Resmed – Buy the Dip

Posted on | by Leon Hinde | Leave a Comment on Resmed – Buy the Dip

RMD will report their 3QFY17 results on 27th April. Early success of the AirFit 20 series should help to underpin year-on-year underlying earnings growth 15%+ to $US$520m.

FY18 we expect revenue of US$2.3b, EBIT US$580m, (from US$520in FY17), EPS US$3.10 and DPS US$1.45, placing the stock on a forward yeild of 2.1%

We like RMD’s growth outlook and therefore we’re encouraged to buy RMD ahead of the result and to add to the position on price retracements.

To help enhance the yield, we’re selling out-of-money call options, allowing for reasonable capital growth whilst at the same time increasing the cash flow from the dividend and call option income to over 10% p/a.

Chart – RMD

 

 

 

 

 

Australian Bank Earnings

Posted on | by Leon Hinde | Leave a Comment on Australian Bank Earnings

On 2nd May, ANZ will report their half-year earnings. The market is expecting a net profit of around $3.7b and DPS for the half year of $0.80.

4th May, NAB will report their half-year earnings.  Net profit should be around $3.4b and DPS of $1.00.

5th May, Macquarie Bank reports. Net profit is expected to be similar to last year at $2.15b and DPS of $2.52

8th May, WBC report their half-year result. Net profit should be $4b and DPS $0.95

On average, the market is looking for approximately 3% underlying EPS growth among the banks and dividends to remain steady, or the same as the previous 12 months.

Charts – MVB (Vaneck Aust Bank ETF)

 

 

Coca-Cola – 1H17 Outlook

Posted on | by Leon Hinde | Leave a Comment on Coca-Cola – 1H17 Outlook

CCL downgraded its outlook for 1H17 due to weakness in the Australian beverage performance.

CCL expects underlying NPAT will decline in 1H17 and expects FY17 NPAT to be in line with FY16 at around $420m

If we assume no earnings growth into FY18 and a continuation of the $0.45 cent per year dividend, it places the stock on a forward yield of 4.6%.

FY18 revenue $5.2b, EBIT $680m & EPS $0.54.

Charts – CCL

 

JP Morgan & General Electric

Posted on | by Leon Hinde | Leave a Comment on JP Morgan & General Electric

The following charts of Dow Jones’ large caps General Electric and JP Morgan, provide an interesting technical perspective of one of the world’s largest industrial conglomerates and one of America’s largest financial institutions.

GE reported late in the week and at first glance the headline number looked okay, but after digging deeper the free cash flow provided a concern and the stock sold off.

In the case of JP Morgan and other US banks, we’ve watched their share prices sell-off from the March highs as the long end of the yield curve flattens. The implication for banks is, a flattening yield curve will reduce their net interest margins.

US banks have now retraced on average 10%+ from their recent highs.

Chart – GE
Charts – JPM

 

 

 

 

WPL – Q1-17 Production

Posted on | by Leon Hinde | Leave a Comment on WPL – Q1-17 Production

Woodside’s 1Q-17 quarterly production was impacted by weather, with sales revenue down to US$895 vs US$1b in the December quarter of 2016.

Woodside is working on advancing Scarborough & Browse LNG projects. With the market assigning a minimal current value to these projects, they could provide longer term material upside to Woodside should it be successful in demonstrating the viability of the projects.

FY18 forecast EPS is likely to be similar to FY17 placing the stock on a forward yield of 4%.

 

 

 

Goldman Sachs – Q1 17 Earnings Result

Posted on | by Leon Hinde | Leave a Comment on Goldman Sachs – Q1 17 Earnings Result

Goldman shares dropped more than 5 percent overnight to trade at their lowest since the end of November and are down 10 percent for the year so far. The US financials sector is about 1 percent lower year to date

Goldman Sachs reported 1Q earnings per share of $5.15 a share, missing a consensus estimate by 16 cents. Revenue came in short by about $420 million at $8.026 billion.

The last time Goldman reported a miss on earnings per share was the fourth quarter of 2015.

Technical buying support may start to build at or near $200.

Chart – Goldman Sachs

 

 

ASX Yield Sensitive Names Rally

Posted on | by Leon Hinde | Leave a Comment on ASX Yield Sensitive Names Rally

With bond yields moving lower in the US, we’ve seen strong buying interest in domestic yield sensitive names.

The rally is nearing the peak and taking profit  or selling tight covered calls is advised. History shows yields compressing below 4% will act as resistance for further share price advances.

Chart – TCL
Chart – SYD
Chart – WFD
Chart – SCG