Washington H Soul Pattinson Rises on First-Half Results

Washington H Soul Pattinson and Co Ltd [ASX:SOL], the diversified investment house, climbed 2.1% today, to a high of $17.50 a share. The stock is now up 14.41% year-to-date and is trading on a price-to-earnings ratio of 27.73-times earnings.

What happened?

This morning, SOL released their first-half results for FY17. Revenues jumped 60.8%, to $438 million. SOL generated a $148.9 million profit for the period, which was a 56.1% increase on FY16 figures.

Cash on hand increased from $126.7 million, to $252 million, with borrowings staying more or less the same.

SOL chairman Rob Miller said:

We are pleased with these results. We have seen most of the companies that WHSP is invested in experienced strong earnings growth over the half year period, contributing to the record regular profit of the Group.

WHSP’s diversified portfolio continues to deliver reliable cash returns which enable it to provide increasing fully franked dividends to shareholders.

Is it time to buy Washington H Soul Pattinson?

It’s not enough to look at a billion-dollar company to determine whether you should buy the stock or not. It’s far better looking at the historical average of the company to evaluate how they might perform in the future.

For example, SOL has had pretty choppy revenues and profit growth. From 2013 to 2016, average revenue growth was -4.57%, and average profit growth was 10.31%.

That’s not to say you can’t make money on a stock like SOL. But if you’re looking for a reliable earner, maybe SOL isn’t the stock for you.


Härje Ronngard,

Junior Analyst, Money Morning

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