What Worked Australia - 10 Mar 2017 - Both Value and Growth off, ROE Positive

What Worked

In an odd week both Value and Growth metrics came off this week. Value, except for Dividend yield, has seen a lot of low PE names hit hard over the last couple of weeks, all in stark contrast to the excellent run over the previous 3 months. Cheap names on a forward PER basis that came off this week were also the ones that were hurt last week, and as with last week the more expensive names tended to remain in line with the market, while the cheaper ones came off sharply again. The Resources names were among the most impacted this week, and continue to get cheaper on a forward PER basis, namely Whitehaven Coal (WHC, -7.3%), Saracen Mineral Holdings (SAR, -10.8%) and Northern Star Resources (NST, -5.2%).

Names ranking highly in terms of forward OP growth were also hit this week, and once again the focus was on Resources. Iluka Resources (ILU, -3.6%), Whitehaven Coal (WHC, -7.3%) and BHP Billiton (BHP, -5.4%) are all among the names with the highest forecast OP growth, and all among the hardest hit this week. On the positive side of things, ROE did see positive numbers in terms of Rank IC, yet this was in large part driven by the middle ground rather than the top and tail of the market. Both the top and bottom quintile of ROE names were off against the benchmark this week.

Who Moved

Only 14 names managed to move on significant volume this week, a small downtick from the previous weeks that have seen a lot of names moving around backed by volume. On the losing side of the market Resolute Mining (RSG, -9.2%), OZ Minerals (OZL, -7.6%) and Evolution Mining (EVN, -6.1%) filled the bottom three positions, while Qube Holdings (QUB, +6.9%), Costa Group Holdings (CGC, +4.4%) and Breville Group (BRG, +2.3%) all finished the week in the black and above the benchmark.


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