Three Stocks Under Spotlight: AAL, MCRO, CRH

Companies that have given consistent dividend yields over a long period of time have also taken the buyback route to reward shareholders. Here we are discussing some prominent companies which, in recent times, have initiated stock buybacks. AAL had commenced its buyback of ordinary shares from Morgan Stanley for $0.55 per share (Total number of shares bought back- 2,142,946). Similarly, MCRO carried out $200 million of share buyback for its shareholders. CRH also successfully executed buyback of ordinary shares amounting to €350 million. The comparative chart of stock prices of these stocks is shown below.

(Source: Thomson Reuters)

Anglo American PLC

Anglo American PLC (AAL) is headquartered in London and was founded in 1917. Its principal operations include mining, exploring and processing of metal and minerals globally. The group mainly Explore’s metals such as copper, platinum, diamonds, iron, nickel, manganese and thermal coal. The group has mining operations in Africa, the Americas and Australia.

Financial Highlights for H1 FY19

In H1 Financial Year 2019, the company’s reported revenue increased by 8 per cent to $14,772 million as compared to $13,698 million in H1FY18. Underlying EBITDA surged by 19% to $5,451 million against $4,577 million in H1 FY18, while mining EBITDA margin rose to 46 per cent from 41% in the same period previous year, reflecting strong prices, mainly for iron ore and the PGMs basket. The company’s attributable free cash flow was $1.3 billion, a decrease of 17 per cent as compared with the corresponding period of the last year. Cash flows from operations stood at $4.2 billion, an increase from the previous year same period data. Capital expenditure increased to $1.4 billion. Profit attributed to equity shareholders climbed by 46 per cent to $1.9 billion as compared to $1.3 billion in H1 FY18. Underlying earnings per share stood at $1.58, an increase of 28 per cent against the $1.23 in H1 FY18. Earnings per share increased by 45 per cent to $1.48 in H1 FY19 as against H1 FY18. The board proposed a dividend per share of $0.62, an increase of 27 per cent from the previous year same period data. Group’s attributable ROCE increased to 22 per cent as compared to 19 per cent in H1 FY18.

In H2 FY19, the company expects to start expending 60 per cent share of capital expenditure relating to Quellaveco. For the second half of the year 2019, Capital expenditure is projected to be in the range of $2.4 – $2.7 billion and in line with the guidance for the year of between $3.8 billion and $4.1 billion.

 

AAL Share Price Performance

On 13th August 2019, at the time of writing (before the market close, GMT 03:06 PM), Anglo American PLC shares were trading at GBX 1,833.4 and inched up by 0.88 per cent as compared with the previous day’s closing price. Stock’s 52-week High is GBX 2,294.00 and 52-week Low is GBX 1,433.64. The group’s stock beta as on date was recorded at 1.60, reflecting higher volatility in comparison to the benchmark index.

In the past 1 year, AAL shares have delivered a positive return of 8.98 per cent. Also, on a YTD (Year-to-Date) basis, the stock surged by approximately 3.98 per cent and was down by 3.98 per cent in the last three months with an overall gross dividend yield of 4.76 per cent.

The company has been consistent in paying dividends to investors. In the last seven years, the company’s highest dividend yield has been of 7.45 per cent (FY15), while its lowest has been of 2.88 per cent (FY12). The mean annual dividend yield was around 4.03 per cent in the past seven years.

 

Micro Focus International PLC

Micro Focus International PLC (MCRO) is a British company engaged in the business of delivering and supporting software solutions, and its business involves acquiring companies whose margins it believes can improve and which has a favourable business model. The company operates five portfolios with approximately 300 product lines and helps around 40,000 customers, ranging from small and medium-sized enterprises to most of the companies featured on the Forbes Global 2000.

Financial Highlights for H1 FY19

Revenue from continuing operations declined by 5.3 per cent on a constant currency basis, though it was in line with the guidance with full-year guidance of minus 4 per cent to minus 6 per cent.
Statutory operating profit rose by 2.5 per cent to $32.6 million in H1 FY19, while adjusted EBITDA at constant currency basis was $662.3 million. Adjusted EBITDA margin at constant currency rose by 2.8 ppt to 40 per cent from 37.2 per cent in H1 FY18.

Profit for the period, which includes profit from discontinued operations, was $1,397.1 million, representing an increase of 125.5 per cent, while adjusted diluted earnings per share growth from continuing operations was 8.4 per cent to 85.53 cents in H1 FY19 as compared to H1 FY18The company reported adjusted cash conversion ratio of 115.1 per cent and free cash flow of $429.9 million, while adjusted net debt was $3,807.5 million at 30 April 2019 with net debt to Adjusted EBITDA multiple of 2.7 times.

The group reconfirmed its revenue target from the continuing operations for the financial year ending 31 October 2019 to minus 4 per cent to minus 6 per cent, while leverage remains at the medium-term target of 2.7x. Coupled with operational efficiency and disciplined capital allocation, and underpinned by effective long-term product management, the company continues to execute its strategy and business model to deliver returns.

However, one of the biggest impediments to its growth has been the integration of software division of Hewlett Packard which it bought for £7 billion in 2017, and which the company admitted in the recent filing “remains a complex and significant programme of work” as it has proved to be more time consuming and costly than anticipated.

MCRO Share Price Performance

On 13th August 2019, at the time of writing (before the market close, GMT 03:12 PM), MCRO shares were trading at GBX 1,609.6 and declined by 1.94 per cent as compared with the previous day’s closing price. Stock’s 52-week High is GBX 2,174.50 and 52-week Low is GBX 1,164.68. The group’s stock beta as on date was recorded at 1.40, reflecting higher volatility as against the benchmark index.

In the past 1 year, MCRO shares have delivered a positive return of 32.68 per cent. Also, on a YTD (Year-to-Date) basis, the stock surged by approximately 19.34 per cent, though was down by 8.03 per cent in the last three months with an overall gross dividend yield of 6.16 per cent.

In the last seven years, the company’s highest dividend yield has been of 7.14 per cent (FY12), while its lowest has been of 1.72 per cent (FY13). The mean annual dividend yield was around 3.49 per cent in the past seven years.

CRH PLC

CRH PLC (CRH) is an Ireland-based, leading globally diversified building materials group, headquartered in Dublin, Ireland. It deals in building materials worldwide.

Financial highlights for FY18 (€, million)

The sales for the period was €26,790 million, reporting an increase of 6% than in 2017 and 3% ahead on a like-for-like basis, reflecting the strong performance of each of the individual segments.

EBITDA for the year increased by 7% to €3.4 billion. This reflected in EBITDA margin as well which rose by 10bps. Though operating profit (continuing operations) was up by 4% to €2.1 billion for FY 18, profit after tax (continuing operations) plunged to €1.4 billion as compared to previous year.

Basic earnings per share reported a rise of 33% over the year to €302.4 cent in 2018, from €226.8 cent in 2017. In addition, an interim dividend of €19.6 cent per share was paid to the shareholders.

The construction market continues to remain strong, despite certain economic hiccups. The market is assisted by a decent job scenario. Even in turbulent markets like Britain, policies like “Help to Buy” has contributed towards the sector growth. The company is in a great position to take advantage of strong market conditions.

CRH Share Price Performance

On 13th August 2019, at the time of writing (before the market close, GMT 03:17 PM), CRH shares were trading at GBX 2,716 and surged by 2.45 per cent as compared with the previous day’s closing price. Stock’s 52-week High is GBX 2,768.00 and 52-week Low is GBX 1,960.56. The group’s stock beta as on date was recorded at 1.16, reflecting higher volatility against the benchmark index.

In the past 1 year, CRH shares have delivered a positive return of 5.20 per cent. Also, on a YTD (Year-to-Date) basis, the stock surged by approximately 28.01 per cent and was up by 7.98 per cent in the last three months with an overall gross dividend yield of 2.32 per cent.

The company has been consistent in paying dividends to investors. In the last seven years, the company has paid 4.07 per cent (FY12) as the maximum dividend yield and 1.96 percent (FY16) as the minimum dividend yield. The mean annual dividend yield was around 2.90 per cent.

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