Italian stock report - Finmeccanica
Leonardo decreases on firm volume June 15, 2018 17:30 CEST
NEWS BITES - EUROPE
Leonardo Spa (MI:LDO), Italy's 4th largest Industrial goods & services company by market cap, has decreased 6.0c (0.7%) from its last trading session of June 14 to close at EUR8.94. Compared with the FTSE MIB Index which fell 176.8 points (0.8%) in the day, the relative price increase was 0.1%. The fall was exacerbated by firm volume of 1.3 times the average daily volume of 2.5 million shares.
Highlights in today's Report:
SECTION 1 BEARISH SIGNALS
SECTION 2 BULLISH SIGNALS
SECTION 3 PRICE VOLUME DYNAMICS
SECTION 4 RELATED NEWS
SECTION 5 GLOBAL RANKING
SECTION 6 SUMMARY FINANCIALS
SECTION 7 PROFILE
SECTION 1 LEONARDO BEARISH SIGNALS
+ The relative yield of LDO, defined by its yield of 1.6%, divided by average yield of dividend yielding stocks in the FTSE MIB Index of 2.7% is 58.4%. This suggests Leonardo stock is overvalued in dividend yield terms.
+ Total Liabilities/EBITDA of 29.9 which compares unfavourably with the Joseph Piotroski benchmark of 5.
+ Net profit margin has averaged 2.6% in the last 3 years. This suggests the company is less profitable with a low margin of safety.
1.2 Overvaluation [compared with sector average]:
+ Dividend yield of 1.6% [2.0%].
+ The price dropped 3.7% in the last month. The fall has been exacerbated by robust volume of 1.6 times average for the month.
+ In the last three months the stock has hit a new 52-week low twice.
+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 8.89 minus the 26-day EMA of 9.0 is negative 0.11 suggesting a bearish signal.
1.4 Low Performance Indicators:
|Description||LDO Value||Rank In Market|
|EPS Growth %||4.3||In Bottom 7%|
|% Prem to Vol Wtd Price||0.8||In Bottom Quartile|
SECTION 2 LEONARDO BULLISH SIGNALS
+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.2. Compared with the rest of the market the stock is undervalued and ranks in the top quartile of stock by value of Q Ratio.
+ As per the Du Pont analysis, Return on Equity of 11.6% is better than sector average of 0.4%. This is computed as net profit margin of 4.2% times asset turnover [sales/assets] of 0.53 times leverage factor [total assets/shareholders' equity] of 5.8.
2.2 Undervaluation [compared with sector average]:
+ Price/Earnings of 10.2 [27.2].
+ Price/Sales of 0.4 [0.9]. We estimate Leonardo stock is trading at a current year Price/Sales of 0.4 and a forward year Price/Sales of 0.4.
+ Return on Assets 2% [1.5%].
+ Return on Capital Employed 12.6% [9.8%].
+ The present value of EUR1,000 (PV1000) invested five years ago in Leonardo is EUR2,402, including a capital gain of EUR1,365 and dividend reinvested of EUR37.
+ 5 years Multiplier in EUR = 2.402x
+ Compound Annual Growth Rate (CAGR) in EUR = 19.2%
Present Value of USD1,000 invested 5 years ago:
+ The present value of USD1,000 (PV1000) invested five years ago in Leonardo is $US2,092, including a capital gain of $US1,060 and dividend reinvested of $US33.
+ 5 years ago EUR 1 equalled USD 1.328
+ 5 years Multiplier in USD = 2.092x
+ Compound Annual Growth Rate (CAGR) in USD = 15.9%
Jun 15, 2018: EUR 1 equals USD 1.16
2.4 High Performance Indicators:
|Description||LDO Value||Rank In Market|
|Today's Turnover||EUR29.7 million (US$34.3 million)||In Top 4%|
|Price to Sales||0.4||In Top Quartile|
SECTION 3 LEONARDO PRICE VOLUME DYNAMICS
+ Volume: there were 3,320,000 shares worth EUR29.7 million (US$34.3 million) traded today. In the past week, volume was 1.3 times average and the shares were up 3.5%.
+ Leonardo is at a discount of 20.7% to its 12-month high of EUR11.27 on January 17. It is also at a premium of 8.1% to the 12-month low of EUR8.27 on May 30.
Turnover Rate & Turnover Period:
+ The turnover rate in the 12 months to date was 110.6% (or a turnover period of 10 months). This average length of ownership of the stock at 0.9 times the average holding period of 11 months for stocks in the FTSE MIB Index suggests a larger number of speculators on the share register, making it less safe for long-term investors.
3.2 The Past Quarter
+ Leonardo Spa (MI:LDO), has decreased 44.27c (or 4.7%) in the past quarter to close at EUR8.94 today. Compared with the FTSE MIB Index which fell 404.0 points (or 1.8%) in the past quarter, this represented a relative price change of -2.9%.
SECTION 4 LEONARDO RELATED NEWS
4.1 Corporate Wires
Leonardo (LDO) issued 1 new Release this week.
June 13: Leonardo signs defence systems collaboration agreement with Konstrukta Defence in Slovakia
The new commercial partnership will see the two companies integrating Leonardo's precision-guided 'Vulcano' ammunition onto Konstrukta's 'ZUZANA 2' 155mm/52 cal artillery system and jointly marketing the products to international customers The agreement supports the aims of the European PeSCo (Permanent Structured Cooperation) initiative which aims to develop common defence capabilities and counts both Italy and Slovakia as members As a key player in the guided ammunition field, Leonardo is expertly positioned to offer state-of-the-art products and technology for customers worldwide
Leonardo has signed a collaboration agreement with Slovakia's Konstrukta Defence, a leading provider of artillery systems, that will see the two companies working together in the precision-guided ammunition field.
The agreement will see Leonardo's precision-guided Vulcano ammunition integrated onto Konstrukta's ZUZANA 2 155mm/52 cal artillery system, with the two companies going on to jointly market the products internationally.
To view the previous 3 months' Releases in full, click here
4.2 Other News
+ Vanguard Total World Stock ETF:
The stock was one of 7581 global stocks selected by Vanguard Total World Stock ETF (VT) who bought 13,152 shares in the period Jan 31, 2018 to Apr 30, 2018 worth $US125,832 at an estimated Volume Weighted Average Price (VWAP) of $US9.5675. As at Apr 30, 2018, the Vanguard Total World Stock ETF held 123,996 shares worth $US1,438,902 or 0.01% by value of the ETF's portfolio [Ranked 1748 out of 7581 by value and 19 out of 87 for Italy].
SECTION 5 LEONARDO GLOBAL RANKING
Global Rank [out of 47,577 stocks] and Rank in the Europe Region [out of 8,515 stocks]
|Description||Value||Global Rank||In Eur Region|
|Total Assets (US$)||29.4B||1,340||298|
|Net Profit (US$)||584.2M||1,665||373|
|Return on Equity %||11.6||11,351||2,259|
|Net Profit Margin %||4.2||19,817||3,195|
* 1 year ago EUR 1 = USD 1.13
Jun 15, 2018: EUR 1 equals USD 1.16
SECTION 6 LEONARDO SUMMARY FINANCIALS
6.1 Dividend History
+ Trailing 12 months dividend has unchanged from 14.0c in 2017 to 14.0c in 2018.
6.2 Financials Summary
|Year ended||Dec 2016||Dec 2015||Dec 2014|
|Sales (USD B)||16||17||17.3|
|Pretax (USD M)||784.5||545.1||59|
|Net (USD M)||595.8||574.5||(36.6)|
+ Net profit was up 3.7% from US$574.5 million in 2015 to US$595.8 million in 2016.
+ Earnings Per Share (EPS) was up 4.3% from 84.30c to 87.90c.
SECTION 7 LEONARDO PROFILE
Leonardo SpA, formerly Leonardo Finmeccanica SpA, is a global high-tech player in Aerospace, Defence and Security. With headquarters in Italy and over 47,000 employees, Leonardo has a consolidated industrial presence in four main markets (Italy, the UK the U.S. and Poland), and an important network of strategic partnerships in the main high potential markets worldwide. Leonardo builds its competitiveness and success on two main pillars: first, continuous innovation, to be at the forefront of technology, and second, a customer-focused culture, an essential part of its commercial strategy.
7.2 Top Management
The chairman is Giovanni De Gennaro and the chief executive officer is Alessandro Profumo.
7.3 Issued Capital
Based on 578,150,000 issued shares the market capitalisation is EUR5.2 billion (US$6 billion).
Contact: 39 06 324731
Physical Address: Piazza Monte Grappa, 4
Country of Incorporation: Italy
Exchange: Borsa Italiana
Business Sector: Chemicals
Industry Group: Chemicals
Industry: Commodity Chemicals
Activity: Industrial Gas
Economic Sector: Basic Materials
MI:LDO; BIT:LDO; IM:LDO; LDOF.MI