The interim profit reporting season confirmed that plenty of companies see favourable growth prospects going forward – and while for many of these, the opportunities had been baked-in to the share price and price/earnings (P/E) ratio by an expectant market, there were some situations where investors could enjoy a robust result while also seeing scope for the share price to move higher. Here are five such situations.
1. CSL (CSL, $195.66)
Market capitalisation: $88.6 billion
FY20 forecast price/earnings (P/E) ratio: 29.6 times (FN Arena)
FY20 forecast dividend yield: 1.5%, unfranked
Analysts’ consensus target price: $203.95 (FN Arena), $205.16 (Thomson Reuters)
One of the very few frustrating things about owning global biotech heavyweight CSL is that while it continues to deliver, the market often expects more. The interim result last month was a familiar story: CSL beat market estimates with a 7% rise in interim net profit, to $US1.2 billion ($A1.7 billion); lifted its Australian-dollar interim dividend by 20% to $1.20 a share and lifted its full-year guidance, but the market was unimpressed (the shares initially fell by 7% on the release.) CSL was simply expected to do as well as it did. And confirming that full-year FY19 guidance would be at the upper end of the previously stated $US1.88 billion–$US1.95 billion range – compared to US$1.73 billion in 2018 – was not considered to be a rosy enough outlook: the market was hoping for the guidance band to be moved higher, not just confirmed at the upper end.