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Austal and iSentia Group tanking

Jul 04, 2016 | Team Kalkine
Austal and iSentia Group tanking

Austal Limited


ASB Details
  • Earnings forecast downgrade: Austal Limited (ASX: ASB) stock fell over 8.3% on July 04, 2016 due to lower than estimated earnings forecasts from the group. ASB issued a Statutory Group EBIT forecast in the range $(116) - (121) million for FY2016 due to US$115 million (A$156 million) one off write back of Work in progress (WIP). On the other hand, the group reported that its present cash position would not be affected as the billings to the US Navy are calculated based on actual cost incurred, instead of revenue booked. Austal also forecasted that they would generate positive operating cash flows and is expecting that its FY2017 US shipbuilding margin would be in the range of 5% – 7% while EBIT is in the range of A$45 million – $55 million. The group got a US$11.24 million cost-plus-fixed-fee contract modification from the U.S. Navy to offer emergent availability planning and full ship shock trials (FSST) support for tests to be conducted on Littoral Combat Ship USS JACKSON (LCS 6).
  • Recommendation: We put a “Hold” recommendation on the stock at the current price of $1.11
 
iSentia Group Ltd


ISD Details
  • SaaS revenue growth under pressure: iSentia Group Ltd (ASX: ISD) stock fell over 6.5% on July 04, 2016. The stock has been correcting over 30.5% in the last six months (as of July 01, 2016) due to their lower than estimated SaaS revenue growth. Recently, the group reported that they are boosting their geographical penetration in to the South Korean market with the acquisition of media intelligence company, Social Net Creator Ltd. However, the group could face challenges in the short term and despite the stock fall, ISD is trading at a relatively higher P/E.
  • Recommendation: We give an “Expensive” recommendation on this dividend yield stock at the current price of  $3.15
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