July is a big month for half-time results, and some of them distract attentionfrom the post-Brexit panic that has affected so many. Here are three that should remain largely untouched by EU fallout
Risky oil?
Shares in Tullow Oil (LSE: TLW), scheduled to release first-half figures on 27 July, have just about doubled since their low point on 20 January. But since the companys trading update on 30 June, theyve turned tail again and have lost 23% to 203p.
Whats given investors the willies is Tullows ballooning debt, which stood at $4.7bn at the end of June up from $4bn at the end of 2015. Tullow still has undrawn borrowing capacity and free cash totalling around $1bn, but using up $700m in just six months suggests that might not last long, and the firm estimates 2016 capexat around $1bn. With Tullow saying it needs to get debt down, investors are clearly fearing the possibility of a dilutive new equity issue.
Total revenue for the half should come in at $0.5bn, lower than the $0.8bn ofa year ago, with gross profit down from $0.3bn to $0.2bn. Should you buy Tullow shares now? I can see a volatile year ahead with some sort of refinancing needed, but the long-term future should be healthy as long as oil prices rise further.
Mining comeback
The bottom for Anglo American (LSE: AAL) also came on 20 January, since whenthe diversified miners shares have more than trebled in value to 718p. Recovering iron ore prices have been largely responsible for the changein fortunes as Chinasslowdown is starting to look less bad than feared. However, that country plans to reduce its steel capacity in the coming years, and thats knocked iron ore prices back down a little.
Does that mean the share price surge is overdone? With a 38% fall in earnings per share currently forecast, valuing Anglo American shares at nearly 25 times earnings, I fear it might be especially as theres no dividend expected this year. Theres a recovery in earnings pencilled-in for 2017, and a very modest 0.6% dividend, but with the gyrations in commodities prices were seeing Im really not convinced its time to buy.
Results for the first half should be with us on 28 July, so there might be a brighter outlook in there, but I dont expect to see anything that would change my stance right now.
Pharma bouncing back
Also on 28 July, well have half-year results from pharmaceuticals giant AstraZeneca (LSE: AZN). The EU referendum result gave AstraZeneca shares a boost and the flight to safety has sentthe price up14% since the day to 4,523p. Other than that, the shares have had a pretty flat couple of years, as the world has waitedfor boss Pascal Soriots restructuring and pipeline focus to bear fruit. The company had been suffering from the loss of some key patent protections and increased competition from generic drugs.
EPS is expected to slip by around 14% this year, and analysts currently have a further 1% drop suggested for 2017. Any brighter outlook than that suggested on 28 July could have a positive effect on the shares, as I cant help feeling many folks are awaiting the first evidence of a return to profit growth.
Meanwhile, with the shares on a P/E of approximately 16.5 and a4.4% dividend yields on the cards, AstraZeneca looks like a safe long-term investment to me.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.