CSR – Building Earnings

 

 

Disclaimer

This post is one of a series looking briefly at a few stocks in the ASX 300 Index (XKO). It provides information that may be of interest to readers but is no substitute for professional investment advice.

Background information  – Profile

http://www.csr.com.au/About-Us/Pages/default.aspx

CSR is the name behind some of the market’s most trusted and recognised brand names in providing building products for residential and commercial construction.

Names that builders and generations of Australians have come to know and trust. Like Gyprock™ plasterboard, Bradford™ insulation, PGH™ bricks and pavers, Monier™ rooftiles and Viridian™ glass to name a few.

We operate low cost manufacturing facilities and a strong distribution network to service our customers across Australia and New Zealand.

And because these products come from CSR, our customers can be sure that they are manufactured to meet all relevant building codes and standards to do the job.

We’re continually re-investing in our business to meet new challenges in construction.

We’re also continuing to invest in research and development to develop new products to help our customers meet these challenges.

Products like energy efficient Viridian™ glass, Bradford™ insulation and lightweight Hebel® concrete to make Australian homes more energy efficient. We endeavour to develop more innovative products right across our portfolio targeting the buildings of the future. Our customers benefit from our knowledge and our expertise.

It means we have the resources to provide our customers with the service they need to get their job done.

CSR is also a joint venture participant in the globally cost competitive Tomago aluminium smelter, located near Newcastle, NSW.

CSR generates additional earnings from its Property division which focuses on maximising financial returns by developing surplus former manufacturing sites and industrial land for sale.

Technical Analysis

Weekly MMA chart

On the 'up and up'?

On the ‘up and up’?

Monthly MMA chart

The big picture

The big picture

Points of relevance:

  • Long-term shareholders have endured the pain of seeing the price of their shares eroded from a high of $8.91 in March 2006 to a low of $1.24 in August 2012.
  • The share-price over the past two years has rebounded strongly from this low to a high of $3.86 in April 2014. Optimum entry to the trend for investors was signalled by crossing-over of the averages between September 2012 and June 2013, at prices between $1.50 and $2 approximately.
  • The weekly chart suggests that the SP after easing, is now again testing this resistance, and today ((August 5) trading is at $3.75
  • Of relevance is whether continuing momentum will break through this resistance. Failure to do so would create a ‘double top’ a feature that suggests a possible change in trend. The continuing momentum of the medium-term averages suggests that this is unlikely
  • If the uptrend continues unabated, the next targets suggested by Fibonacci levels on the monthly chart are $4.20 at 38.3% and $5 at the 50% level.

Key Fundamental Metrics

  • P / E ratio = 22.91
  • Dividend yield is 3.2%, Unfranked. Pay-out ratio is 70%
  • Debt / Equity = 3.1%
  • ROE = 6.6%
  • Total return in the past 12 months = 71.4%
  • EPS is forecast to increase from 14.2 c/s in 2014, to 27.4 c/s in 2017.

Conclusions

The continuing strong upward momentum of the medium-term averages is encouraging for long-term investors to continue to hold their positions.

The return for shareholders in the last year was outstanding.

The company is almost debt-free, but most significantly, Earnings per Share are forecast to almost double in the next three years.

 

 



Categories: Business, Chart Analyses, Trading opinion

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