Financial Trading Blog
Stock of the day 12/02/2016 – Centrica PLC
A slashed dividend last February initially caused a precipitous plunge for Centrica at the start of 2015, before the stock settled between £2.60 and £2.80 (from year highs of £3) for spring and early summer.
However the company received another kicking at the end of July, when doubled half year profits for British Gas (to £528 million) failed to compensate for a 3% drop in group profits (to £1 billion as its oil and gas production division saw profits plunge 78%) and the subsequent announcement of a 6000-strong job cut. Things got even worst for Centrica as the markets entered August, the well-worn tale of Black Monday putting the company on track to hit a 6 year-plus low of £2.17 by the start of October.
(Source: IT-Finance.com 12/02/2016)
The stock managed to rebound to the £2.40s by the middle of the month, only to swiftly resume its decline, touching £2 by mid-December. Things perked up slightly with Centrica’s final trading update of 2015, briefly touching £2.20 as the company claimed it was on track to hit full year pre-tax profit targets despite continually collapsing energy and commodity prices.
Yet Centrica hasn’t been immune to the terrible start to 2016 incurred by most of the market, opening the year at £2.16 before falling to an 11 year low of £1.83 as it revealed British Gas would be cutting its prices further, taking the subsidiary’s overall reduction to 14% since the start of 2015. Centrica sits at a current trading price of £1.87 (IT-Finance.com, 12/02/2016).
In terms of Centrica’s full year figures on Thursday analysts are expecting pre-tax profits of £1.1 billion to £1.4 billion (compared to £1.4 billion last year), with the company itself forecasting £2 billion-plus in adjusted operating cash flow with capital spending coming in below the targeted £1.05 billion.
Centrica PLC has a consensus rating of ‘Hold’ with an average target price of £2.39.
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