Investors took the knife to leading online automotive classifieds owner Carsales.Com Ltd (ASX: CRZ) and gold and copper miner OZ Minerals Limited (ASX: OZL) on Wednesday, slicing around 6% and 4% off their share prices respectively.
The price falls came in the wake of each firm releasing earnings results…here's what happened.
Carsales.Com
Once again results from Australia's number one automotive portal were impressive. Revenue increased 10% to $235.6 million and earnings per share gained 13% to 40.4 cents per share. For the 2014 financial year the total dividend paid is set to be 32.1 cents which equates to a fully franked yield of 3%.
Over the past 12 months Carsales.Com has also actively expanded its business, acquiring interests in Asian online classified sites, launching a general merchandise site and buying into a car financing business.
All told, Carsales.Com is travelling well and there was no specific bad news to point to the sell-off.
OZ Minerals
The explanation for the sell-off in OZ Minerals' shares by investors is more obvious with the miner reporting an underlying loss for the half year to June 2014; although it must be pointed out that the $7.4 million loss was a vast improvement on the $268 million loss in the prior half!
Cash on the balance sheet also declined substantially, falling from $433 million to $155 million. Despite the lower cash balance and continued losses, the board saw fit to declare a dividend of 10 cents per share in line with the prior half.
Buy, hold or Sell
In the past 12 months the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has rallied 9%, yet Carsales.Com has gained just 7%, while OZ Minerals is up less than 2%. Given Carsales.Com trades on a reasonably hefty multiple it would seem reasonable to suggest that the share price already reflects fair value which is making it tough for the stock to head higher. In the case of OZ Minerals it is still dealing with production issues and facing an uncertain outlook for commodity prices which will continue to create a headwind.
At current prices, both stocks look like holds to me.