What Worked Australia - 10 Jun 2016 - EPS Revisions proving strong motivator

What Worked – EPS Revisions, both recent and longer term, spiked this week, with the market outperformance largely on the positive revision side, while the names with lower/negative revisions stayed flat to market. EPS Revisions over the last 2 months have started to take over as the defacto momentum signal to follow. Whitehaven Coal (WHC, +11.4%), Beach Energy (BPT, +6.3%) and Fortescue Metals (FMG, +3.9%) all have some of the strongest EPS revisions in the market and all provided significant returns this week.

At the same time, Debt to Equity also provided its strongest performance in the last 2 years by a long way, and produced a long/short return of +4.2% this week – largely impacted by the RBA’s decision to keep rates on hold. This move was not one sided either, with the debt laden names underperforming the market by more than -1%, while the more debt free names saw over +2% outperformance. OZ Minerals (OZL, +3.3%), Western Areas Limited (WSA, +16.3%) and Iluka Resources (ILU, +8.5%) all score low in the Debt/Equity score and showed good returns, while Amcor (AMC, -9.9%), Automotive Holdings Group (AHG, -3.5%) and Telstra (TLS, -2.5%), all with more debt on their books than equity, did not fare so well.

Who Moved – 8 names managed to move this week on higher than normal volumes, and some big moves in there also. On the negative side, UGL Limited (UGL, -37.0%), Atlas Iron (AGO, -15.4%) and Greencross Limited (GXL, -7.2%) all down backed by high volumes, while Liquefied Natural Gas (LNG, +34.7%), Japara Healthcare (JHC, +4.9%) and Spark Infrastructure (SKI, +4.4%) all up on volume.

Summary

PDF Report available here: Download


Log in to comment