Despite finishing the day higher after releasing its half year results for the six months ending 31 March 2015 – poker machine manufacturer Aristocrat Leisure Limited (ASX: ALL) has since slumped around 7%. In comparison, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is down 4% over the same time period.
The underperformance of Aristocrat's share price would suggest the market wasn't enthusiastic about the interim results; even more telling is that since touching a 52-week high in late April the stock has lost 11% (about $1) in value.
Aristocrat's share price weakness could provide investors with a buying opportunity…
Aristocrat reported, on a normalised basis, a 73.5% increase in revenue, a 66.8% jump in profits to $110.1 million and a 45.4% jump in earnings per share (EPS) to 17.3 cents per share (cps) and a flat dividend of 8 cps which is payable on 3 July.
Aristocrat is currently enjoying an upswing in demand for its products in the critical USA market after a tough 2014. Commenting on the results, the group noted that Aristocrat has achieved average selling price growth in North America and maintained its market-leading position across Asia Pacific including strong sales into new Macau openings.
The strong half-year growth looks set to continue with management guiding towards a second half broadly in line with the first. Analysts are forecasting further positive momentum with one broker forecasting a compound average growth rate of 17% in EPS for the next three years.
Shareholders of Origin Energy Ltd (ASX: ORG) could also see their shares trade higher…
Despite the massive volatility in the oil price earlier in the year, the stock is up around 11% this calendar year and down less than 10% over the last 12 months.
Much of the recent worries surrounding Origin haven't simply been a lower earnings outlook on account of a lower oil price but rather high debt levels have been causing concerns with some analysts worried that the balance sheet is stretched and being exacerbated by a weak oil price.
One of the key positives on this front has been management's recent commentary surrounding certain infrastructure assets which could potentially be sold and lead to the realisation of billions of dollars. These asset sales could be used to reduce debt levels.
The combination of muted asset sales and the near-term ramp-up in cash flows from the APLNG project are both catalysts which could help to improve the market's perception of Origin and may help re-rate the stock.
