|Back at top of what now is a big inverted "Head and Shoulders".
All the sold-off defensives back into, or near, new highs. Probably not surprising given they're pretty much geared to Euros or US Dollars. So a good insurance for UK holders.|
|Thanks ali47fsh for the two contrasting views.
As always it will be about delivery (growth rates of profits). It would surprise me that a good management team would be in business and NOT recognise this when doing their deals. If they don't then their record will be disproven.
I think these operators, like BNZL and to a lesser extent RB., see things in "defensive" markets that consolidation will bring, in terms of economies of scale and margin improvement, that others don't see.
I also added this morning and own BNZL, RPC & RB (similarly "themed" in my mind). Am I missing something?|
|2 contrasting verdicts
shareacast-30/1/17-Gs bullish update 11 feb
Goldman Sachs has upgraded DCC to 'buy' from 'neutral' and lifted the price target to 7,400p from 7,000p, saying recent underperformance provides an attractive entry point.
GS noted the shares have underperformed the Stoxx 600 by 15% since November 2016, mostly likely caught up in a broader sector rotation.
Its de-rating creates an attractive entry point for two reasons, the bank said. Firstly, it pointed to the fact that DCC is not a typical defensive stock, and secondly, it highlighted its significant M&A growth potential and superior returns profile, which it said warrant a premium valuation.
"For the last four reported years, consensus earnings per share estimates for DCC have been revised up by 13%, versus the Stoxx 600 down 18%. We believe M&A and consistent delivery of organic improvement will continue to drive these upgrades over time."
Goldman reckons DCC has the financial headroom to spend close to £1bn on additional M&A over the next two years, based on debt and equity financing. It said that this, along with the pricing of its deals, could add 16% a year to earnings growth.
"At the same time, and owing to its operational efficiency and strong cash generation, we believe that DCC will continue to deliver cash returns significantly ahead of its business services and consumer staples peers."
and the fool finds expensive
This growth stock is set to lag the FTSE 100 in 2017
Image: DCC Group; Fair use
Peter Stephens | Tuesday, 7th February, 2017 | More on: CPIDCC
Finding shares that could outperform the FTSE 100 is never a straightforward task. Certainly, unearthing businesses with bright futures is possible for even the most time-poor investor. However, in many cases much of the growth potential of a business has already been priced-in by the market. Reporting today is a stock which, while offering a strong track record of growth, seems to be overvalued at the present time.
The update released today by sales and marketing company DCC (LSE: DCC) shows that it made encouraging progress in its third quarter. Operating profit was ahead of the prior year and in line with expectations. In particular, DCC Energy benefitted from strong organic volume growth in LPG as well as sound organic growth in both Retail & Fuelcard and Oil. Similarly, DCC Healthcare overcame the headwind of weaker sterling and benefitted from an improved performance in DCC Health & Beauty Solutions.
Meanwhile, DCC Technology’s operating profit grew sharply versus the prior year and it benefitted from the CUC acquisition. DCC Environmental saw good organic growth, which made a positive contribution to the company’s overall performance. Looking ahead, the acquisition of Esso Retail Norway for a total consideration of £235m (also announced today) could generate a return on invested capital employed of around 15% in the first year.
However, DCC’s valuation appears to take into account its upbeat performance and its future prospects. In terms of the latter, its bottom line growth rate of 8% next year and 4% the year after represents a significant downward step from the double-digit gains recorded in recent years. Despite the lower profitability expected over the medium term, DCC continues to trade on a relatively high valuation. For example, it has a price-to-earnings (P/E) ratio of 22.8. This equates to a price-to-earnings growth (PEG) ratio of 3.8 when combined with its growth forecast.
Due to its high valuation, the company’s share price gains in 2017 may fail to match those of the FTSE 100. Certainly, DCC is performing well as a business and has a bright long-term future. But its valuation appears to be excessive, given its near-term profit growth forecasts.
i added this mornig as i like the divi and the m@A potential- any comment welcome!|
|Strong hint in todays statement that there are more acquisitions in the pipeline...'new geographies' is very interesting.
Interim Management Statement
DCC remains ambitious to continue the growth and development of its business in existing and new geographies and retains a strong, well-funded and liquid balance sheet.|
|Indeed; small but shows what the upside could be... "full service" stations from a full service company...|
|The market loves this,quite a small acquisition,markets moving more on outlook I would think.|
|Market likes latest deal after recent sell-off.|
|Paddy Power, DCC, Kingspan top Davy ‘conviction’ stock list for 2017
|Mentioned as one of ten "Picks of the year" 2017 by Shares Magazine today.
Brokers targets are:
If it's priced at a P/E of 20 those brokers probably see more that 300p EPS but time frame unknown.|
|The Group expects that both operating profit and adjusted earnings per share for the year ending 31 March 2017 will be significantly ahead of the prior year and ahead of current market consensus expectations.What's not to like?Eps over £3 comfortably?|
|Accumulating now on this pull-back.
Quite a few "defensives", like Reckitt for example, have been hit as being "over-valued" on P/E terms. For Reckitt I can understand but there is more growth in this one... 3 acquisitions lately in as many months!
My chart says support round about 5950p.|
|Fell after the ex dividend day, and just had a bit of a plunge in the days after. Has been very steady for about two weeks, today's the most it's moved since.|
|Very quiet here. Any reason for the share price drop?Looks a nice entry point for this beast|
|Well I'm about 20p from getting stopped out which is a shame as I only bought the share two days ago! Cracking outlook statement and cracking company but I fear if this level does not hold then it could easily slide to £50 which I would not fancy being in for. You watch this roar back now when I get knocked out. Typical.|
|Quite the sell off since results and off it's high. I should of shorted it rather then but the shares in hindsight!|
|Brokers upgrades not helping...looks like they have become victims of their own success but this will come good. Excellent strategy and focused. The webcast on the results was very positive going forward.
* DCC Plc : Peel Hunt raises target price to 6936p from 6111p; rating hold
* Dcc Plc : Investec Securities raises target price to 6730p from 6610p|
|Very positive,as always,I'm tempted to reinvest .|
|Excellent. I got £63.2 I did get stung with tax paying a whopping 1% on my buy (typed through gritted teeth)|
|Yep, got £63, with upside to £80 imv.
I class these along with BNZL & Reckitt but with exposure to oil/gas and Euro.|
|Been on my watch-list for a while too... I was tempted last time around £60 but i was too busy making bad trades with GFRD/HWDN. Looks like a gift to me at this level and that outlook statement reads superb. Easy trade back up and above £70? And a plan to get out if it falls sub £60? Seems good risk reward to me..|
|Been watching this for a while.
Looks a good place to enter; which I shall do now.|
|ahead in 2017-all good|
|I've sold all my shares in the company.A wonderful company with top class management and proven capability when it comes to sourcing and integrating acquisitions.I've been here since they were 18 euro a share and they have been a super investment.However,at a P/E of 33,I've decided to invest elsewhere.I'm sure they'll 'grow' into the P/E,perhaps with a big acquisition,but for now,adios!|
|* DCC Plc : Jefferies raises target price to 7300p from 7100p; rating buy *|