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RFM reported a P175 million net income for 3Q2016, up by 12% versus P156 million from the same period last year. Revenues are slightly higher amounting to P2.96 billion from P2.91 billion of the same period last year.
Its 9-month revenue is P8.7 billion. It is higher compared to P8.41 billion last year. Current 9-month net income is 683M, up by almost 9% compared to the P628 million of the same period last year.
Sales continued to pose strong growth for its core products namely, Selecta Ice Cream, Selecta Milk, and Fiesta Pasta. Selecta Ice cream saw a double-digit rise in sales due to push in availability, affordability, and visibility. Selecta milk continued to pose strong growth behind the strong sales of Selecta white milk. The P59 pasta and sauce dish TV campaign during the third quarter helped push the pasta’s momentum. Royal pasta brand also launched its P135 pasta and sauce spaghetti dish bundle.
However, soft prices in the flour business weighed down on the company’s revenue growth from within the 9-month period. Nonetheless, RFM expects to achieve its target growth of 9% for the fourth quarter due to increase in sales and momentum mentioned above.
For the information of our subscribers, RFM has also been doing a share buy-back program, amounting to P300 million. The P192 million worth of shares have already been bought back by the company.
What Is a Share Buy-Back Program?
A reason for initiating a share buy-back program can generally be interpreted in three ways.
- The company has a lot of cash on hand and instead of declaring dividends, they opt to buy back shares to increase shareholder value.
- The company is preventing the companies stock from falling further if the stock is on a downtrend.
- The company expects a strong performance and wants to create shareholder value by decreasing the number of shares.
Remember, Earning Per Share (EPS) is calculated by dividing net income by the number of shares. If you decrease the denominator (number of shares), EPS goes up. If EPS goes up, PE ratio goes down which makes it a good buy.
On a technical standpoint, RFM stock seems to be moving sideways and is trading at its 5 year support/resistance.
RFM was trading between 4.23 and 4.15 for nearly 3 months until it breached 4.23 two days ago. RFM touched the resistance near 4.30 with a bullish volume last October 24. However, its ascent wasn’t sustained today due to low volume. If you’ve been reading my posts that contain price-volume distribution charts, you must be familiar by now about the relationship of the price’s direction with volume.
If volume won’t increase, RFM might fill the gap down as part of the technical correction. If we will see a follow-up on volume, the price must stay above 4.30 for a little while to gain a stronger momentum to pierce the next resistance near 4.40 as a pre-cursor to 4.70.
RFM’s MACD is already above the zero line and stays above the signal line (bullish). RSI shows that current price is near the overbought level. This boost on RSI’s score was driven by last Monday’s bullish price movement.
Foreign Fund Flow
On a 30-day trading period, RFM is on a Net Foreign Buying worth PHP41,549,750.00.
- From October 3, 2016 to October 25, 2016, 6 out of 11 active online foreign brokers traded RFM.
- Online foreign brokers’ Buy Average: PHP4.22
- Online foreign brokers’ Sell Average: PHP4.22
- Number of net buyers among the participating online foreign brokers: 3 out of 6
- MACQUARIE bought the biggest number of shares among online foreign brokers amounting to
- ATR sold the biggest number of shares among online foreign brokers amounting to PHP37,856,380.00.
Top 10 Players
Participants with a 100% Buying and Selling Activity from Oct-03-2016 to Oct-25-2016 at 03:30PM:
- 6 out of 34 participants or 17.65% of all participants registered a 100% BUYING activity
- 14 out of 34 participants or 41.18% of all participants registered a 100% SELLING activity
- Top 10 Players’ Buying Average: 4.2380
- Top 10 Players’ Selling Average: 4.2149
As what I’ve mentioned above, RFM has been moving sideways inside its 5-year support and resistance zones. That explains why its historical volatility is so low. RFM is a low-risk stock based on its volatility.
Do you see why I’ve mentioned the need for RFM to register consistent heavy volume above its 30-day volume average?
Do you like this update?
I do hope I was able to help you through my analysis and simplified interpretation of data. Always have a trailing stop-loss to preserve your capital and to protect your gains.
Please let me know your thoughts by commenting below.