid, we don't think the pay is too generous either. If you think CEO compensation levels are interesting you will probably really likethis free visualization of insider trading at British Land.
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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A Look At The Fair Value Of CLX Communications AB (publ) (STO:SINCH)
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Does the July share price for CLX Communications AB (publ) (STO:SINCH) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by projecting its future cash flows and then discounting them to today's value. I will use the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple!
Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. Anyone interested in learning a bit more about intrinsic value should have a read of theSimply Wall St analysis model.
See our latest analysis for CLX Communications
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
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 (SEK, Millions)", "2020": "SEK298.0m", "2021": "SEK380.0m", "2022": "SEK426.7m", "2023": "SEK463.9m", "2024": "SEK492.9m", "2025": "SEK515.1m", "2026": "SEK532.0m", "2027": "SEK544.9m", "2028": "SEK554.8m", "2029": "SEK562.7m"}, {"": "Growth Rate Estimate Source", "2020": "Analyst x2", "2021": "Analyst x2", "2022": "Est @ 12.29%", "2023": "Est @ 8.73%", "2024": "Est @ 6.24%", "2025": "Est @ 4.5%", "2026": "Est @ 3.28%", "2027": "Est @ 2.43%", "2028": "Est @ 1.83%", "2029": "Est @ 1.41%"}, {"": "Present Value (SEK, Millions) Discounted @ 7.24%", "2020": "SEK277.9", "2021": "SEK330.4", "2022": "SEK346.0", "2023": "SEK350.8", "2024": "SEK347.5", "2025": "SEK338.7", "2026": "SEK326.2", "2027": "SEK311.5", "2028": "SEK295.8", "2029": "SEK279.7"}]
("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF)= SEK3.2b
We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 10-year government bond rate (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 7.2%.
Terminal Value (TV)= FCF2029× (1 + g) ÷ (r – g) = kr563m × (1 + 0.4%) ÷ (7.2% – 0.4%) = kr8.3b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= SEKkr8.3b ÷ ( 1 + 7.2%)10= SEK4.13b
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 SEK7.33b. 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 SEK136.82. Compared to the current share price of SEK146, the company appears around fair value at the time of writing. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. 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 CLX Communications 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 7.2%, which is based on a levered beta of 1.142. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
Whilst important, DCF calculation shouldn’t be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For CLX Communications, I've compiled three additional aspects you should look at:
1. Financial Health: Does SINCH 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 SINCH'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 SINCH? 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 STO 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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What Berentzen-Gruppe Aktiengesellschaft's (FRA:BEZ) ROE Can Tell Us
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One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. We'll use ROE to examine Berentzen-Gruppe Aktiengesellschaft (FRA:BEZ), by way of a worked example.
Over the last twelve monthsBerentzen-Gruppe has recorded a ROE of 11%. That means that for every €1 worth of shareholders' equity, it generated €0.11 in profit.
Check out our latest analysis for Berentzen-Gruppe
Theformula for ROEis:
Return on Equity = Net Profit ÷ Shareholders' Equity
Or for Berentzen-Gruppe:
11% = €5.2m ÷ €47m (Based on the trailing twelve months to December 2018.)
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. A higher profit will lead to a higher ROE. So, all else being equal,a high ROE is better than a low one. That means it can be interesting to compare the ROE of different companies.
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. You can see in the graphic below that Berentzen-Gruppe has an ROE that is fairly close to the average for the Beverage industry (9.5%).
That's neither particularly good, nor bad. ROE tells us about the quality of the business, but it does not give us much of an idea if the share price is cheap. If you are like me, then you willnotwant to miss thisfreelist of growing companies that insiders are buying.
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 used for growth will improve returns, but won't affect the total equity. That will make the ROE look better than if no debt was used.
While Berentzen-Gruppe does have some debt, with debt to equity of just 0.17, we wouldn't say debt is excessive. The combination of modest debt and a very respectable ROE suggests this is a business worth watching. Judicious use of debt to improve returns can certainly be a good thing, although it does elevate risk slightly and reduce future optionality.
Return on equity is useful for comparing the quality of different businesses. In my book the highest quality companies have high return on equity, despite low debt. All else being equal, a higher ROE is better.
Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. 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 you might want to check this FREEvisualization of analyst forecasts for the company.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss thisfreelist of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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Does Public Joint Stock Company Gazprom Neft’s (MCX:SIBN) ROCE Reflect Well On The Business?
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Today we'll look at Public Joint Stock Company Gazprom Neft (MCX:SIBN) and reflect on its potential as an investment. 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. Second, we'll look at its ROCE compared to similar companies. And finally, we'll look at how its current liabilities are impacting 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. 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.'
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 Gazprom Neft:
0.16 = RUруб482b ÷ (RUруб3.6t - RUруб513b) (Based on the trailing twelve months to March 2019.)
Therefore,Gazprom Neft has an ROCE of 16%.
See our latest analysis for Gazprom Neft
ROCE can be useful when making comparisons, such as between similar companies. It appears that Gazprom Neft's ROCE is fairly close to the Oil and Gas industry average of 14%. Separate from how Gazprom Neft stacks up against its industry, its ROCE in absolute terms is mediocre; relative to the returns on government bonds. It is possible that there are more rewarding investments out there.
In our analysis, Gazprom Neft's ROCE appears to be 16%, compared to 3 years ago, when its ROCE was 9.5%. This makes us wonder if the company is improving. You can see in the image below how Gazprom Neft'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. Companies in cyclical industries can be difficult to understand using ROCE, as returns typically look high during boom times, and low during busts. This is because ROCE only looks at one year, instead of considering returns across a whole cycle. Remember that most companies like Gazprom Neft are cyclical businesses. Since the future is so important for investors, you should check out ourfreereport on analyst forecasts for Gazprom Neft.
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 ROCE is calculated, a high level of current liabilities makes a company look as though it has less capital employed, and thus can (sometimes unfairly) boost the ROCE. To counter this, investors can check if a company has high current liabilities relative to total assets.
Gazprom Neft has total assets of RUруб3.6t and current liabilities of RUруб513b. As a result, its current liabilities are equal to approximately 14% of its total assets. This is a modest level of current liabilities, which would only have a small effect on ROCE.
That said, Gazprom Neft's ROCE is mediocre, there may be more attractive investments around. But note:make sure you look for a great company, not just the first idea you come across.So take a peek at thisfreelist of interesting companies with strong recent earnings growth (and a P/E ratio below 20).
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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Does Market Volatility Impact Be Think, Solve, Execute S.p.A.'s (BIT:BET) Share Price?
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If you own shares in Be Think, Solve, Execute S.p.A. (BIT:BET) then it's worth thinking about how it contributes to the volatility of your portfolio, overall. In finance, Beta is a measure of volatility. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The second sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.
Some stocks see their prices move in concert with the market. Others tend towards stronger, gentler or unrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. A stock with a beta below one is either less volatile than the market, or more volatile but not corellated with the overall market. In comparison a stock with a beta of over one tends to be move in a similar direction to the market in the long term, but with greater changes in price.
See our latest analysis for Be Think Solve Execute
Given that it has a beta of 0.85, we can surmise that the Be Think Solve Execute share price has not been strongly impacted by broader market volatility (over the last 5 years). If history is a good guide, owning the stock should help ensure that your portfolio is not overly sensitive to market volatility. 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 Be Think Solve Execute's revenue and earnings in the image below.
Be Think Solve Execute is a rather small company. It has a market capitalisation of €130m, which means it is probably under the radar of most investors. It is not unusual for very small companies to have a low beta value, especially if only low volumes of shares are traded. Even when they are traded more actively, the share price is often more susceptible to company specific developments than overall market volatility.
One potential advantage of owning low beta stocks like Be Think Solve Execute 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. In order to fully understand whether BET is a good investment for you, we also need to consider important company-specific fundamentals such as Be Think Solve Execute’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 BET’s future growth? Take a look at ourfree research report of analyst consensusfor BET’s outlook.
2. Past Track Record: Has BET 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 BET's historicalsfor more clarity.
3. Other Interesting Stocks: It's worth checking to see how BET 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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With EPS Growth And More, Sartorius Stedim Biotech (EPA:DIM) 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! Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as 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 Sartorius Stedim Biotech ( EPA:DIM ). While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour. Check out our latest analysis for Sartorius Stedim Biotech How Quickly Is Sartorius Stedim Biotech Increasing Earnings Per Share? As one of my mentors once told me, share price follows earnings per share (EPS). That means EPS growth is considered a real positive by most successful long-term investors. Impressively, Sartorius Stedim Biotech has grown EPS by 18% per year, compound, in the last three years. So it's not surprising to see the company trades on a very high multiple of (past) earnings. I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note Sartorius Stedim Biotech's EBIT margins were flat over the last year, revenue grew by a solid 17% to €1.3b. That's a real positive. In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart. ENXTPA:DIM Income Statement, July 2nd 2019 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 check this interactive chart depicting future EPS estimates, for Sartorius Stedim Biotech ? Story continues Are Sartorius Stedim Biotech Insiders Aligned With All Shareholders? As a general rule, I think it worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. I discovered that the median total compensation for the CEOs of companies like Sartorius Stedim Biotech, with market caps over €7.1b, is about €3.1m. The Sartorius Stedim Biotech CEO received €2.5m in compensation for the year ending December 2018. That seems pretty reasonable, especially given its below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when its reasonable that does give me a little more confidence that leadership are looking out for shareholder interests. I'd also argue reasonable pay levels attest to good decision making more generally. Is Sartorius Stedim Biotech Worth Keeping An Eye On? For growth investors like me, Sartorius Stedim Biotech's raw rate of earnings growth is a beacon in the night. With swiftly growing earnings, it probably has its best days ahead, and the modest CEO pay suggests the company is careful with cash. So I'd argue this is the kind of stock worth watching, even if it isn't great value today. Another important measure of business quality not discussed here, is return on equity (ROE). Click on this link to see how Sartorius Stedim Biotech shapes up to industry peers, when it comes to ROE. You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months. Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. If you spot an error that warrants correction, please contact the editor 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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