Today I’m looking at three stocks making the news in Monday business.
Raw materials goliath Vedanta Resources (LSE: VED) was recently dealing up over 2% in start-of-week trading after releasing exceptional production numbers.
The company churned out record quantities of copper cathodes, aluminium, silver and electricity between January and March, Vedanta reaping the fruits of improved efficiency, better ore grades and production expansions across its major commodity classes.
Also, Vedanta’s iron ore division finished the quarter with a production run rate of 800,000 tonnes per month, reflecting ongoing expansion work in Goa and the resolution of previous transport issues.
Major producers like Vedanta are hiking volumes to mitigate the impact of subdued commodity prices, of course, and to put higher-cost operators out of business. But such measures are casting a huge pall over future earnings as chronic supply/demand imbalances look set to persist.
The City expects Vedanta to punch losses of 128 US cents per share in the year to March 2016. And the firm is anticipated to remain in the red until fiscal 2018 at the earliest as commodity prices look set to languish. I believe the metals and energy giant is a risk too far at the present time.
The market was much less receptive to Carr’s Group (LSE: CARR) in Monday business, the diversified agricultural business dealing down 4% from Friday’s close at time of writing.
The company announced that pre-tax profit slipped 0.9% during September-February, to £10.5m, the result prompted by a 9.4% revenues decline.
Worryingly, Carr’s Group said “the UK agricultural market has suffered from the depressed farm gate milk and livestock prices and we expect this to continue through 2016 and 2017.”
These issues are expected to push earnings 1% lower in the period to August 2016, according to City forecasts, although a 3% rebound is anticipated for 2017. Sure, these figures produce relatively-low P/E ratings of 11.4 times and 11.1 times, respectively. But I believe today’s worrying market outlook could see brokers take the red pen to these earnings predictions.
Iodine producer Iofina (LSE: IOF) has emerged as one of Monday’s big winners, the company shooting 89% higher from the end of last week.
Iofina announced that it had produced 124.6 metric tonnes of crystalline iodine between January and March. Although down from 127.9 metric tonnes during the corresponding 2015 period, the company had six of its IOsorb plants running last year compared with five during the last quarter.
Most promisingly, Iofina reaffirmed its target of producing 250-270 metric tonnes of iodine in the first half. And while the firm has seen iodine prices for large users fall below $25 per kilo, Iofina said that it “has seen recent signs of price stabilisation across the global iodine market.”
The City expects Iofina to record further losses in 2016 before bouncing into the black next year. However, 2017’s projection leaves the firm dealing on a P/E rating of 34.6 times. I reckon such a multiple remains far too heady given the still-patchy outlook for iodine values.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.