Australian stock report - Qantas

AUSTR

Qantas Airways keeps rising, up 6.1% in 3 days January 16, 2018 16:00 AEST

NEWS BITES - AUSTRALIA

Qantas Airways Limited (ASX:QAN), Australia's 4th largest Transportation company by market cap, extended its gains on Tuesday, rising an additional 1.0c (0.2%) to close at $A5.19. The shares have jumped 30.0c (6.1%) over the past three trading days, compared with the All Ordinaries Index which fell 10.3 points (0.2%) in the three days for a relative price increase of 6.3%. The 3-day rise was fuelled by a cumulative volume of 1.2 times the average 3-day volume of 9.1 million shares.

Highlights in today's Report:

SECTION 1 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators

SECTION 2 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Open Interest, Low Performance Indicator

SECTION 3 PRICE VOLUME DYNAMICS

Technicals, Moving Annual Return, Beta, Turnover Rate & Turnover Period

SECTION 4 RANKING

Global, Independent Ratings

SECTION 5 FINANCIALS

Financials Summary, Annual Report for the year ended June 30, 2017 (year-on-year comparisons with previous corresponding period)-, Trailing 12 Months Dividends

SECTION 6 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 7 REPORTED BUYING AND SELLING

SECTION 8 STOCK BUZZ

SECTION 1 QANTAS AIRWAYS BULLISH SIGNALS

1.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.5. Compared with the rest of the market the stock is undervalued and ranks in the top quartile of stock by value of Q Ratio.

+ Total Liabilities/EBITDA of 4.9 is less than the Joseph Piotroski benchmark of 5.

+ Interest cover defined by EBIT/I is 6 times. This indicates it is less leveraged.

+ As per the Du Pont analysis, Return on Equity is high at 24.1%. This is computed as net profit margin of 5.3% times asset turnover [sales/assets] of 0.93 times leverage factor [total assets/shareholders' equity] of 4.9.

1.2 Undervaluation [compared with sector average]:

+ Price/Earnings of 11.3 [40.3]. We estimate Qantas Airways stock is trading at a current year P/E of 8 and a forward year P/E of 6.

+ Price/Sales of 0.6 [2.2]. We estimate Qantas Airways stock is trading at a current year Price/Sales of 0.6 and a forward year Price/Sales of 0.6.

+ Return on Equity 24.1% [8.4%].

+ Return on Assets 5% [2.3%].

+ Return on Capital Employed 14% [5.7%].

1.3 Technicals:

+ In the last three months the stock has hit a new 52-week high thrice.

+ The present value of $A1,000 (PV1000) invested one year ago in Qantas Airways is $A1,561, comprising a capital gain of $A513 and dividend reinvested of $A48.

PV$10001-week1-month1-year
QAN.ASX1,0681,0021,561
All Ordinaries Index9881,0001,063

+ The present value of AUD1,000 (PV1000) invested twenty years ago in Qantas Airways is $A4,271, including a capital gain of $A1,980 and dividend reinvested of $A1,291.

+ 20 years Multiplier in AUD = 4.271x

+ Compound Annual Growth Rate (CAGR) in AUD = 7.5%

Present Value of USD1,000 invested 20 years ago:

+ The present value of USD1,000 (PV1000) invested twenty years ago in Qantas Airways is $US5,223, including a capital gain of $US2,645 and dividend reinvested of $US1,579.

+ 20 years ago AUD 1 equalled USD 0.6514

+ 20 years Multiplier in USD = 5.223x

+ Compound Annual Growth Rate (CAGR) in USD = 8.6%

Jan 16, 2018: AUD 1 equals USD 0.8

1.4 High Performance Indicators:

DescriptionValueRank In Market
Today's Turnover$A51.7 millionIn Top 2%
Price to Sales0.6In Top Quartile
Volatility %1.4In Top Quartile

SECTION 2 QANTAS AIRWAYS BEARISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 2.7%, divided by average yield of dividend yielding stocks in the All Ordinaries Index of 4.2% is 64.3%. This suggests the stock is overvalued in dividend yield terms.

+ Net profit margin has averaged 5.1% in the last 3 years. This is lower than the sector average of 8% and suggests a low margin of safety.

2.2 Overvaluation [compared with sector average]:

+ Dividend yield of 2.7% [5.3%].

2.3 Technicals:

Overbought/Bearish/Resistance Signals:

+ The stock is overbought according to the Williams % R indicator of -4.5, suggesting the price is close to its 14-day high of $A5.21.

2.4 Open Interest:

Open Interest Trend

Same day trend: The price increased 0.2% from $A5.18 to $A5.19; Open interest has decreased 0.1% from 82,597 to 82,554. A price rise combined with a decline in open interest suggests the rally is caused by short sellers covering their positions. This indicates money is leaving the market, a bearish signal.

DurationOpen Interest change %Price change %Interpretation
1-day-0.10.2Market is Weakening

2.5 Low Performance Indicator:

DescriptionValueRank In Market
Total Debt to Equity1.4In Bottom 9%

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 9,965,154 shares worth $A51.7 million traded today. In the past week, volume was 1.1 times average and the shares were up 6.8%. The rise has been propped up by average volume of 1.1 times the average daily volume of 9.1 million shares.

+ Qantas Airways is at a discount of 20.5% to its 12-month high of $A6.53 on October 18, 2017. It is also at a premium of 67.3% to the 12-month low of $A3.10 on February 03, 2017.

3.2 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 3 of the last 5 years. An investment a year ago in QAN would have produced a return of 55.4%.

QANClose (AUD)Dividends (AUD)Capital Gain / (Loss) %% YieldAnnual Return %
Jan 165.190.1451.34.155.4
1 Yr ago3.430.07(10.5)1.8(8.7)
2 Yrs ago3.83-62.1-62.1
3 Yrs ago2.37-113.7-113.7
4 Yrs ago1.11-(28.7)-(28.7)

Close 5 years ago $A1.55

3.3 Beta:

+ Beta: the Beta of Qantas Airways stock is 0.2. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

3.4 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 123.4% (or a turnover period of 9 months). This average length of ownership of the stock at 0.5 times the average holding period of 1 year 9 months for stocks in the All Ordinaries Index suggests a larger number of speculators on the share register, making it less safe for long-term investors.

SECTION 4 RANKING

4.1 Global Rank [out of 47,413 stocks] and Rank in the Asia Pacific Region [out of 2,078 stocks]

DescriptionValueGlobal RankIn APAC Region
MCap (US$)7.3B2,06645
Total Assets (US$)13.7B2,23330
Revenue (US$)12.7B1,09716
Net Profit (US$)675.5M1,39925
Return on Equity %24.12,915141
Net Profit Margin %5.317,442558
Price to Book3.624,9741,035
Price/Earnings11.35,389233
Yield %2.79,147454
PV$1000 (1Year) US$*1,6577,296349
US$* Change (1Year) %60.07,622367

* 1 year ago AUD 1 = USD 0.75

Jan 16, 2018: AUD 1 equals USD 0.8

4.2 Independent Ratings

+ Forbes 2000:

Qantas Airways Limited is the 707th largest by revenue in the Forbes Global 2000.

+ BSS/News Bites:

It is placed 313/1410 in BSS News Bites' ranking of Australian performers in the past year, a percentile ranking of 78.

+ Vanguard Total World Stock ETF 7457:

The stock was one of 7457 global stocks selected by Vanguard Total World Stock ETF (VT). As at November 30, 2017, the Vanguard Total World Stock ETF held 237,276 shares worth $US1,049,580 or 0.01% by value of the ETF's portfolio [Ranked 1939 out of 7457 by value and 58 out of 245 for Australia].

SECTION 5 QANTAS AIRWAYS FINANCIALS

5.1 Financials Summary

Year endedJun 2017Jun 2016Jun 2015
Sales (USD B)12.712.812.5
Pretax (USD)930.7M1.1B621.8M
Net (USD M)671.4810.9438.9
EPS (AUD)0.460.4940.25

Net profit was down 17.2% from US$810.9 million in 2016 to US$671.4 million in 2017. Earnings Per Share (EPS) was down 6.9% from 49.40c to 46.0c.

5.2 Annual Report for the year ended June 30, 2017 (year-on-year comparisons with previous corresponding period)-

Favourable Changes:

+ Interest expenses to Sales down from 1.8% to 1.5%.

+ Debt to Equity down 8.1% from 1.5 to 1.4.

+ Total non-current assets to Total Assets up from 79.3% to 81.9%.

+ Total Liabilities to EBITDA of 4.9 compares favourably with the Joseph Piotroski benchmark of <5. However, it has deteriorated by 6.5% from the previous year's ratio of 4.6.

Unfavourable Changes:

+ Net profit down 17.2% from $A1.0b ($US764.7m) to $A852.0m ($US653.9m)

+ EBIT Margin down from 10.5% to 8.8%.

+ EBIT to total assets down from 10.2% to 8.2%.

+ Total revenue to total assets down from 1.0 to 0.9.

+ Profit before tax to Sales down from 8.8% to 7.4%.

+ Current ratio down 10.2% from 0.5 to 0.4.

+ Total current assets to Total Assets down from 20.7% to 18.1%.

+ Current Debtors to Total Assets down from 4.8% to 4.6%.

+ Total Liabilities to Operating Cash Flow of 5.1 compares unfavourably with the Joseph Piotroski benchmark of <4. This ratio has deteriorated by 6.1% from the previous year's ratio of 4.8.

Note:

+ EPS steady at 46.0c (US35.3c).

+ Interest cover steady at 6.0.

+ Cost of Goods Sold to Sales up from 64.6% to 65.4%.

+ Depreciation to Sales up from 7.6% to 8.6%.

+ Tax expenses to Sales down from 2.4% to 2%.

+ Total liabilities to Total assets steady at 0.8.

+ Fixed Assets to Total Assets up from 69.9% to 71.2%.

+ Intangibles to Total Assets up from 5.4% to 6%.

5.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (c)
16 Jan 201814
16 Jan 20177

SECTION 6 QANTAS AIRWAYS PROFILE

6.1 Activities

Qantas Airways Limited provides transportation of passengers through two airlines including Qantas (full service carrier) and Jetstar (low cost carrier), operating international, domestic and regional services. The Company also includes Qantas Frequent Flyer and Qantas Freight which generates diverse revenue streams and adds value for customers and investors.

6.2 Industry & Sector

Classification LevelName of Sector
Business SectorTransportation
IndustryPassenger Transportation, Ground & Sea
Economic SectorIndustrials

6.3 Top Management

The chairman is Leigh Clifford and the chief executive officer is Alan Joyce.

6.4 Issued Capital

Based on 1,760,803,756 issued shares the market capitalisation is $A9.1 billion.

SECTION 7 REPORTED BUYING AND SELLING

Insider Buying and Selling

Reported Buying:

December 20: Qantas Airways substantial shareholder buys

Qantas Airways (ASX:QAN) substantial shareholder BlackRock Group bought 88,175,557 shares worth $A456,749,385 ($US349,836,230) on December 18. The purchase price was $A5.18.

December 11: Qantas Airways substantial shareholder buys

Qantas Airways (ASX:QAN) substantial shareholder BlackRock Group bought 88,463,751 shares worth $A472,396,430 ($US355,110,317) on December 08. The purchase price was $A5.34.

November 01: Qantas Airways director buys

Qantas Airways (ASX:QAN) director James Todd Sampson bought 2,400 shares worth $A14,856 ($US11,372) on November 01, increasing 51.1% from 4,695 shares to 7,095 shares. The purchase price was $A6.19.

Reported Selling:

December 13: Qantas Airways substantial shareholder sells

Qantas Airways (ASX:QAN) substantial shareholder BlackRock Institutional Trust Company, National Association sold 46,296 shares worth $A245,369 ($US184,769) on December 11. The selling price was $A5.30.

December 04: Qantas Airways substantial shareholder sells

Qantas Airways (ASX:QAN) substantial shareholder BlackRock Group sold 27,205,031 shares worth $A154,252,526 ($US116,993,445) on November 30, reducing 23.5% from 115,627,833 shares to 88,422,802 shares. The selling price was $A5.67.

SECTION 8 STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

January 12: Qantas Airways: Update on Level of Foreign Relevant Interest

December 08 2017: Qantas Airways: Cancellation of Buy-back Shares

December 06 2017: Qantas Airways: Daily share buy-back notice - Appendix 3E

December 06 2017: Qantas Airways: Final share buy-back notice - Appendix 3F

December 05 2017: Qantas Airways: Daily share buy-back notice - Appendix 3E

Contact: +61 2 9691 3636

Physical Address: Level 8, 241 O'Riordan Street, Mascot, NSW, Australia, 2020

State/Province/Country: Australia

Exchange: Australian Securities Exchange

ISIN: AU000000QAN2

AU:QAN; ASX:QAN; AX:QAN; QAN.AX

PermID: 4295858622

Qantas Airways Limited, Qantas Airways Ltd

Source: www.BuySellSignals.com