Leonardo (LDO:EUR5.84) drops 2.2% on high volatility 03 July 2020

NEWS BITES - EUROPE

Dateline: Friday July 03, 2020

Leonardo Spa (MI:LDO), Italy's 5th largest Industrial goods & services company by market cap, traded between an intraday low of EUR5.79 and a high of EUR6.07, suggesting a trading opportunity between peaks and troughs. The average daily volatility of 3.8% places Leonardo's stock in the 2nd quartile in the market, meaning it is the moderately volatile. Today its volatility (highest price minus lowest price/lowest price) of 4.8% was 1.3 times the average daily volatility of 3.8%, up from 2.4% on Thursday and 4.5% on Wednesday. A fall in the price on high volatility is a bearish signal. Leonardo's stock price has dropped 13.0c (2.2%) from its previous trading session to close at EUR5.84. Compared with the FTSE MIB Index which fell 160.2 points (0.8%) in the day, the relative price change was -1.4%. There were 4,160,000 shares worth EUR24.3 million (US$27.3 million) traded today. The fall was exacerbated by firm volume of 1.1 times the average daily volume of 3.8 million shares.

Bullish Turning Point

Williams % R

The stock is oversold according to the Williams % R indicator of -86.6, suggesting the price is close to its 14-day low. The Williams % R was previously -72.0.

Stock Summary (traded in EUR)

Currency1 EUR = 1.12 USD Dividend Yield2.4%
Jul 03 closeEUR5.84SectorIndustrial Goods & Services
Ave Daily Volume3,753,138 sharesShares Outstanding578,150,000
52-Week Range4.28 - 11.63Market CapEUR3.4 billion [USD3.8 billion]
P/E6.6EPS Growth (FY2018 vs FY2017)84.2%

ADR Summary (traded in USD)

Home ExchangeItalyTypeUnsponsored
CodeFINMYJul 02 closeUSD3.25
ISINUS3180272086Ave Daily Volume20,487 ADRs
CUSIP31802720852-Week Range2.31 - 6.40
Ratio2 ADRs equals 1 ordinary share

Primary Exchange and Other Listings: Trading Currency and Volume (Excl ADR)

ExchangeTickerCurrencyLastADVTVol % of TotalToday's VI
Borsa ItalianaLDOEUR5.843,743,41699.81.1
FrankfurtFMNBEUR5.914,1700.22.1
Total100.00

ADVT= Avg. Daily Volume of Trading; VI= Volume Index (1 is avg)

Financials Summary: EPS up 84.2% to 88.80c in FY2018

+ Net profit was up 83.8% from USD310.9 million in FY2017 to USD571.3 million in FY2018.

+ Earnings Per Share (EPS) was up 84.2% from 48.20c in FY2017 to 88.80c in FY2018.

Year ended DecFY2018FY2017FY2016
Sales (USD B)13.713.214.3
Pretax (USD M)544.3457.9746.4
Net (USD M)571.3310.9566.8
EPS (EUR)0.8880.4820.879

Click on links to download LDO data

Financials in xls

News Archives Past 4 years in HTML

Patents past quarter in xls

INDEX

SECTION 1 News In The Past Two Months

SECTION 2 Corporate Profile and Independent Ratings

SECTION 3 Today's Bearish Signals

SECTION 4 Ongoing Bearish Parameters

SECTION 5 Today's Bullish Signals

SECTION 6 Ongoing Bullish Parameters

Click here to view the following

SECTION 7 Patents

SECTION 8 Dividend

SECTION 9 Financials FY 2018

SECTION 10 Peer Group Analysis & Ranking

SECTION 11 News Archives (Jul 2018 - Sep 2019)

Glossary

SECTION 1 News In The Past Two Months

1.1 Dividends

May 30: Leonardo announces dividend

Leonardo today announced a cash dividend of 14.0c per share. The ex-dividend date is Monday, June 22, 2020 and it is payable on Wednesday, June 24.

SECTION 2 Corporate Profile and Independent Ratings

2.1 Activities

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.

2.2 Contact Details

Websitehttp://www.finmeccanica.it/
Physical AddressPiazza Monte Grappa, 4 , 00195 ROMA , Italy
Phone39 06 324731
Fax39 06 3208621

2.3 Industry & Sector

Classification LevelName of Sector
Economic SectorBasic Materials
Business SectorChemicals
Industry GroupChemicals
IndustryCommodity Chemicals
ActivityIndustrial Gas

2.4 Independent Ratings

+ Industryweek 1000:

Leonardo Spa is a new entrant in the Industry Week list of the world's largest 1000 manufacturers by Revenues in 2016, ranked 279.

+ Forbes 2000:

It is the 485th largest by revenue in the Forbes Global 2000.

SECTION 3 Today's Bearish Signals

3.1 Rank in the bottom 9% by Price Performance in the Italian market

DescriptionValueRank
Price/MAP2000.68In Bottom 9%
1-month Price Change %-10.8In Bottom 8%

3.2 Downtrend

Today's Volatility:

Today its volatility (highest price minus lowest price/lowest price) of 4.8% was 1.3 times the average daily volatility of 3.8%, up from 2.4% on Thursday and 4.5% on Wednesday. A fall in the price on high volatility is a bearish signal.

Price/Moving Average Price of 0.68 and negative MACD:

- The Price/MAP 200 of 0.68 for Leonardo is lower than the Price/MAP 200 for the FTSE MIB Index of 0.86.

- In the past 200 days this ratio has been under 0.68, 56 times suggesting further downside. The stock is trading below both its MAPs and the 50-day MAP of EUR5.95 is lower than the 200-day MAP of EUR8.64, a bearish indicator. The 200-day MAP has decreased to EUR8.64. A decrease is another bearish indicator.

- The price to 200-day MAP ratio is 0.68, a bearish indicator.

- The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 6.01 minus the 26-day EMA of 6.06 is negative, suggesting a bearish signal. Both the 12-day EMA as well as the 26-day EMA are falling, another bearish signal.

- The price to 50-day EMAP ratio is 0.9, a bearish indicator. In the past 200 days this ratio has been under 0.9 27 times suggesting further downside. The 50-day EMAP has decreased to EUR6.19. A decrease is another bearish indicator.

Past Month:

- Falls to Rises: In the past month the number of falls outnumbered rises 14:9 or 1.6:1.

Trailing Relative Strength (6 months) at 7 percentile:

- The stock has a 6-month relative strength of 7 in the Italian market of 291 stocks and 3 preference stocks indicating it is trailing 93% of the market.

3.3 Other Bearish Signals

- Net profit margin has averaged 3.6% in the last 3 years. This suggests the company is less profitable with a low margin of safety.

SECTION 4 Ongoing Bearish Parameters

4.1 Annualised Period-based Total Shareholder Returns [TSR %]: The Worst Periods with TSR < -1.9%

TSR %1 yr5 yrs10 yrs
LDO.MI-47.1-10.3-2

4.2 Present Value of EUR1000 Invested in the Past [3 Mo, 1 Yr]; The Worst Periods with PVEUR1000 < 968

PVEUR1,0003 mo ago1 yr ago
LDO.MIEUR967EUR529
Industrial Goods & Services sectorEUR1,160EUR828
FTSE MIB IndexEUR1,217EUR901

4.3 The Worst Periods [3 Mo, 1 Yr] with Price Change % < -5.3

1-Year price change of -48.3% for Leonardo underperformed the change of -7.8% in the FTSE MIB index for a relative price change of -40.5%.

Price Change %QuarterYear
Leonardo-5.4-48.3
Industrial Goods & Services sector16-15.8
FTSE MIB index20.4-7.8

4.4 Declining VWAP, down 23% in 5 years

In the past five years Volume Weighted Average Price (VWAP) has decreased by 23.1% to EUR8.16. .

Past five years, 12 months ended Jul 03 (EUR)

YearHigh PriceVWAPLow Price
202011.638.164.28
201911.319.257.19
201810.879.17.8
201712.9310.727.97
201613.110.617.54

4.5 Declining share turnover, down 20% in 5 years

In the past five years, average daily share turnover has decreased 20.2% to EUR28.8 million (US$32.3 million). This suggests decreased liquidity.

Past five years, 12 months ended Jul 03 (EUR million)

YearAverage Daily Turnover
202028.8
201927.9
201823.9
201717.4
201636.0

SECTION 5 Today's Bullish Signals

5.1 Momentum Up 0.2% Past Week

The price ranged between a low of 5.83 on Wednesday, Jul 01 and a high of 5.99 on Monday, Jun 29.

DayLeonardoClose price [EUR]Price change %Relative change %Comment
ThursdayInches higher, resistance at 12-day EMA5.972.4-0.5Top Rise; VI*=1.3
WednesdayDrops to one-month low5.83-1.2-1.0Week-low of 5.83
TuesdayUnderperforms 97% of the market5.9-1.5-1.1VI*=1.1
MondayLifts 2.4% on rising relative strength5.992.41.4VI*=1.3
FridayKeeps sliding, down 7.4% in 3 days5.85-1.8-1.3Steepest Fall; VI*=1.2

[Volume Index (VI); 1 is average]

5.2 Rank in the top 18% by Relative Valuation in the Italian market

DescriptionValueRank
Price/Earnings6.6In Top 17%
Price to Sales0.3In Top 18%

5.3 Undervaluation

Price/Earnings:

Leonardo stock is trading at the fifth lowest P/E multiple in the FTSE MIB Index.

Price/Earnings of 6.6 < sector avg of 10.6:

- Price/Earnings of 6.6 versus sector average of 10.6 and market average of 10.9.

Earnings Yield of 15.2% > Italian ave of 9.2% > Bond Yield of 1.3%:

- Earnings yield of 15.2% is greater than the Italian average earning yield of 9.2%.

- The earnings yield of 15.2% is 11.9 times the 10-year bond yield of 1.3%.

(All figures in %)

Earnings Yield15.2
Italian avg9.2
Dividend Yield2.4
Bond Yield1.3

Dividend Yield > Bond Yield of 1.28%:

The dividend yield of 2.4% is 1.88 times the triple-A bond yield of 1.28%. The times factor of 1.88 is above the benchmark factor of 0.67 times set by Benjamin Graham.

(All figures in %)

Dividend Yield2.4
Bond Yield1.28
Spread1.12

MCap/Total Assets:

- Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.1. Compared with the rest of the market the stock is undervalued and ranks in the top 4% of stocks by value of Q Ratio.

5.4 Other Bullish Signals

- As per the Du Pont analysis, Return on Equity of 11.3% is better than sector average of 11.1%. This is computed as net profit margin of 4.2% times asset turnover [sales/assets] of 0.48 times leverage factor [total assets/shareholders' equity] of 5.7.

5.5 Oversold/Bullish Signals:

- The stock is oversold according to the Williams % R indicator of -86.6, suggesting the price is close to its 14-day low of EUR5.72.

SECTION 6 Ongoing Bullish Parameters

6.1 Rank in the top 24% by Size in the Italian market

DescriptionValueRank
Annual RevenueEUR12.2 billion (US$13.7 billion)In Top 8%
Ave daily TurnoverEUR24.3 million (US$27.3 million)In Top 8%
MCapUSD3.8 billionIn Top 24%

6.2 Improved EBIT Margins:

EBIT margin is positive and has increased from 3.5% to 4.0% in the past year.

FYEBIT Margins (%)
20184.0
20173.5
201612.3
20159.6
20143.3

6.3 Low Debt to Equity (%) and Reducing

The debt to equity ratio of 26.4% is under a safe benchmark figure of 50%. Moreover, it has improved in the past four years.

YearsDebt to Equity (%)
Dec 201826.39
Dec 201733.63
Dec 2016120.7
Dec 2015123.97
Dec 2014164.34

6.4 Increased Volume, up 12% in 5 years

In the past five years, Average Daily Volume of Trading (ADVT) has increased 11.5% to 3.8 million shares.

Avg. Daily Volume Traded 12 months ended Jul 03, million shares

YearADVT
20203.8
20193.0
20184.5
20172.4
20163.4

6.5 Satisfies four criteria of Benjamin Graham

- "An earnings-to-price yield of at least twice the triple-A bond"; the stock's earning yield of 15.2% is 11.9 times the triple-A bond yield of 1.3%.

- "A dividend yield of at least two-thirds the triple-A bond yield"; the stock's dividend yield is 1.9 times the triple-A bond yield of 1.3%.

- "A stock price down to two-thirds of "net current asset value" or "net quick liquidation value"; the price is 0.3 times net current asset value of EUR21.7 per share.

-"Total debt equal or less than twice the net quick liquidation value"; total debt of EUR1.2 billion (US$1.4 billion) is 0.1 times the net liquidation value of EUR12.48 billion (US$14.3 billion).

6.6 Satisfies 5 out of 9 criteria of Joseph Piotroski [pass mark 5]:

- Positive net income.

- Positive operating cashflow.

- Return on Assets improvement [from 1.1% to 2%].

- Good quality of earnings [operating cashflow exceeds net income].

- Improvement in asset turnover [growth in revenue of 4.3% exceeded growth in assets of 3.3%].

Glossary

ADVT: Average Daily Volume of shares Traded

Current Ratio: Current Assets/Current Liabiliites (times)

Debt/Equity: Net Debt/Net Assets %

Dividend Yield: Dividend Per Share/Share Price (%)

EBIT Margin : Earnings Before Interest and Tax/Revenue (%)

Earnings Yield: Earnings Per Share/Share Price (%)

Income during the n years (3/2/1): Dividends received during the Period

Moving Average Price (n periods): Sum of Prices for each Period/Number of Periods

PV1000: Present value of 1000 invested 1 year/'n' years ago

Price Close/Moving Avg Price: Latest Price/Moving Average Price

Price/Earnings: Share Price/Earnings Per Share (times)

Price/Sales: Share Price/Sales Per Share (times)

Relative Price Change [RPC]: Relative price change is price change of stock with respect to Benchmark Index

Relative Strength (6 Months): Price close today/Price close 6 months ago, then ranked by percentile within the entire market.

Return on Assets: Net Profit/Total Assets (%)

Return on Equity (Shareholders' Funds): Net Profit/Net Assets (%)

TSR: Total Shareholder Returns is expressed as an annualized rate of return for shareholders after allowing for capital appreciation and dividend

TTM: Trailing 12 Months

Total Liabilities/Total Assets: Total Liabilities/Total Assets

Turnover Rate: value of annual trading volume as a percentage of market capitalisation

Volatility: Highest Price minus Lowest Price/Lowest Price (%)

Volume Index (VI): Number of shares traded in the period/Average number of shares traded for the period

Volume Weighted Average Price (VWAP): The Volume Weighted Average Price (VWAP) is the summation of turnover divided by total volume in the same period.

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