reported 1H20 earnings which were mostly in-line with market forecasts. Aurizon Holdings
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.
is under Algo Engine buy conditions. Aurizon Holdings
The share price is supported by a combination of the ongoing share buyback program and 100% dividend payout, which places the stock on a forward yield of 4.9%.
AZJ goes ex-div $0.115 on the 25th Feb. Adding a $5.75 June call option boosts the annualized cash flow to 10%.
is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio. Aurizon Holdings
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.
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.
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.
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.
Aurizon has made a lower high formation and we feel the recent rally from $4.75 to $5.30 will run into selling pressure.
We continue to believe
AZJ will come under selling pressure as the company moves to lower the future dividend payout ratio. Chart – AZJ
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
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