We’re in a busy period for company reporting right now, with first-half results coming in from a lot of our big names. Here’s a look at three reporting their figures in the coming week:
Downbeat miner
Rio Tinto (LSE: RIO) should be telling is how its first six months went on Thursday, 6 August, and although the sector is under the hammer with commodities prices down, Rio’s production figures for its second quarter looked good. Released on 16 July, the report told us of an 8% rise in iron ore shipments on the half, from a 11% rise in production — and iron accounts for around half of the company’s sales.
Analysts are expecting full-year earnings per share to drop by about half, and although Rio’s share price has lost 28% over the past 12 months to 2,461p, that would still suggest a P/E of over 15. I think Rio is a good buy for the long term, but with Chinese problems continuing, there could be more short-term pain.
Steady insurer
The day before that, on Wednesday, we’ll have an update from a very different business in the shape of Legal & General (LSE: LGEN). Along with a steadily recovering sector, Legal & General’s shares have put on 11% in the past 12 months, to 260p, and have just about trebled in value over five years.
Even after that rise, we’re still looking at a forecast P/E of under 14, dropping to around 12.5 on 2016 predictions — and shareholders should be seeing dividend yields of 5 to 5.5% this year and next. After a Q1 that saw the firm’s cash generation reach record levels with operational cash up 11% year-on-year, the dividends look safe enough — cover should come in a little above 1.4 times. I reckon this is a great company in a strong sector.
The market itself
On the same say we should get a first-half report from the London Stock Exchange (LSE: LSE) itself, and this is another company expected to do well with double-digit rises in EPS on the cards for this year and next. In a pre-close update, chief executive Xavier Rolet told us the company had “continued to perform well”, after the average value of daily UK equity trading had risen by 8%.
At 2,610p and after a 12-month gain of 45%, the shares aren’t cheap, mind — forecasts suggest a P/E of more then 22, which is a good 50% higher than the market average, and dividend yields should be less than 1.5%. Although it represents a strengthening sentiment towards financial markets in general, that P/E looks just too high to me and I can’t see the stock’s recent rapid growth continuing much further.
