2 Stocks That Have Advanced Higher Despite Market Downturn - CSL And QBE

  • Nov 21, 2018 AEDT
  • Team Kalkine
2 Stocks That Have Advanced Higher Despite Market Downturn - CSL And QBE

The markets closed at a two-year low dropping below the 5700 mark at 5642 and is testing the investor’s risk tolerance. Despite this market downturn a couple of stocks that made their way up and advance on the rally in the late afternoon are discussed below:

CSL LIMITED (ASX: CSL) – The company’s total operating revenue up 11% on a constant currency basis reached US$7.9 billion. The reported net profit after tax up 29% on a constant currency basis1 was US$1.7 billion, with earnings per share similarly up. A measure which provides how well the company is turning capital into profit, i.e. return on invested capital, was 25.9%. With the average return on invested capital for Australia’s top 15 companies this compares very favorably. The company’s net debt to Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) currently stands at around one point three times 1.3x which denotes that the balance sheet and debt serviceability remain strong. Approximately A$1.28 for the 2018 financial year the Board determined a final unfranked dividend of US 93 cents per share which was paid on October 12, 2018 to the shareholders. The number of shareholders has been increasing over time i.e. by approximately 7% to now more than 158,000 shareholders. The stock traded at a market price of $178.770 with a daily percentage change of 1.718% as at November 21, 2018. It has undergone a performance change of 22.95% over the past 12 months. 

QBE INSURANCE GROUP LIMITED (ASX: QBE) – Towards further simplifying its operations and building an agile, more streamlined and customer-oriented business, QBE’s operations will comprise International, Australia Pacific and North America and Asia pacific will no longer be a separate division. The pricing remained favorable for 1H18 average rate increase of 4.6% during the year. The investment yield is improving with bottom of 2.25%-2.75% target range and upper end of 2.25% - 2.75% target range (incl risk-free rate benefit). Company’s growth asset allocation increased to 12% with 3Q YTD annualized returns of ~12%. The combined operating ratio target for 2018 was 95.0% - 97.0%. Also, the PCA multiple is stable towards the upper end of the target range and the directors are happy with the current strength and positioning of the balance sheet while market conditions are also certainly a little more supportive. The company is also pleased to see fixed income running yield which had increased to 2.2% at Q3. The stock traded at a market price of $11.490 with a daily percentage change of 0.789% as at November 21, 2018. It has undergone a performance change of 3.17% over the past 12 months.


CSL and QBE Dividend Yield, Source: Thomson Reuters.


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