Shares in CSR Limited (ASX: CSR) have sunk 7% to $3.27 after the building materials company released its full year results for the year ending 31 March 2014.
Trading revenues grew 4% to $1.75 billion versus the previous year thanks to higher volumes in the building products division. The tailwind of a booming property market helped the group post an 80% rise in earnings before interest and tax (EBIT) to $126 million.
While the headline numbers look good, it appears the results have failed to inspire investors with the stock falling around 7% by early afternoon. Perhaps investors are thinking that this is as good as it gets for CSR….
Here’s a closer look at the results
- The building products division increases EBIT by 20% to $93 million
- The poorly performing glass division, Viridian, reigned in losses from nearly $40 million to $15 million
- Earnings from the Aluminium division were reasonably steady, contribution $52 million to the group
- Property EBIT rose to $17 million from a break-even result last year
The much improved results correspond to earnings per share of 14.2 cents (pre significant items). This equates to a price-to-earnings multiple of 23 which would appear to be a reasonably full multiple to pay at this point in the cycle.
An investment in CSR, Boral Limited (ASX: BLD) or any other highly priced property play means you’re taking the view that there is a very strong construction boom ahead.