It's unbelievable that asb is being shorted after good news.
I'm going to accumulate next week.
Data Analysis
May 26th, 2016 9:24 am
Via Stephen Stanley at Amherst Pierpont Securities:
Durable goods orders surged by 3.4% in April, but the bulk of the increase came from the volatile defense and aircraft sectors. Defense bookings had spiked from $9.6 billion to $15 billion in March so naturally I projected a pullback. Instead, the military spending spree continued, as orders were barely off. It has been 5 years since we have seen such strong back-to-back readings for this category. Meanwhile, civilian aircraft bookings also jumped, from $10 billion to almost $17 billion, despite the fact that Boeing’s reported orders for the month were lackluster. Excluding defense and aircraft, durable goods orders managed a 0.6% gain in April, roughly in line with my expectation. This is certainly better than in recent months (5 of the previous 6 readings had been negative) but nothing to write home about. The strength was led by a pickup in the auto sector. Excluding transportation, durable goods bookings rose by 0.4%, also roughly in line with expectations.
Unfortunately, while the broad aggregates were somewhat better in April, the core capital goods orders figure sagged by 0.8%, offsetting a 0.7 percentage point upward revision to the March level. This category has now fallen in five of the last six months and is down 5% year-over-year. Core capital goods shipments managed a 0.3% rise in April, the first monthly increase since September, but it was offset by a downward adjustment to the March tally. The April bounce, albeit feeble, suggests that capital expenditures, while still sluggish, may not be quite as weak in the current quarter as in Q1, when real business investment in equipment sank at a disastrous 8.6% annualized clip. Nevertheless, in my view, tepid is about as good as we can expect, as businesses are likely to sit on their hands to some degree until the political uncertainty is resolved later this year.
Meanwhile, initial unemployment claims slid by 10,000 to 268,000 in the week ended May 21, returning closer to the range seen before the early May blip higher that came out of New York. Initial claims have averaged 269K so far this year (down from 273K in the second half of 2015 and 284K in the first half of 2015). So, a gentle downtrend remains in place and the latest reading brings the number of new filers back into the prevailing range. As always, the labor market is rock solid.
Broker Call ASB - Ord Minnett rates the stock as Accumulate
Broker Call - May 23 2016
Ord Minnett notes the US Navy wishes to start building its updated frigate version of the LCS program in 2018 rather than 2019 and wants to choose one design in a fixed price, winner-take-all competition. A formal request for the program is expected to be out late in 20 ASB - Macquarie rates the stock as Outperform
Broker Call - May 11 2016
The company has stated at the Macquarie conference that LCS margin is under review. The US Navy is currently considering its LCS budget and will undergo LCS6 shock trials in June, which Macquarie believes will be a factor in determining eventual LCS vessel margins. T ASB - Macquarie rates the stock as Outperform
Broker Call - May 06 2016
Austal has been awarded the government's 21 vessel Pacific Patrol Boat replacement project. Austal's Australian yard will thus have work in hand beyond 2020. The company has also been awarded a contract to pursue long-lead items for the US Navy's 12th Expeditionary Fa ASB - Macquarie rates the stock as Outperform
Broker Call - April 19 2016
Austal has been selected as preferred tenderer for the government's 21 vessel Pacific Patrol Boat replacement project. If formalised, Austal's Australian yard would have work in hand beyond 2020 and an already $3bn order book would see a material addition, the broker note ASB - Ord Minnett rates the stock as Accumulate
Broker Call - April 19 2016
The company is preferred in the tender for the Pacific patrol boats replacement, announced by the federal government. This is expected to provide a base level of throughput for Australian operations over coming years. Ord Minnett believes this contract win puts Austal in ASB - Macquarie rates the stock as Outperform
Broker Call - April 04 2016
Austal has won an order for a Littoral Combat Ship, exercising an option for an eleventh vessel in a 10-vessel block contract. Macquarie believes the share price over-reacted to the profit warning late last year, as the company has a strong balance sheet. Opportunities al ASB - Macquarie rates the stock as Outperform
Broker Call - March 21 2016
Austal has won a US$13.97m LCS study services contract. While not material on its own, this is the fifth one that has been announced in FY16, Macquarie observes. The company's profit warning late last year disappointed the broker but the share price reaction is also c ASB - Macquarie rates the stock as Outperform
Broker Call - February 24 2016
Austal's earnings result was in line with a recent profit warning, with a big fall in margins as guided. Margins were impacted by issues for the LCS6 flowing into the LCS8 and 10, the broker notes. These issues are nevertheless transitory, and Austal has won two new contra ASB - Ord Minnett rates the stock as Accumulate
Broker Call - February 24 2016
First half earnings were slightly below Ord Minnett's forecasts. Management did not provide quantitative earnings guidance for FY16 but the broker remains comfortable with forecasts, given the near-term pipeline of work in the business. The company continues to generate ca ASB - Macquarie rates the stock as Outperform
Broker Call - December 23 2015
Austal has won its largest support contract to date, representing US$52m for the LCS program and US$198m if all options are exercised, the broker notes. The US defence budget for FY16 has now been passed and should lead to a lengthening in Austal's order book in due course.
ASB Price at posting:
$1.33 Sentiment: Buy Disclosure: Held
(20min delay)