BlueScope expects substantial first half earnings beat
Published 24-JAN-2017 14:58 P.M.
|
2 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
BlueScope Steel (ASX: BSL) announced on Tuesday morning that preliminary unaudited underlying earnings before interest and tax for the six months to December 31, 2016 were expected to be in the vicinity of $600 million, significantly higher than AGM guidance of ‘at least $510 million’.
The group put down the improved performance since November to a number of factors. Stronger steel prices and spreads across its businesses, which particularly benefited the Australian Steel Products and New Zealand and Pacific Steel operations were key drivers.
BlueScope also benefited from stronger than expected iron ore prices which improved profitability in its iron sands export business.
The company continues to achieve cost reductions from productivity improvements across all of its businesses, including North Star BlueScope Steel.
The North American building products division, as well as the Indian business both performed well with the latter seeing positive earnings growth with higher margins and volumes.
While the company has flagged a substantial outperformance compared with guidance, Citi was expecting a reasonable beat. The broker reviewed the stock less than two weeks ago, pointing to underlying earnings before interest and tax of $548 million.
At that stage Citi lifted its target price from $11.03 to $12.75, stating that BlueScope was one of the cheapest quality global steel stocks given global peers are trading at a substantially higher median of 7.5 times EV/EBITDA based on the next 12 months earnings.
If BlueScope pushes up towards Citi’s price target it would imply a premium of 23% to Monday’s closing price of $10.38.
It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.