Australian stock report - Qantas

AUSTR

UPDATE: Qantas Airways keeps rising, up 3.3% in 3 days July 26, 2017 16:00 AEST

NEWS BITES - AUSTRALIA

Qantas Airways Limited (ASX:QAN), Australia's 4th largest Transportation company by market cap, extended its gains on Wednesday, rising an additional 8.0c (1.5%) to close at $A5.40. The shares have lifted 17.0c (3.3%) over the past three trading days, compared with the All Ordinaries Index which rose 52.1 points (0.9%) in the three days for a relative price increase of 2.3%. Cumulative volume in the 3 days was 0.9 times the average 3-day volume of 9.2 million shares.

SECTION 1

QANTAS AIRWAYS BULLISH SIGNALS

1.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.6. Compared with the rest of the market the stock is undervalued.

+ Total Liabilities/EBITDA of 4.7 is less than the Joseph Piotroski benchmark of 5.

+ The company is cash rich with Cash to Market Capitalisation at 22.6%.

+ 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 31.6%. This is computed as net profit margin of 6.4% times asset turnover [sales/assets] of 0.97 times leverage factor [total assets/shareholders' equity] of 5.1. Also, this has improved from 16.4% last year.

Du Pont AnalysisROEProfit MarginAsset TurnoverEquity Multiplier
Current Year31.66.40.975.1
Previous Year16.43.50.95.1

1.2 Undervaluation [compared with sector average]:

+ Price/Earnings of 11 [44.5].

+ Price/Sales of 0.6 [2.0]. 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 31.6% [10.5%].

+ Return on Assets 6.2% [2.0%].

+ Return on Capital Employed 17.7% [4.9%].

1.3 Technicals:

+ In the last three months the stock has hit a new 52-week high twenty-six times, pointing to a significant uptrend.

+ The present value of $A1,000 (PV1000) invested one year ago in Qantas Airways is $A1,929, comprising a capital gain of $A854 and dividend reinvested of $A75.

PV$10001-week1-month1-year
QAN.ASX9829591,929
All Ordinaries Index1,0091,0041,038

+ The present value of AUD1,000 (PV1000) invested twenty years ago in Qantas Airways is $A3,418, including a capital gain of $A1,425 and dividend reinvested of $A993.

+ 20 years Multiplier in AUD = 3.418x

+ Compound Annual Growth Rate (CAGR) in AUD = 6.3%

Present Value of USD1,000 invested 20 years ago:

+ The present value of USD1,000 (PV1000) invested twenty years ago in Qantas Airways is $US3,666, including a capital gain of $US1,601 and dividend reinvested of $US1,065.

+ 20 years ago AUD 1 equalled USD 0.7405

+ 20 years Multiplier in USD = 3.666x

+ Compound Annual Growth Rate (CAGR) in USD = 6.7%

Jul 26, 2017: AUD 1 equals USD 0.79

1.4 Oversold/Bullish/Support Signals:

+ The Stochastic indicator of 19.2 has pierced the oversold line of 20; this indicates the price is close to its 14-day low and is likely to revert to an uptrend.

1.5 Short Selling:

+ The current short volume is 0.7 times its own historical average of 0.1%. It decreased 1.7% from the previous day, plummeted 18.8% from a week ago and plummeted 88.9% from a month ago, a significant bullish indicator.

1.6 High Performance Indicators:

DescriptionValueRank In Market
Today's Turnover$A67.8 millionIn Top 3%
Price/MAP2001.36In Top 4%
EPS Growth %96In Top Quartile
Cash to MCap %22.6In Top Quartile
Price to Sales0.6In Top Quartile
Price/MAP501.0In Top Quartile

SECTION 2

QANTAS AIRWAYS BEARISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 2.6%, divided by average yield of dividend yielding stocks in the All Ordinaries Index of 4.2% is 61.5%. This suggests the stock is overvalued in dividend yield terms.

2.2 Overvaluation [compared with sector average]:

+ Dividend yield of 2.6% [5.4%].

2.3 Low Performance Indicator:

DescriptionValueRank In Market
Total Debt to Equity1.5In Bottom 8%

SECTION 3

PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 12,562,369 shares worth $A67.8 million traded today. In the past week, volume was 1.0 times average and the shares were down 1.8%. The rise has been propped up by firm volume of 1.4 times the average daily volume of 9.2 million shares.

+ Qantas Airways is at a discount of 8.5% to its 12-month high of $A5.90 on June 29. It is also at a premium of 106.1% to the 12-month low of $A2.62 on October 31, 2016.

3.2 Beta:

+ Beta: the Beta of Qantas Airways stock is 0.9. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

3.3 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 90.6% (or a turnover period of 1 year 37 days). This average length of ownership of the stock at 0.7 times the average holding period of 1 year 7 months for stocks in the All Ordinaries Index suggests a slightly 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 47,593 stocks] and Rank in the Asia Pacific Region [out of 2,049 stocks]

DescriptionValueGlobal RankIn APAC Region
MCap (US$)7.8B1,79740
Total Assets (US$)13.3B2,17730
Revenue (US$)12.9B1,04013
Net Profit (US$)817.3M1,13916
Return on Equity %31.61,53670
Net Profit Margin %6.415,195492
Price to Book3.022,5191,106
Price/Earnings10.95,052218
Yield %2.69,262482
PV$1000 (1Year) US$*2,0532,928113
US$* Change (1Year) %90.23,310113

* 1 year ago AUD 1 = USD 0.75

Jul 26, 2017: AUD 1 equals USD 0.79

4.2 Independent Ratings

Qantas Airways Limited was ranked 9 in World Airline Awards list of Top 100 Airlines Companies in 2016; an improvement over a year from rank 10 in 2015.

It is the 707th largest by revenue in the Forbes Global 2000.

It is placed 89/1255 in BSS News Bites' ranking of Australian performers in the past year, a percentile ranking of 93.

SECTION 5

QANTAS AIRWAYS FINANCIALS

5.1 Financials Summary

Year endedJun 2016Jun 2015Jun 2014
Sales (USD B)12.912.612.2
Pretax (USD)1.1B628.1M(3.2B)
Net (USD)819.2M443.4M(2.3B)
EPS (AUD)0.490.25(1.3738)

5.2 Annual Report for the year ended June 30, 2016 (year-on-year comparisons with previous corresponding period)-

Qantas Airways Net Profit up 85%

Favourable Changes:

+ Net profit up 84.7% from $A557.0m ($US427.7m) to $A1.0b ($US764.7m)

+ Total revenue up 2.4% from $A15.8b ($US12.1b) to $A16.2b ($US12.0b).

+ EBIT Margin up from 7.2% to 10.5%.

+ Interest cover up 84.4% from 3.3 to 6.0.

+ EBIT to total assets up from 6.5% to 10.2%.

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

+ Profit before tax to Revenues up from 5% to 8.8%.

+ Interest expenses to Revenues down from 2.2% to 1.8%.

+ Debt to Equity down 8% from 1.6 to 1.5.

+ Total non-current assets to Total Assets up from 71.2% to 79.3%.

+ Fixed Assets to Total Assets up from 61.1% to 69.9%.

+ Total Liabilities to EBITDA of 4.7 compares favourably with the Joseph Piotroski benchmark of <5. This ratio has improved by 28.6% from the previous year's ratio of 6.6.

+ Total Liabilities to Operating Cash Flow of 4.8 compares favourably with the Joseph Piotroski benchmark of <4. This ratio has improved by 30.7% from the previous year's ratio of 6.9.

Unfavourable Changes:

+ Interest revenue to Revenues down from 0.6% to 0.4%.

+ Current ratio down 27.9% from 0.7 to 0.5.

+ Total current assets to Total Assets down from 28.8% to 20.7%.

+ Cash to Total Assets down from 16.6% to 11.9%.

Note:

+ Depreciation to Revenues up from 6.9% to 7.6%.

+ Tax expenses to Revenues up from 1.4% to 2.4%.

+ Current Inventory to Total Assets up from 1.8% to 2%.

+ Net tangible assets per share steady at $A1.56 ($US1.2).

5.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (c)
26 Jul 201714

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 1,808,226,377 issued shares the market capitalisation is $A9.8 billion.

SECTION 7

REPORTED BUYING AND SELLING

Insider Buying and Selling

Reported Buying:

May 23: Qantas Airways substantial shareholder buys

Qantas Airways (ASX:QAN) substantial shareholder BlackRock Group bought 94,572,395 shares worth $A459,621,840 ($US343,613,287) on May 19. The purchase price was $A4.86.

March 30: Qantas Airways substantial shareholder buys

Qantas Airways (ASX:QAN) substantial shareholder BT INVESTMENT MANAGEMENTLIMITED (BTT) bought 21,449,268 shares worth $A84,939,101 ($US65,156,785) on March 28, reducing 15.2% from 140,931,486 shares to 119,482,218 shares. The purchase price was $A3.96.

March 23: Qantas Airways substantial shareholder buys

Qantas Airways (ASX:QAN) substantial shareholder UBS Group AG and its associates bought 95,829,066 shares worth $A363,192,160 ($US279,730,602) on March 17. The purchase price was $A3.79.

Reported Selling:

May 30: Qantas Airways substantial shareholder sells

Qantas Airways (ASX:QAN) substantial shareholder HSBC Custody Nominees (Australia) Limited. sold 30,936 shares worth $A149,730 ($US111,429) on May 24. The selling price was $A4.84.

April 06: Qantas Airways substantial shareholder sells

Qantas Airways (ASX:QAN) substantial shareholder WESTPAC BANKING CORPORATION sold 21,816,820 shares worth $A85,521,934 ($US64,791,418) on April 04, reducing 13.9% from 156,421,952 shares to 134,605,132 shares. The selling price was $A3.92.

SECTION 8

STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

April 06: Qantas Airways appoints Company Secretary

Qantas Airways has appointed Debra Joan Smith as Company Secretary. The effective date is Thursday, April 06.

April 06: Qantas Airways will appoint Non-Executive Director

Qantas Airways will appoint Richard Goyder as Non-Executive Director. The effective date is Sunday, October 01.

February 25: Qantas Airways announces dividend

Qantas Airways today announced an interim dividend of 7.0c per share, franked to 50%. The ex dividend date is Tuesday, March 07, 2017 and the record date is Wednesday, March 08, 2017 and it is payable on Monday, April 10.

November 16 2016: Qantas Airways buys back 641,167 shares

Qantas Airways (QAN.AU) announced a buyback of 641,167 shares worth $A2,016,086 (or $US1,520,532) on November 15, 2016. The buyback price was $A3.14.

November 15 2016: Qantas Airways: Cancellation of Buy-Back Shares

Further to the ASIC Form 484 Change to company details, notifying the cancellation of shares, as lodged on 28 October 2016, please see attached additional ASIC Form 484s notifying recent cancellations of shares, as lodged with ASIC, with details as follows

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