Here’s why the Caltex Australia Limited share price is soaring

The Caltex Australia Limited (ASX: CTX) share price soared 7% higher today following a positive trading update this morning.

In an announcement to the ASX, the transport-fuel supplier and retailer said it expects to report a full-year historic cost profit after tax (HCOP) between $530 million and $550 million, excluding significant items. That compares to the $132 million achieved last year.

Including the significant items as well as the effects of a rise and fall in oil and product prices, Caltex said its HCOP for the year to 31 December 2015 is expected to be between $560 million and $580 million.

In addition, the better-than-expected profits, lower oil prices and Australian dollar will also help the company pay off a meaningful amount of debt. Indeed, it forecasts its net debt position to be around $420 million at 31 December 2015, down from the $715 million it reported at 30 June 2015.

Caltex shares have risen more than 15% in the past three months, but it could still be worthy of a spot on a watch list since many analysts are currently forecasting profit and dividend growth in coming years.

I wouldn't buy Caltex shares until you've read this...

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Motley Fool writer/analyst Owen Raszkiewicz has no position in any stocks mentioned.

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Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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