Regional bank Bendigo & Adelaide Bank Limited (ASX: BEN), leading miner Rio Tinto Limited (ASX: RIO) and wagering business Tabcorp Holdings Limited (ASX: TAH) have all released solid results.
In the case of Bendigo, its net profit was around $4 million below consensus, however the second-tier bank still managed to increase full year profit by 5.7% with the bank reporting some good operating metrics including a 6.1% rise in retail deposits. Bendigo announced a rise in the final dividend which takes the full year dividend to 64 cents per share and puts the stock on a dividend yield of 5.1%.
Meanwhile Rio's interim results surprised on the upside and beat market expectations. The miner remains the lowest cost iron ore producer in the Pilbara with an average unit cost of just US$20.40 a dry tonne. The results which saw underlying earnings rise 21% to US$5.1 billion were boosted dramatically by a 48% decline in capital expenditure (capex). The higher profit flowed through to shareholders in the form of a higher dividend which increased 15% to US96 cents per share.
Thirdly, leading provider of betting services Tabcorp came in just above consensus estimates, recording a full year underlying profit of $149 million which was up 7.4% on the prior year. Underlying earnings per share (EPS) however were up a less impressive 4.8%.
Buy, Hold or Sell
Bendigo's cash EPS were 91.5 cents per share – implying a price-to-earnings ratio of 13.6x. There is little reason to suspect the market has this pricing wrong with the stock looking to be trading at about fair value.
Rio's capex is forecast to fall further over the coming 18 months which will soften the blow from the cycling of lower iron ore prices. Given Rio's enormous exposure to iron ore, it is basically a play on the iron ore price – it would be a brave investor who presently sees the stock as a bargain.
Lastly, but by no means least, Tabcorp which is a quality, defensive business, currently looks like a hold given its rate of growth relative to its high multiple.