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Brambles Ltd Share Price Rise on Positive Report

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Brambles Ltd (ASX: BXB) is an Australian supply chain logistics company that specialises in the pooling of unit-loading equipment, specifically pallets, crates and containers. They operate globally through the CHEP and IFCO brands. Brambles’ share price is up 5% in the past 4 days, continuing the strong growth for the stock that has seen a 16% increase this year alone, which proves particularly exceptional when compared to the sector average of approximately –6%. However, this comes as somewhat of a surprise given they are less than stellar FY19 results which consisted of an $85 million decrease in net cash inflow from operating activities, a 91% increase in net cash outflows from financing activities, resulting in an 18% decrease in net profit.

Brambles - report 2

Brambles Ltd (ASX: BXB) has seen 5% share price growth in the past 4 days, continuing their strong growth for 2019. This comes as a surprise given their less than stellar FY19 result (Credit: Motley Fool).


A primary reason for the most recent bullish behaviour of Brambles Ltd’s share price is that the stock’s ex-dividend date is 14 October. It is common to observe growth in stock in the days leading up to the ex-dividend date because investors are likely purchasing the stock to take advantage of its dividend, which in Brambles’ case yields $0.17 per share. Moreover, the fact that Brambles institutional ownership encompasses 45% of the company insists on stock credibility amongst professional investors. Another variable to be considered amongst potential investors is Brambles’ client base. Brambles Ltd primarily serves defensive growth sectors such as the grocery, fresh produce and beverage sectors. Consequently, unfavourable macroeconomic conditions are not expected to have a significant impact on the company’s revenue.

Given Brambles is able to overcome their recent unfavourable cash flow issues; it is likely that their stock will continue to rise, as has been the case for the majority of 2019. With most recent quarterly financials indicating a 5% growth in revenue (the key driver of which was their U.S. business with 7%), Brambles appears to be accomplishing their FY20 objective of “mid-single-digit revenue growth”.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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