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  • Companies Comparison 2012 1Q

    10 largest US and 2 UK companies financial statements are analyzed and here are the main indicators.

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    If looking only at share evaluation and profitability clear leaders is BP, Chevron and Vodapfone. Google and IBM are clear outsiders. Average but still good shares Exxon Mobil, Microsoft and Wal-Mart.

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    If you look at dividend yield and dividend payout ratio again same leaders BP, Chevron and Vodafone. Two companies Jonson&Jonson and Proctor&Gamble has good dividend yield but their payout ratio is quite high compared to other companies. Outsiders high evaluated Google, Apple and IBM.

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    So the best shares at 2012 1Q are: BP, Chevron and Vodafone. According to our methodology these are the top3 largest world companies to invest today. Average but still good shares to invest are Intel, Exxon Mobil, Microsoft and Wal-Mart. Two shares Johnson&Johnson and Proctor&Gamble are a bit pricey and their dividend payout ratio is quite high but they are still at good for investing zone, while last 3 is Apple, Google and IBM which are over-evaluated and IBM has unacceptably low equity level and all 3 have very low dividend yield.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: AAPL, BP, CVX, GOOG, IBM, INTC, JNJ, MSFT, PG, VOD, WMT, XOM
    May 29 2:56 PM | Link | 4 Comments
  • Vodafone 2012 1Q Financial Analysis

    Vodafone 2012 Q1 (yearly) results are negative. Although yearly revenue has increased from 45,9 bn.£ to 46,4 bn.£ (Δ+1,2%), but main indicator Net Income before Depreciation has decreased from 15,8 bn.£ to 14,9 bn.£ (Δ-5,6%). Income analysis is quite poor because company provides only revenue date on quarterly basis. And half year analysis show very differences at 1st half and 2nd half, so only yearly result analysis can be done. Companies fiscal year is at Q1. Also this is the first company that I analyze which has financial statements in other then $ currency.

    Companies main segment Voice 55% has decreased from 27,2 bn.£ to 26 bn.£ but other segments grew more which lead to revenue increase. Main companies revenue ~70% comes from Europe market which should fall in rescission in Y2012. Two large market countries Spain and Italy will be hit the most takes 22% of companies revenue. UK and Germany which should show small growth takes 30%. Remaining markets are South Africa and India (former British colonies).

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    A factor that makes companies evaluation the most complicated is 45% ownership of US company Verizon Wireless. This companies yearly revenue was 18 bn.£ with increase of 4,6% and Net Income before depreciation is 7,2 bn.£ with increase of 6%. Vodafone share of Net Income before depreciation would be 3,2 bn.£. This company has paid 10 bn.$ of dividends to its shareholders Vodafone received 45% of that 4,5 bn.$ or around 2,8 bn.£. It is doubtful that this company will manage to pay such dividends in the futures but ~2 bn.£ would be reasonable, these dividend is already calculated into companies income. If this company would be included into group fully then companies results and geography diversification would be considered as good only lacking China which holdings was sold at China, French, Japan and Poland because company did not had the majority at these companies. In general companies results are negative.

    Companies balance sheet looks normal. Company provides only with half-year balance sheet information. Equity level is steady around 56-57%. Liquidity ratio at the moment is 0,8 but has increased from 2009 Q3 0,5 by increasing current asset and decreasing short term liabilities. After 2010 Q3 companies total asset has steadily declined so as companies equity level due to quite aggressive own share repurchase with 4,6 bn.£ + 6,9 bn.£ paid dividends company has outputted 11,5 bn.£ of its earnings which is 77% from Net Income before depreciation and164% of Net Income which is half lower due to high depreciation cost ~8 bn.£/year lead by telecommunication sector demand for large investments. Decrease of equity is bad for the company in long term as it shrinks companies ability of expansion.

    Investments into long term asset is ~7 bn.$ lack was covered by 7 bn.$ income in sale of companies investments. Companies cash management can be considered as quite aggressive. Companies account payable turnover is 83 days while account payable is even worse 174 days. Taking in consideration liquidity ratio below 1 this is quite risky. In general companies balance sheet is a bit risky.

    Share value:

    Equity / share78,2 bn.£4,96 bn.15,8 £/sh.
    Market value17,1£ (26,9$)+1,3£0,4 years
    Year Net income before Depreciation14,9 bn.£+3,0 £/sh.17,5%

    Companies share basic value is ~15,8£ which is very near to present market value ~17,1£(26,9$ x 0,63734863). Difference 1,3£ which is only 0,4 years of Net income before Depreciation. This shows that companies share is undervalued. Share profitability (Share market price/Net income before Depreciation) is 17,5% which very good ratio.

    Company pays dividends 2 times in a year (unusual to other US share quarterly payments) one Interim - smaller amount at January and Final around double larger dividend at June. Due to that is it quite tricky to calculate. 2012 Interim dividends is 0,464$ Final should be around 1$ so total dividends is ~1,5$ or ~5,6% dividend yield which is very good. If calculating extra dividends connected to Verizon Wireless 0,62$ yield would be even 7,8% but such large dividends from this subsidiary non US company is likely happen on regular basis, but some can be expected at the future also so yield including special dividends should be around ~7% which is even better. Dividend payout ratio if including special dividends is ~40% which is a bit high.

    Analysis source: Vodafone 2012 1Q financial results

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: VOD
    May 29 2:55 PM | Link | Comment!
  • BP 2012 1Q Financial Analysis

    British Petroleum 2012 1Q results is average. Revenue has slightly increased compared to Q4 from 93,4 bn.$ to 94 bn.$ since seasonality has low impact to companies results. Net Income before depreciation has decreased from 10,8 bn.$ to 9,2 bn.$ but profit remains quite good. 4Q profit was influenced by positive effect of 4 bn.$ from gulf of Mexico provision decrease. So earnings at Q4 was ~7 bn.$ and as all oil sector companies showed decrease during Y2011. So taking that into consideration companies earnings are quite good at Q1.

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    Companies revenue is driven 32% by sales in US. Sales in Europe is around the same as us ~1/3 with most strongest positions in UK. Since Europe will mostly fall into recession in Y2012 this will have some negative results on companies results. Companies main earnings come from Downstream, as this segment is less influenced by oil price as they only take their margin in refining and selling fuel at petrol stations this is good for long term results. In general companies results are slightly positive.

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    Balance sheet is steadily improving after downfall at Q3 2010 due to Mexico gulf spill. Till then companies equity level was over 43, after it has decreased to 35%. Since then Equity level has stably increased and now it has reached 39% which is quite good level. If if will increases to somewhat near 50% that could be considered as a good ratio. Liquidity ratio has increased over 1,2 which is acceptable. After the spill it has decreased below 1 which was dangerous, but company managed to comeback.

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    Return on equity is over 20% which is also quite good result. Dividend payments is 1,2 bn.$/quarter or just ~15%. Most of money went to long term property investments which took 8,5 bn.$/quarter. Company has issued new shares rather then buyback old ones for the company this is good, for investor bad as companies profit will have to be shared with more other. In general companies balance sheet is average.

    Share value:

    Equity / share119,2 bn.$3,163 bn.37,7 $/sh.
    Market value38,2$+0,5 $0 years
    Year Net income before Depreciation36,3 bn.$+11,5 $/sh.30%

    Companies share basic value is ~38$ which is the same as current market price (!). This makes companies share value very undervalued. Share profitability (Share market price/Net income before Depreciation) is 30% which very good compared to other companies.

    Company announced that it has increased dividends by 14% from 0,42$/quarter to 0,48$/quarter or ~5% dividend yield which is very good, with dividend payout ratio only ~16% which is also very good level.

    Companies such low share value could be connected to Mexico gulf spill but this was already calculated in 24 bn.$ loss at Q2 2010, figures does not provide any other negative information. Even if 20 bn.$ more loss would appear, still that would be only ~0,6 year of companies earnings and companies like Chevron has 2 years earning add-on and ExxonMobile has 4 years of earnings added to their share price and their risk is not very different from BP except maybe larger market in Europe, but still that not that much.

    Analysis source: BP 2012 1Q financial results

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: BP
    May 29 2:53 PM | Link | Comment!
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    Jun 3, 2012
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