Woolworths – 3Q17 Earnings

Posted on | by Leon Hinde | Leave a Comment on Woolworths – 3Q17 Earnings

WOW has reported very strong Aust Food sales for the 3Q17.

If we assume FY18 revenue of $57b, EBITDA $3.5b, Net Profit $1.55b and dividends increasing from $0.70 in FY17 to $0.80 cents in FY18, it places WOW on a forward yield of 3%.

Based on the above metric, we think WOW is now fully valued and investors should add a covered call above the market to enhance the return.

Chart – WOW

 

 

 

RBA Preview: Aussie Dollar Still Trending Lower

Posted on | by Todd | Leave a Comment on RBA Preview: Aussie Dollar Still Trending Lower

The Reserve Bank is expected to keep the official cash rate unchanged tomorrow, ahead of the federal government’s budget next week. Over the weekend, fresh concerns emerged that China’s economic recovery might not be as strong as expected, which may also be included in the RBA’s statement.

The consensus is that the 1.5 per cent benchmark interest rate will remain on hold, but some analysts believe it could be raised in the next few months with the domestic economy more resilient than ­expected.

However, renewed signs appeared yesterday that China’s economic growth trajectory could prove more volatile in 2017 than first thought after a surprising fall in manufacturing output.

It’s our base case that the RBA still maintains an easing-bias, and that the next move on rates will be lower. As such, we expect to see a protracted move lower in the AUD/USD, with a medium-term target near the January low of .7150.

We have suggested that investors looking to profit from a lower AUD/USD can buy the BetaShare YANK ETF. This an an inverse ETF, with a 2.5% weighting, which gains value as the AUD/USD trades lower.

Chart – YANK ETF