Aurizon 1H20 Earnings

Aurizon Holdings reported 1H20 earnings which were mostly in-line with market forecasts.

1H20 EBIT of $456 million with underlying EPS of $0.136cps. The company continues to payout 100% of earnings in dividends.

Full-year 2020 EBIT guidance remains unchanged at $880m – $930m and the share buy-back program has increased to $400m in FY20.

Aurizon – Buy

Aurizon Holdings is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

We see buying support building at $5.30 and expect the share price to soon trade into the $5.50 to $5.75 range.

AZJ goes ex-div $0.114 on the 25th February.

ALGO Buy Signal For AZJ

Our ALGO engine triggered a buy signal for Aurizon Holdings on Tuesday at $4.24.

This “higher low” chart pattern is referenced to the low of $4.10 posted on June 13th.

AZJ’s FY2018 results, which were released last week, showed a modest 1% decrease in revenue from last year, but the underlying EBIT of $940 million was up 6% from 2017.

With a total dividend of 27 cents, the stock has an effective yield of 6% at current prices.

We expect the initial price target of $4.60 to be reached over the medium term.


AZJ – A Buy/Write Strategy For A 10%+ Return

Our Algo Engine triggered a buy signal for AZJ going into yesterday’s ASX close.

With the stock trading $4.22 today, we now look to accumulate AZJ and sell the Nov $4.40 call to add an additional $0.10 of cash flow for the next 3 months.

AZJ next goes ex-div in Feb 19 for $0.14.

Aurizon Holdings

Algo Update – Short AZJ

Our Algo Engine flagged the recent “lower high” structure in AZJ, and we’ve been highlighting the trade on the blog as one of our preferred shorts.

The stock is $0.40 lower today from last weeks $5.40 high.

Our concern with AZJ, relates to the unsustainable payout ratio.

The downside momentum looks to be increasing for a move to the early October lows near $4.75.



AZJ – Is $5.20 a Shorting Level?

Although we don’t  have a current Algo Engine short signal in AZJ, we remain cautious of the 100% payout ratio the company continues to maintain.

Investors should look at the short side with a stop loss above the $5.23 high.

Chart – AZJ


Aurizon Holdings – FY17 Earnings

AZJ reported its FY17 EBIT of $836m and guided towards  FY18 EBIT growth of 8 – 11% or $900 – 960m.

Losses in both Intermodal and bulk divisions were higher than market expectations. Dividends were reduced to $0.225 for the year but this was offset by the company announcing a $300 million share buy back.

We feel FY18 EPS growth may be optimistic and the reduced dividend is something we’ve been flagging as a potential concern coming into this result.

Assuming dividends remain flat over the next 12 months, it places AZJ on a forward yield of 4.4%.

Chart – AZJ