There are some companies that investors simply can’t help but watch. Usually, they’re the biggest stocks on the market. They have tremendous influence on whether the market moves up or down.
They’re also a favourite investment among extremely large investors, like billion-dollar super funds.
There is one blue-chip that’s about to increase profits sixfold and dividends threefold. Well, that’s according to The Australian Financial Review (AFR).
Tomorrow, all eyes will be on BHP Billiton Ltd [ASX:BHP] as it releases its preliminary results for 2017. Investors will finally see how much the big miner has benefited from the commodity resurgence.
As reported by the AFR:
‘BHP Billiton will deliver a sixfold increase in profit and a threefold increase in its final dividend when it announces its full-year earnings on Tuesday.’
A sixfold profit jump and a threefold dividend hike… Sounds like a small-cap stock, doesn’t it? But you could say BHP was due for a huge improvement. As commodities like iron ore and coal have rallied since 2016, so too has BHP’s bottom line.
The AFR continues:
‘After a lacklustre start to the earnings season from many of Australia’s blue chip companies, near doubling of earnings from BHP’s iron ore division will propel the resources giant to underlying earnings of around between $US7 billion and $US7.3 billion based on analyst expectations.’
The stock hasn’t really done much in trade today. BHP barely opened down half a percent as investors eagerly await tomorrow’s results. But even if BHP produces a huge profit windfall, it’s still not certain how investors will take it.
The miner has coped loads of criticism over its dual listing and shale division. None have been more vocal than Elliott Management.
The activist investor is still pressuring BHP to sell shale assets and return capital to shareholders. According to analysts, BHP has around US$10 billion worth of shale assets.
I’m sure investors will want a detailed answer as to why BHP disagrees with Elliott’s recommendation.
Junior Analyst, Money Morning
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