FTSE falls on economy fears but Randgold rises as it beats forecasts

Discussion in 'Market News' started by Lily, Feb 8, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
    Likes Received:
    Gold miner leads risers but market under pressure on concerns over outlook

    With markets starting the week on the back foot despite a reasonable performance from Asia, one exception is Randgold Resources.

    Mining stocks have, as is well known, been rather volatile in recent weeks and precious metal miners are no exception. But Randgold has reported better than expected results despite turbulence in the gold price and commodities generally. Full year profits fell 11% to $572.2m as gold fell for the third year in 2015. But earnings per share of $2.03 were better than the expected $1.95 and the company has also raised its dividend by 10%.

    It’s easy to achieve when the stars are all aligned but it’s a lot more difficult in a market as challenged as this one, which makes these results even more pleasing.

    Randgold produced 1,211,000 ounces in 2015 at cash costs of $679 an ounce, in line with guidance, to deliver earnings of 203 cents per share (Investec 193 cents per share) and leave it with cash of $213m, up from $83m at the end of 2014. Randgold is one of the few companies to still generate earnings growth on our forecasts, while its investment discipline has left it well placed to withstand the current environment. Consequently, it trades at an ever increasing premium to its peers. Our forecasts are under review, pending incorporation of the results.

    Stock markets in Europe are in full retreat... continuing the theme from last Friday.

    There will be considerably less chance of any monkey business from Asian markets as China enjoys a week off celebrating the start of a new year with its spring festival. The day’s economic data releases are almost non-existent, with only this morning’s European Sentix investor confidence and this afternoon’s US Labor Market conditions data worthy of note.

    Emerging market headwinds could offset self-help initiatives in 2016, prompt S&P to reintroduce a negative outlook and require G4S to repair its balance sheet again. This isn’t our central case but, when the path is credible and the margin for error is slim, a nervous equity market will start to discount it.

    Continue reading...

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