Insights for February 2016

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Diageo, the drinks manufacturing and distribution giant, has posted interim first-half results which has underwhelmed commentators. The volume of sales has slipped by 3%, from 134 million to 130 million reported sales worldwide, while net sales have decreased by 5% from £5,900 million to £5,606 million. This has resulted in a 7% drop in reported profits before exceptional items from £1,839 million to £1,717 million, and in a parallel decrease of 3% of operating profits from £1,668 million to £1,613 million. The company has reported 1.8% organic net sales growth, a 2.4% organic (before earnings and tax) operating profit growth: the impact to bottom line figures is mostly due to adverse exchange rates and the impact of the disposal of non core assets. Free cash flow has grown by £0.8 billion, reaching £140 million. Earnings per share have risen by 7% to 56.1. The interim dividend has also been increased by 5% and now stands at22.6 pence per share. (Read more)

Topics: beverages, Food
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GSK PLC is a Hold at the current levels with an upside of upto 10% to 15% within 6 months to 12 months. The company’s latest fiscal 2015 results were in line with the management guidance, as the fiscal 2015 eps declined by 15% which is in accordance with the company’s guidance given on investor day in May 2015. However, on the announcement of the results the stock crashed by 8% in the next 4 trading sessions.  Lately, the stock has formed the consolidation levels at 1340 pence and finally set for a breakout as it has successfully breached 1400 levels. Currently, the stock is trading above 20 days and 50 days moving average of 1400 p and 1370 p respectively. Based on earnings estimates for the company's fiscal year ending in December 2017, the stock has a price-to-earnings ratio of 15.43 which is slightly up compared to FTSE100 12 month forward P/E of 13.37. The stock has a trailing price to earnings of 8.43.The Stock finished trading on London stock exchange on 17th February at 1419 p a share.

Earnings: estimates versus actual: (Read more)

Topics: Analysis
Other Insights on Related Shares: GSK.L

Rio Tinto, the second biggest mining company in the world by market share, has reported a loss in profits in its 2015 annual results. Underlying net earnings came in at US $4,540 million, a considerable drop of US$4765 from the total 2014 figures, with net losses totalling US $866 million. The Anglo-Australian company conceded that reduced prices on the raw materials it provides played a major effect on the results, reducing earnings by over 80%. This was partially offset, however, by US$ 2,007 millions gains due to favourable foreign exchange conditions. (Read more)

Other Insights on Related Shares: RIO.L
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Not all the effects of cheap oil are bad for companies. Wizz Air (WIZZ.LN), the ultra-low cost airline focusing on flights to central and Eastern Europe, can testify to this. The Budapest-based carrier, which is traded on the LSE, posted a 17% increase in revenue for the third quarter compared with Q3 last year, up to €310 million, and a 23% rise of almost a million in passenger numbers for the same period, for a total of 4.7 million passengers. Although profit suffered quite a large fall of 20.9% from a year earlier, what the company calls underlying net profit – reported net profit minus foreign exchange losses and exceptional items – was instead almost 4 times what it was for the third quarter in 2014, jumping from 3.6 to 17.2 million. This has permitted the company to raise its underlying net profit guidance for the year to a range between €200 and €210 million. This hike in profitability was partly at least due to the fall in oil prices: first, Wizz Air had to pay less in fuel costs – the average fuel price paid by Wizz Air declined by 27.2% compared to Q3 2014 – and second, it was fed through to passengers with lower air fares, boosting ticket sales. (Read more)

Topics: Airline
Other Insights on Related Shares: WIZZ.L
Related Shares: Wizz Air Share Price

Rightmove plc is a hold at the current price levels. Though based on the fundamental analysis and valuation we do not see an upside of more than 5 to 10% from the current levels, but any small correction or dip in its stock prices is a ‘Buy’ for the bulls. Based on the technical analysis the stock has been trading above its 50 day and 100 day moving average of 3973 pence and 3861 pence respectively. We see resistance at 4173 pence and once the stock breaks this resistance, it’s all set for a breakout and ready to make new highs. The company has been trading in a range between 2310 p- 4219 p over the past one year. Based on earnings estimates for the company's fiscal year ending in December 2015, the stock has a price-to-earnings ratio of 27.4 which is quite high compared to FTSE100 12 month forward P/E of 13.37. The stock has a trailing price to earnings of 38. Based on the analysis of forward P/E compared to FTSE 100 the stock seems slightly overpriced.  It finished trading on London stock exchange on Tuesday 2nd February at 4021 pence a share.

Rightmove plc is a United Kingdom-based company engaged in operating a property portal. The Company's principal business is the operation of the Website,, which provides details of all properties available to buy or rent. Its platform provides an online property search. The Company's operational segments include Agency, New Homes and Other. The Agency segment provides resale and lettings property advertising services on The New Homes segment provides property advertising services to new home developers and housing associations on The Other segment consists of overseas and commercial property advertising services and non-property advertising services which include its third-party and consumer services, as well as data and valuation services. However, out of the three business segments, the company reports over 80% of the revenue from its agency segment. Rest 20% of the revenue is attributable to the other two segments. The company also continued reporting strong financial results throughout fiscal year 2015. As per the latest first half results of 2015, there is a 10% increase in UK residential property listings on rightmove since the start of the year 2015 to 1.1 m, which is 50% more than any portal. Also, the website traffic continued growing as the visits were up in H1’15 by 17% to 110m per month, compared to 94m in H1’2014. Also, Rightmove’s share of traffic to the top four UK property websites increased to 82% in H1’15 compared to 77% in June 2014. The website traffic continued increasing with a record number of people visiting and spending more time on the property portal. Rightmove PLC is the UK’s largest property portal and has a very strong brand recognition. The company also a has very strong financial matrix and is a debt free company. Also, the company continued pursuing its share buyback programme which also indicates that the company’s management too is confident of its business model. (Read more)

Topics: Analysis
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