Price target increased

Dulux Group (DLX)


Chart: Share price over the year to versus ASX200 (XJO)


Share Price: $2.96

Price target: $3.12 (RBS)

Broker Calls: Buy – Macquarie

P/E: 23.73

Market Cap: $1,088 million

Richard Batt from Shadforths points out that the company continues to benefit from the growing DIY (do It yourself) home renovation trend. ‘Amid a subdued property market, homeowners will continue to focus on cheaper improvements, such as a fresh coat of paint,’ says Batt. ‘DLX provides a fully franked dividend yield marginally above 5 per cent and is ideal for long-term portfolios.’

Sean Conlon, Macquarie Private Wealth agrees. ‘In a year hit hard by the Queensland floods and higher input costs, its ability to grow underlying group EBIT (earnings before interest and tax) margins from 12.8 per cent to 13.5 per cent year on year was an outstanding outcome,’ says Conlon. ‘The company’s defensive qualities and resilient earnings will leave it well placed in an environment of shorter, sharper cycles.’

Other brokers are similarly bullish, including UBS, JP Morgan and RBS. Meanwhile Merrill Lynch has upgraded the stock to Neutral from Underperform.

Upgrades & Buys


Cardno (CDD)

Chart: Share price over the year versus ASX200 (XJO)


Share Price: $5.83

Price target: $7.28 (RBS), $6.90 (UBS)

Broker Calls: Buy – UBS

P/E: 9.95

Market Cap:  $658 million

CDD operates in three different divisions, providing engineering consulting and other services.  They have separate divisions for Australian/New Zealand professional services and software operations; a similar division for professional services in the Americas; and another division for International development assistance.  Their main focus is infrastructure development, both physical and social.

Macquarie, UBS and RBS all have buys on Cardno, with Macquarie noting that not only is the outlook positive, but they’ve got enough cash to fund acquisitions. Morgan’s Simon Bond is keen on the stock and says that the consulting engineering services company has increased geographical diversity, with almost 60 per cent of earnings made in North America. ‘Undemanding valuation metrics and strong dividend yield highlights there’s still further upside,’ says Bond.

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