Matrix Composites announces $61m in new orders

Matrix Composites & Engineering Ltd (ASX: MCE) announced on Thursday 17th November, that they had secured $61m in new contracts. They also announced that they had $105m in unfulfilled orders and have $560m in outstanding submissions.

This is the first announcement of new contracts since they reported 2011 full year results. Its been a while coming and Matrix had noted in August 2011 that orders had slowed for the whole industry.

In February 2011, Matrix announced that it had received $400m of new contracts in three months, since November 2010.  This announcement of $61m in contract wins should be put in that perspective. This should be the first of more announcements to come in the next two-three months, and while it’s a good sign, it should be considered as a baby step in the right direction, and not as a return to the levels of growth the company has sustained over the past year or two.

I’ll be watching with interest to see if Matrix announce more contract wins in the months ahead.


Austock portfolio versus my model portfolio update (as at 28 Oct 2011)

Austock portfolio versus model 28 Oct 2011The Stock market volatility continues and the performance of both my model portfolio and the Austock portfolio also continue to lag behind the ASX 200 Accumulation index. As I’ve mentioned before, this is not a sprint, but a marathon, so performance over twelve months counts. Performance over four months means we are only a third of the way through our journey. Read more of this post

Does a low PE Ratio mean a stock is cheap?

The short answer is….’not necessarily’. There are many reasons why a stock might have a low PE ratio, including the following:-

  • It has been overlooked by the market.
  • Its share price has been marked down by the market because of real or imagined threats to its business in future.
  • It has had abnormally high earnings in the last year.
  • The market in general has fallen; so many stocks have low PE ratios.
  • The sector as a whole may be suffering e.g. the retail sector in Australia at the moment e.g. David Jones Limited (ASX:DJS) is trading on a PE of 8.9x, Myer Holdings Limited (ASX:MYR) is trading on a PE of 8.2x.
  • It’s a cyclical stock. Resources and Australian Bank stocks typically trade at lower PEs than the market as a whole e.g. BHP Billiton Limited (ASX: BHP) is currently trading on a PE of just over 9x and Westpac Banking Corporation (ASX: WBC) is trading on a PE of 8.7x.
  • The company has gone through a de-merger or sold off some of its revenue producing assets, so the previous earnings bear no resemblance to its future earnings e.g. Tabcorp Limited (ASX: TAH) current PE is 3.37 based on earnings per share of 80.7 cents, however it recently split off its casinos business into Echo Entertainment Limited (ASX: EGP), so 2012 earnings won’t be as high as 80.7 cents.
  • The company has issued a heap of new shares or had a rights issue. Generally this forces the price down, but earnings might still be based on the old number of shares.
  • Property and Infrastructure trusts can have misleading earnings per share due to non-cash adjustments included in the income statement e.g. property revaluations.
  • The stock may have gone ex-dividend, so price is pushed down, causing PE ratio to be artificially low. Read more of this post
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