WEIR is in an interesting position. SP does well when there is a boom in shale gas/oil. The over production of oil and gas then drives down price and WEIR's SP suffers. Last down turn made worse by OPEC in particular Saudi Arabia trying to drive out shale producers by flooding market with cheap oil. That did not do Saudi and and other oil producers much good. I have heard that as far as production costs are concerned in Saudi oil costs less than fresh water there to extract but flooding market with oil is self destructive.
Recently OPEC and some other producers have managed to reduce production and oil price risen as a consequence. Now Americans and Canadians shale producers back in. I think they will be a little more restrained this time round but oil price once again under pressure. A lot of backers last time lost money.
I know WEIR do a lot of mining equipment as well as fracking pumps but that industry is similarly cyclic.
I missed out selling WEIR at around £26 so think I will set a target of £24 and then perhaps hedge my bets by keeping some.
Engineering group Weir (LSE: WEIR) had dividend cover of 1.8 times last year, which doesnt give too much cause for alarm. But because the companys earnings outlook remains tied to upstream spending in the oil and gas sector, we ought to be vigilant.
Trading conditions remain challenging and another slump in commodity prices could hit the company hard. And although the industrys fundamentals look a lot better than a year ago, I expect the recovery to be slow as capital spending by major oil and gas producers is unlikely to rebound back to pre-2015 levels.
The company is due to announce its full-year results in February and analysts currently expect underlying EPS to fall by 19% to 63.5p. This implies its dividend cover would have fallen to below 1.5 times in 2016, which could cause some concern for shareholders given the cyclical nature of its business.
WEIR.L 'Bid price' greater than 1950 (now 1995.000)
Dear John *********,
At 12:19 20/12/16 'Weir Group' in your Interactive Investor portfolio reached a 'Bid price' alert of greater than 1950.
Please note, as the alert has now been sent, you won't receive it again, and it will no longer be listed on the web site. To set a new alert, please visit your portfolio: http://www.iii.co.uk/portfolio"
I have pencilled is a target price of 1960p to sell half my WEIR shares. It is my belief that once shale oil and gas production ramps up in North America & Canada oil price will fall again and along with it WEIR.
Hardcore's £2.50 looking unlikely but I think I'll bank some profits tomorrow. It will probably sink again (yo-yos and Weir have a lot in common) and if it does I'll probably buy back in. If not, will enjoy the upside on my remaining stake.
<b>OPEC agrees first oil output cuts since 2008 -
11/30/2016 | 01:36pm GMT</b>
The OPEC headquarters is seen in Vienna
The Organization of the Petroleum Exporting Countries has agreed its first oil output cuts since 2008, an OPEC source told Reuters on Wednesday.
The source said the agreement was in line with an accord reached in Algiers in September. OPEC member Algeria was proposing to set a new production ceiling at 32.5 million barrels per day, down from current levels of 33.6 million.
(Reporting by OPEC team)
The Weir Group Plc provides engineering equipment, services, and support to various customers in the minerals, oil and gas, and power markets.It operates in three segments: Minerals, Oil & Gas, and Power & Industrial.
Read Panmure Gordon & Co's note on WEIR GROUP, out this morning, by visiting https://www.research-tree.com/company/GB0009465807
"Todays trading update was all about being able to say ahead of market expectations and squeezing the bears. However, these are expectations that have been steadily falling throughout this year. Indeed, the company IR rushed out a new consensus only yesterday, which for H1/16 was down 3% from the consensus sent on April 11. The risk with this communication strategy is that at some stage the company will have to deliver against the recovery valuation of 20x 2016 consensus EPS ..."
"Weir Group's shares were under pressure on Wednesday after Canaccord Genuity downgraded its rating on the stock to 'sell' from 'hold' and cut its price target to 880p from 940p.
Canaccord said it was lowering its earnings per share forecasts for 2016, 2017 and 2018, ahead of the engineering group's trading update on Thursday.
"We are putting in a cut of 16.9% to 54.7p for 2016 with a reduction of 7.8% for 2017 to make 65.0p and our initial forecast for 2018 is 75.8p," said Canaccord analyst Harry Phllips.
"These compare to Weir's own derived consensus of 62.3p and 70.9p for 2016 and 2017, respectively."
Weir is expecting a significant reduction in 2016 revenue at its oil and gas division due to lower crude prices. The minerals business is expected to show a slight decline in revenue in constant currency. Overall, the group predicts flat revenue and operating margins.
Canaccord has pencilled in full year sales of £1.7bn, down from £1.9bn the previous year.
"Despite considerable action on the cost base, including £45m to come from the full-year benefits from action taking in 2015 and £40m additional cost savings identified for 2016, we still see some potential downside risk to current year numbers particularly in oil and gas," said Phillips.
"Last week's rig count of 431 is 39.6% lower than the average for December 2015 and shows little sign of improving. In its Q1 results on 21 April, (oil services company) Schlumberger stated that the industry displayed 'clear signs of operating in a full-scale cash crisis' and that the environment is 'expected to continue deteriorating through the coming quarter'."
A few weeks ago there was talk of a takeover by a US company. I think this is now pretty unlikely as I suspect the goal of any deal was a tax inversion deal. Based on the legislation by Obama, that blocked the pharma deal, any deal that was being negotiated has probably now been abandoned.
I think this explains the recent price falls, investors were hoping for a takeover which now looks a lot less likely.
"After breaking out of its established downward trading channel last month, and surviving an early wobble, LSE:WEIR:Weir shares have outperformed the wider market threefold. They hit a three-month high this week, but does a two-day drop reflect a ..."
<<So theyre only allowed to look at an adjusted image of the past and only briefly. Instead, they must focus on the future, which they can easily control and mold to perfection in their pronouncements.>>
"Sell-side analysts are not allowed to look back at reality as it happened. Theyd get fired. The past can be measured, and their shenanigans become too obvious. So theyre only allowed to look at an adjusted image of the past and only briefly. Instead, they must focus on the future, which they can easily control and mold to perfection in their pronouncements.
These analysts ought to be laughed out of the room, but they arent. Their pronouncements are reprinted and cited reverentially in the financial media and fed to the investing public to make them feel good about paying enormous amounts of money for companies with terrible earnings and struggling in an environment of declining sales."
The FTSE 250 engineering group, which published its annual results on Wednesday, saw revenue slide 21% on a reported basis to £1.92bn, from £2.44bn. On a constant currency basis, revenue was down 22%. Operating profit fell 42% to £259m, with Weir's operating margin down 490 basis points to 13.5%.
Its profit before tax was down 46% to £220m. The company had £365m of operating exceptional costs during the year, including a £225m impairment in Oil & Gas. Earnings per share were down 45% to 78.4p. Weir Group's final dividend was announced at 29p, leaving the year's total dividend unchanged at 44p.
" A week ago, analysts at UBS published research revealing that the gap between cheap (value) and expensive (growth) stocks within individual sectors hit the tech bubble high. They claimed that this level of dispersion "does not hang around", and ..."
Not a lot mega, it's going to be a long haul unless we see significant oil spikes.
Usually the forecasters get it wrong.
Goldman predicted $200 a barrel for Q4 2015 --- good call yes?
Mind you, Goldman also predicted 20% decline in the £, if we Brexit. Personally I think they will get that wrong by a 40% margin (the £ will appreciate and the Euro will nosedive with the confidence knocked out of the EU project altogether).
Oil -- I haven't a clue M8 and nor does anybody else. But until it shows signs of life Weir has few customers with the will, or the need, or possibly even the wherewithall to spend.
Games -- One day Weir will be a buy --- pick one!!
In order to justify re-entry there has to be a rationale for the shares to actually increase in value at some point after purchase. This would need an improvement in performance, and for the life of me, I can't see this happening any time soon. What am I missing?
The crash will happen, I would say the probability is that it will happen before Nov 5th. The equity markets are so out of line with the realities of the real world, especially the debt markets. Unemployment in the U.S. is thought to be around 23% it is probably far high the official statistics all around the globe. But as President Obama, put it the other week, "I am peddling fiction!"
Here is a video for you it´s a classic. I don´t now how to get embedded video links out of Facebook posts but this video is a good one!
Thanks for the advice, and concern for my solvency.
460p: Irrational perhaps, stupid maybe, but not a stupid as 911p! I have about 100 shares on watch at any one time. I use Sharescope, I make notes like post-its on the screens and it has an automated alert system which just happens to be set to 460p for WEIR. I am a sort of believer in Gann but have not put on my WEIR chart the rational for "guessing" 460p. If it reaches 460p, and I have not changed my notification alarm setting when the alarms rings I will look at:
Where we are on investment cycle
Fundamentals of WEIR
Moving averages/MACD/20(2)%K 9%D Stochastic
I may but probably will not buy but if not will make a note. I have watched, but not held, WEIR on and off for more than 20 years. Last time it looked value was 2005/6 but FENR looked better value. Sold those for 363.34p and 367.29p and had a watch set at 125p, touched intraday on Nov16th, which was agreed with by bots that drove this back up exactly 22.5%. My level today is set for 65p.
I would agree a bear market is overdue but most bear markets have been about 40% falls and the FTSE was down 20% (now 10%), so was half way there (portfolio down 4.83% from peak in Nov 2015). So tbh if I used your 20% retracement advice this is level I should have bought FTSE. However only 3.82% of shares by value in my share portfolio are FTSE100, nearer 2% of total investments. Personally I would find a portfolio of miners, bankers and oilers too toxic a mix and for that reason avoid FTSE100 trackers. One advantage of being a PI is that my minor sums invested can be piled into a share with market cap of just a few million without affecting the market or even get noticed by HFT computers. My most significant holding has only ever represented 0.87% of a tiny company. The FTSE is now down 5% from year end having been down 9.7%, Share portfolio dropped by 2.82%.
Lastly, useful tip that a crash, if it happens, will be before Nov 8. Are you prepared to deny the antecedent? If no crash by Nov 5 we have had a correction rather than entered a bear market?
Personally I think it is stupidity & highly irrational to set yourself a price of 460p. First you don´t know where bottoms/tops are, you need to wait until it is 20% higher each way to give yourself a chance that you´re not buying into dead bounces either way. The balance of probability that you will guess bottoms is a highly low statistical chance
You wait until the fireworks really hit, this will scare the life out of you what is coming (providing you´re still solvent). Hydrocarbons make up 30% o the derivatives market, who is holding these holding these losses? Your confidence still springs from the fact we haven´t really entered into the bear market. You need to pay very close attention to what is happening in the credit markets. Absolutely no mention of Weir´s high gearing. Debt could become a serious problem.
The news came out of Davos, that central banks are planning more huge QE injections, this is what has sent the markets highly. Price discovery has completely gone. There is no rational in equity markets. A crash is going to happen if it does) before the U.S. Presidential s.
460 is my target but I the cash I hold in hand is for whichever WEIR or Fenner bottom out first, (target for FENR was 125 which on Nov 14 proved to be about as resilient as a NZ roadside crash barrier). For both shares 200x needs to flatten out and ideally crossed by 25x after 50x average. Should be mining/oil news/rethink first and significant investment into primary extractive industries.
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