The Motley Fool

Are Australian Pharmaceutical Industries Ltd shares cheap?

Australian Pharmaceutical Industries Ltd (ASX: API) has fallen 16.8% in five days including a 7% fall on Tuesday.

At the current price of $1.20 it is trading on a forward PE ratio of 12 based on JB Were’s forecast EPS of $0.11c, up around 9% from last year and a trailing dividend yield of 5.3% per annum fully franked.

The results for 1H18 announced a few days ago revealed that Australian Pharmaceutical Industries had delivered slightly ahead on revised earnings guidance with steady business performance. Net profit was lower compared to 1H17 with the company talking about challenges in the retail environment regarding one of its core businesses, Priceline.

Aggressive discounting is having an impact on cosmetic and beauty product sales according to the company’s CEO with price falls of about 3% to 4% this year. Competition from Mecca and Sephora, favourites of millennials, are also impacting Priceline sales.

The company plans to introduce some exclusive brands, step up training of employees and make personalised offers to the 7 million women in its Sister Club loyalty program.

As mentioned previously on, Credit Suisse has placed a neutral rating on the stock with the broker saying the short-term outlook for the company is “challenging”.

Sigma Healthcare Ltd (ASX: SIG) is in the same sector as Australian Pharmaceutical Industries. It is down 40% in one year to $0.70 cents due to issues from PBS changes with its Hepatitis C medicines. It has a trailing annual dividend yield of 7% trading on a forward PE ratio of 12.99.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Rosemary Steinfort has no position in any of the stocks mentioned. 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 Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.