We’re still in that time of year when first-half results from companies with years ending in December are coming regularly, and though this week has been relatively light on big-company news, we’ll have plenty coming our way next week:
Still climbing!
Just when you might have thought housebuilder share prices could be topping out, they’ve put on a fresh spurt. In fact, since 27 July, Bovis Homes (LSE: BVS) shares have gained another 10%, to reach 1,198p, for a 12-month rise of 49% and a quadrupling since November 2008. Oh, and there was a 4% dividend yield on top of that in 2014, with 3.4% expected this year. And even after all that, the shares are still on a forecast P/E of only 12 for this year, falling to under 10 on 2016 forecasts.
The company’s July trading update told of a record six months for completions, at 1,525 homes, with a 6% boost to average selling prices. CEO David Ritchie spoke of strong business in “a positive UK housing market“, and the company confirmed its plan to lift the dividend by 14%.
Full first-half results should be with on on Monday, 17 August, and it’s unlikely there’ll be any surprises.
Commodities collapse
The markets have not been so kind to Glencore (LSE: GLEN), whose shares are down 51% over the past 12 months, to 176p. However, just as a soaring Bovis might still be cheap, so might a slumping Glencore still be too pricey. We’re already expecting a fall in EPS this year which would put the shares on a forward P/E of 15, and it’s only a 50% rebound forecast for 2016 that’s holding the shares as high as they are.
The big question is whether that’s a realistic expectation. Analysts’ forecasts have been sliding month on month, but they look like they might have bottomed out now. But, Chinese economic figures keep on disappointing, and the slowdown there could well go on for longer than expected — and this week’s devaluation of the Yuan in an effort to boost Chinese exports makes that seem more likely.
Against that, there’s a very clear Buy consensus amongst analysts, and that mooted EPS rise in 2016 would drop the P/E to 10. Undervalued, or are there more falls to come? Interim results on Wednesday might help you make your mind up.
Cheap oil?
Another big faller is Premier Oil (LSE: TLW), whose shares are down 66% in the past 12 months, to 108p. But the thing with Premier is, it has already written down the value of a lot of its assets as the price of oil has slumped, yet its shares are still trading at only around 0.5 times net asset value.
And Premier is expected to be profitable, with a forecast return to decent earnings for 2016 dropping the P/E as low as 10.3. The oil price over the next couple of years could give Premier Oil investors a somewhat rocky ride, but at today’s valuation I see a relatively modest downside risk and plenty of scope for an upwards re-rating when oil finally recovers.
Interim results due on Thursday should shed some more light.