Day: January 19, 2021

What analysts expect from the Woolworths (ASX:WOW) first half result

Woolworths share price

With earnings season on the horizon, I thought I would start to take a look at what is expected from some of Australia’s most popular companies.

Earlier today I looked at Coles Group Ltd (ASX: COL). You can read about that here. Whereas on this occasion, I’m going to take a look at its rival Woolworths Group Ltd (ASX: WOW).

What is expected from Woolworths in the first half of FY 2021?

Due to the favourable changes in consumer spending because of COVID-19, expectations are high for Woolworths in FY 2021.

However, one leading broker that suspects the retail giant could fall short of expectations is Goldman Sachs. In light of this, it will come as no surprise to learn that it has a neutral rating on the Woolworths share price.

According to a broker note, Goldman is expecting Woolworths to deliver total revenue of $35,789.7 million in the first half. This will be a 10.1% increase on the prior corresponding period.

Its analysts expect this to be driven by a 10.9% lift in Australian Food sales to $23,520.1 million, a 17.6% jump in Endeavour Drinks sales to $5,616.2 million, a 15.3% increase in Big W sales to $2,477.6 million, and a 1.1% rise in NZ Supermarket sales to $3,403.6 million.

Partially offsetting this will be its Hotels business, which has struggled during the pandemic from closures and social distancing restrictions. Goldman is forecasting a 25.5% decline in sales to $684.7 million.

What about its earnings?

While Goldman is actually ahead of the consensus by 0.9% on its sales estimates, it sits well and truly behind the consensus on its earnings estimates.

The broker doesn’t expect its margins to be as strong as the market is forecasting. It is expecting a net profit of $1,030.2 million for the first half. This will be up 5.3% on the prior corresponding period but is 4.7% lower than the consensus estimate of $1,080.6 million.

It is a similar story for Woolworths’ interim dividend, which Goldman is expecting to come in at 48.8 cents per share. This compares to the consensus estimate of a 54 cents per share interim dividend.

Is the Woolworths share price a buy?

As I mentioned above, as things stand, Goldman Sachs is sitting on the fence with this one. It has a neutral rating and $39.90 price target on Woolworths shares.

This compares to the latest Woolworths share price of $39.54.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Maggie Beer (ASX:MBH) share price dips following record earnings

flat asx share price represented by investor shrugging

The Maggie Beer Holdings Ltd (ASX: MBH) share price has had a massive year, jumping up more than 160% in the past 12 months.

Shares in the Maggie Beer Group – which encompasses Maggie Beer products, Paris Creek Farms and Saint David Dairy brands – went up 3.5% yesterday on a positive trading update, but flopped more than 8% in opening trade today. At the time of writing, the Maggie Beer share price has regained some lost ground, now trading at 42 cents, down 1.8%.

Let’s take a closer look at what’s happening.

What did the Maggie Beer quarterly release say?

In yesterday’s release, the company said it had achieved record sales and booming growth across multiple initiatives during the first half of FY21. E-commerce sales increased by 167%, net sales powered up 20%, and the cash position has increased $1.2 million compared to the prior corresponding period.

Commenting on the progress, Maggie Beer Group CEO Chantale Millard said:

It is fantastic for the group to have such a strong start to FY21 and the team have done a tremendous job managing the growth over the past 6 months. We are looking forward to continuing this trend, by supplying premium Australian products to our consumers.

Maggie Beer presently holds a cash balance of $6.3 million following the $1.2 million gain realised in the first half of FY21.

Coles partnership helps along the way

Following the announcement of a partnership with Coles Group Ltd (ASX: COL) last August, the Maggie Beer share price has continued to find its way upward. Coles agreed to launch a range of plant-based meals across approximately 400 Coles locations nationwide.

The day this news was announced, the Maggie Beer share price jumped 23%.

Capitalising on growth opportunities 

According to yesterday’s update, Maggie Beer will continue to focus on growth as we enter 2021. The company’s market cap has reached $86.1 million and the company has roughly 207 million shares outstanding.

Maggie Beer expects its cash holdings to increase further when incoming third quarter payments quarter for the second quarter trading period are received.

Said Ms Millard: “With our strong cash and balance sheet position, we are well-placed to capitalise on our growth opportunities.”

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Netflix is considering a stock-buyback program

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

streaming shares represented by large tv on wall in front of red couch

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Netflix Inc (NASDAQ: NFLX) shares surged in after-hours trading on Tuesday following the company’s strong fourth-quarter update. Not only did Netflix report better-than-expected revenue and subscribers, but it also said it’s on pace to become sustainably cash flow positive in the near future. Indeed, management is so confident in this outcome that it’s already considering putting some excess cash flow to use in a share-repurchase program.

Here’s a look at the key takeaways from the streaming-giant’s fourth-quarter results.

Netflix Q4 earnings: The raw numbers

Metric Q4 2020 Q4 2019 Change
Revenue $6.64 billion $5.47 billion 21.5%
Earnings per share $1.19 $1.30 (8%)
Subscribers 203.7 million 167.0 million 21.9%

Source: Netflix fourth-quarter shareholder letter. Table by author.

Netflix’s fourth-quarter revenue rose 22% year over year to $6.64 billion, surpassing analysts’ average estimate for revenue of $6.63 billion. Earnings per share (EPS) of $1.19 was below analysts’ view for $1.30, but the company’s reported earnings-per-share figure notably included a $258 million non-cash charge from currency remeasurement on the company’s euro-denominated debt. Quarterly net income would have been nearly 50% higher without this non-cash unrealized loss.

The quarter was fueled by a 22% year-over-year increase in subscribers. Netflix added 8.51 million paid members during the quarter, well ahead of management’s guidance for 6 million net additions. 

Highlighting Netflix’s incredible momentum for the full year of 2020, the company managed to add a record 37 million new members during the year.

Big cash flow is on the horizon

While Netflix’s financial results and subscriber performance were notable, the star of the quarter was management’s commentary on cash flow: “We believe we are very close to being sustainably [free cash flow] positive. For the full year 2021, we currently anticipate free cash flow will be around break even (vs. our prior expectation for -$1 billion to break even).”

Free cash flow, which is equal to cash generated from operations less capital expenditures, is the cash that a business generates after all operating and investment activity is accounted for. It represents the cash that can be used to pay off debt, repurchase shares, make acquisitions, or even pay dividends.

Netflix has long been known for burning through its cash as it spends heavily on content creation. Big spending on content has led the company to repeatedly turn to debt markets to raise capital. But Netflix’s higher sales and greater economies of scale today mean that those days may be over soon. Management explained:

Combined with our $8.2 billion cash balance and our $750m undrawn credit facility, we believe we no longer have a need to raise external financing for our day-to-day operations. Our 5.375% February 1, 2021 bonds mature in Q1. We plan on repaying the bond at maturity out of cash on hand, as we are currently well above our minimum cash needs.

Even more, the company said it will be exploring the idea of using some of its excess cash to repurchase shares.

Shares of the growth stock soared as much as 13% in after-hours trading on Tuesday as investors applauded Netflix’s improving financial position.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Netflix. The Motley Fool Australia has recommended Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Netflix is considering a stock-buyback program appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Why the Botanix (ASX:BOT) share price rocketed 22% to a record high today

rocketing asx share price represented by man riding golden dollar sign speeding through clouds

The Botanix Pharmaceuticals Ltd (ASX: BOT) share price has been on fire on Wednesday.

At one stage today, the clinical stage synthetic cannabinoid company’s shares were up over 22% to a record high of 16.5 cents.

In afternoon trade the Botanix share price has faded a touch but is still up a sizeable 11% to 15 cents at the time of writing.

Why is the Botanix share price rocketing higher?

Investors have been buying Botanix shares following the release of an announcement this morning.

According to the release, research data from its antimicrobial platform has been published in Nature Research’s peer-reviewed journal, Communications Biology.

The lead author is Dr Mark Blaskovich, Director of the University of Queensland’s Centre for Superbug Solutions in the Institute for Molecular Science. He is joined by Botanix Directors Matt Callahan and Dr Michael Thurn as co-authors.

The company explained that the research represents the culmination of research collaborations involving leading antimicrobial researchers across the world. Furthermore, all research data generated is fully owned by Botanix and is the subject of several patent applications.

What was said about the research?

The release reveals that Communications Biology editors summarised the article as follows:

“Blaskovich et al. demonstrate the antimicrobial applications of cannabidiol in a range of pathogenic bacteria, including MRSA and the capacity to kill the Gram-negative bacteria Neisseria gonorrhoeae. This article highlights the potential for cannabidiol in the age of antimicrobial resistance.”

Botanix President and Executive Chairman, Vince Ippolito, was delighted with the development. He said:

“The published data clearly establishes Botanix as the world leader in characterising and exploiting the pharmaceutical potential of synthetic cannabinoids as antimicrobials – and vast potential for the development of novel and effective treatments. Congratulations to all the collaborators involved in this significant body of research.”

BTX 1801 Phase 2a antimicrobial study update

In addition to this, the company provided an update on its BTX 1801 Phase 2a antimicrobial study.

According to the release, the BTX 1801 antimicrobial clinical study is complete and it is on track to announce data within the first quarter of 2021.

This study aims to test the ability of the nasally applied BTX 1801 ointment to eradicate Staphylococcus aureus (Staph) and methicillin-resistant Staphylococcus aureus (MRSA) from the nose of individuals known to carry these bacteria in their nasal cavity.

Botanix notes that nasal “carriage” of Staph and/or MRSA greatly increases the risks of serious and sometimes life-threatening infections following surgery, as patients essentially infect themselves.

At present, nasal decolonisation is a commonly used method for preventing surgical site infections. However, overuse of the widely available antibiotic Bactroban (also known as mupirocin) has led to a significant increase in the development of bacterial resistance to antibiotics.

The double-blind, vehicle controlled BTX 1801 Phase 2a clinical study has been designed to evaluate the safety and local tolerability of two formulations of BTX 1801 to decolonise Staph and MRSA in the nose of healthy adults.

All eyes will be on the Botanix share price when that data is released.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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