Day: 23 August 2021

Investors in Zip Co Ltd (ASX: Z1P) shares have an anxious wait on their hands. Zip reports its earnings for the 2021 financial year tomorrow, and all eyes are on this buy now, pay later (BNPL) company in anticipation of what its books might hold.

While we wait, it might be a good idea to check out how the Zip share price responded to the company’s last earnings report. That was back on 25 February, when the company delivered its half-year update for FY21. Let’s see what happened with Zip shares when that all went down.

Back in February, Zip reported its numbers for the half-year ending 31 December 2020. Here’s a summary of what Zip had to show for itself:

• Revenues of $160 million, up 130% year-on-year
• Total transaction volume of $2.32 billion, up 141% year on year
• A loss before tax, depreciation, amortisation, and share-based payments of $14.9 million
• Statutory loss of $455.9 million
• Cash gross profit margin of 54%
• 5.7 million active customers, a 217% year-on-year increase
• US-based QuadPay acquisition implemented

How did the Zip share price react at the time?

The market reaction to this earnings report was swift.

Investors gave Zip two thumbs down following the release of these results. As we covered at the time, the Zip share price fell around 10% upon release of these earnings. A month later, the company had shed around a third of its value. It was trading around $11.86 a share the day before this report was released. By 25 March, Zip shares had fallen to $7.53.

Of course, the Zip share price arguably got caught up in some frenzied speculation in the month or so leading up to this earnings report.

Between 15 January and 16 February, Zip had rocketed from around $5.60 a share all the way to a high of $14.53 a share. The ride up proved to be just as steep as the ride down for investors over this period.

We see no similar build-up to Zip’s earnings this time around, so who knows what might happen after tomorrow.

Zip is trading at a share price of $7.26 a share at the time of writing, up 1.68% today. That gives Zip Co a market capitalisation of $4.01 billion.

The post The Zip (ASX:Z1P) share price fell 10% last time the company reported appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Why Zip (ASX:Z1P) and these growth shares could be buys
• Here’s why the Zip (ASX:Z1P) share is down 11% in a week
• What is the outlook for the Zip (ASX:Z1P) share price?
• These are the 10 most shorted ASX shares

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended ZIPCOLTD FPO. 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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The Johns Lyng Group Ltd (ASX: JLG) share price is sinking on Tuesday as the building services company reported its FY21 earnings.

Let’s investigate further.

Johns Lyng share price slumps despite strong earnings and sales growth

The company detailed several investment highlights in its report, including:

• Sales revenue up 14.8% year on year to $568.4 million
• Group EBITDA of $52.6 million, a 28.3% year on year growth from FY20
• Normalised net profit after tax (NPAT) of $20.7 million, up 26.3% from the year prior
• Earnings per share (EPS) of 8.3 cents, up from 7.13 cents in FY20
• Final fully franked dividend of 5 cents per share, a 25% increase from the previous year.

What happened in FY21 for Johns Lyng Group?

Johns Lyng recognised revenue of $568 million, which came in 15% higher than FY20. The growth carried vertically through its income statement, with EBITDA increasing by 28.3% and NPAT by about 26%.

Much of the growth was underscored by “another outstanding performance” from the Group’s core business of insurance building and restoration services. In addition, results were “supported by a solid contribution” from its catastrophe (CAT) business.

In addition, Johns Lyng completed several “important strategic acquisitions” completed prior to FY21’s end.

To illustrate, the company acquired Unitech, a South Australian “insurance building services company”. The company said the transaction “presents clear synergies” with its core business and will increase Johns Lyng’s exposure in SA.

Moreover, it also acquired Steamatic Australia which is a “national restoration services company”, according to the company’s announcement. This extends the previous acquisition of the Steamatic Global Master Franchise back in FY19.

Finally, Johns Lyng also hiked its dividend by 25% from the same time last year, representing 61% of NPAT as a coverage ratio.

What did management say?

Johns Lyng CEO Scott Didier said:

These FY21 results are an excellent representation of the Johns Lyng value proposition and I think it’s an extremely rewarding outcome for our people, our Board and our shareholders.

Speaking on the CAT business’s progress in the year, Didier added:

Our CAT response activity during the year was again a clear indication of the value of the national scale we have built, responding to disasters from southeast Queensland to coastal Western Australia. The growing strength of our offering was recognised late in the year when we entered into a partnership with the State Government of Victoria for clean-up and Makesafe works on damage properties following a significant storm event in June.

What’s next for Johns Lyng Group?

The company expects revenue from FY21 “CAT-related activity” to eventually “flow through to FY22”. Work on the state government contract will also commence in FY22.

As such, management forecasts FY22 sales revenue of $635.4 million and FY22 EBITDA of $60.1 million. These estimates call for 22.2% and 28.6% year-on-year increases from FY21, respectively.

The company also remains prioritised on extending its acquisition trail, whilst “building upon (its) digital service capability”.

The Johns Lyng Group share price has posted a year to date return of 90%, extending the previous 12 months’ gain of 126%.

Both of these results have outpaced the S&P/ASX 200 Index (ASX: XJO)’s climb of around 25% over the past year.

The post Johns Lyng (ASX:JLG) share price sinks 7% despite 26% net profit growth appeared first on The Motley Fool Australia.

More reading

• Infomedia (ASX:IFM) share price backtracks despite returning to growth
• Dimerix (ASX:DXB) share price down 10% after prospectus issued
• Estia Health (ASX:EHE) share price falls on FY21 earnings
• Westpac (ASX:WBC) whacked with $10.5 million penalty
• ASX 200 midday update: Kogan crashes, Nanosonics rockets

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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The Infomedia Limited (ASX: IFM) share price is sliding today following the company’s release of its FY21 full-year results.

At the time of writing, the software company’s shares are down 3.37% to $1.575 apiece.

Infomedia share price falls despite announcing top end of guidance

The Infomedia share price is in the red after the company delivered its FY21 results for the 12 months ending 30 June 2021. Here are some of the key financial highlights for the period:

• Total revenue of $97.4 million, up 3% on the prior corresponding period (FY20 $94.6 million);
• Earnings before interest, tax, depreciation and amortisation (EBITDA) of $47.6 million, up 3% (FY20 $46 million);
• Underlying Net profit after tax (NPAT) of $20 million, up 8% (FY20 $18.6 million); and
• Partially-franked final dividend of 2.3 cents per share, bringing full-year dividend to 4.45 cents apiece.

What happened to Infomedia in FY21?

Infomedia reported a strong finish to a challenging year, underpinned by $35 million in new contract wins across all geographical areas. This included clients such as Ford, Mazda, Audi, and BMW.

In particular, the Asia Pacific region represented $17 million in revenue for the second-half. This is around 40% higher than the next best region of Europe and the Middle East.

The company began transitioning from its legacy software to the Next Gen integrated platform. So far, good sales traction has been recorded with Infodrive (data, analytics, and Nidasu). As such, Nidasu has attained 57% revenue growth, reflecting strong demand for its products.

What did management say?

Infomedia CEO, Jonathan Rubinsztein commented on the result, saying:

Pandemic related restrictions delayed installations, which impacted the conversion of sales to revenue during the year. However, new opportunities emerged as evidenced by the total of our TCV that closed during the period.

Further, innovation and product integration in the core parts and service platform including Infodrive contributed to good sales and revenue momentum in the second half. Global sales and the addition of SimplePart, underpins strong growth into FY22.

What’s next for Infomedia in FY22?

In FY22, Infomedia is forecasting total revenue to be in the range of $117 million and $123 million. This represents an increase of around 20% year on year. However, the future result is dependent on no adverse movements in foreign exchange rates and no significant impact from COVID-19.

The Infomedia board stated it’s confident that the company can return to double-digit growth in FY22. The recent acquisition of e-commerce platform, SimplePart will help achieve the group’s targets. Furthermore, Infodrive is expected to be a significant contributor to revenue in FY22.

The post Infomedia (ASX:IFM) share price backtracks despite returning to growth appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Infomedia. The Motley Fool Australia has recommended Infomedia. 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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The Dimerix Ltd (ASX: DXB) share price has sunk well into the red from the opening of trade on Tuesday.

Dimerix shares are on the way down as the company advised it had lodged a prospectus with the Australian Securities and Investment Commission (ASIC).

Let’s investigate further.

A quick refresher on Dimerix

Dimerix is a clinical-stage drug development company. Its lead clinical program is investigating the use of the company’s DMX-200 treatment in chronic kidney disease (CKD).

In addition, Dimerix is developing DMX-200 for applications in chronic and acute respiratory disease, and another kidney condition known as focal segmental glomerulosclerosis (FSGS).

As a result of its efforts, Dimerix has a market capitalisation of $67.65 million at the time of writing.

What did Dimerix announce?

Dimerix advised its prospectus contained an offer of a share purchase plan (SPP) that gives “each eligible shareholder” the opportunity to apply for “up to $30,000 worth of new (Dimerix) shares”.

In addition, the securities are issued at a price of 20 cents per share. As such, this offer represents the same price as the 2-tranche placement of about 100 million shares last week. The Dimerix share price rocketed 50% on the news of the successful capital raise and the release of the company’s full 2021 financial year results.

Moreover, eligible shareholders will receive “one free unlisted option for every two shares issued under the placement”. This option is exercisable at 40 cents per share, and has an expiry date of July 2024.

Further, it is extending the same option to its SPP, naming it the “SPP Option”.

The proceeds from both the SPP and the placement will be used for working capital, debt repayment and to finance clinical studies in FSGS patients.

Moreover, it will also use the funds to establish manufacturing and distribution channels to conduct further clinical studies. This makes sense, as it can cost up to $1 million for an 8-patient study in some instances.

Investors have punished the company on the back of this update today. Dimerix shares are now exchanging hands at 30.5 cents apiece, a 10.29% dip on the day.

Dimerix share price snapshot

The Dimerix share price has climbed 32% this year to date. Despite this, it has posted a loss of 50% over the past 12 months.

In the last month, Dimerix shares have stepped a further 24% into the green.

This has lagged the S&P/ASX 200 index (ASX: XJO)’s gain of about 23% over the past year.

The post Dimerix (ASX:DXB) share price down 10% after prospectus issued appeared first on The Motley Fool Australia.

More reading

• Dimerix (ASX:DXB) share price rockets 50% on capital raise and results

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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The Estia Health Ltd (ASX: EHE) share price is in the red on the back of the company’s financial year 2021 (FY21) earnings.

Right now, the Estia Health share price is $2.23, 0.43% lower than its previous close.

Estia Health share price slumps despite 105% increase to profits

Here’s how the residential aged care provider performed over FY21:

• Revenue of $646 million – up 4.4%
• $5.99 million net profit after tax – 105% more than in FY20
• Reinstated 2.3-cent fully franked final dividend

FY21 was a productive but challenging time for Estia Health.

The company’s operations suffered a $24.3 million hit from its COVID-19 response, as it increased costs, and reduced occupancy and revenue. Estia received $21.4 million of government support throughout FY21, none of which was from JobKeeper.

Additionally, Estia Health settled a shareholder class action brought about it due to disclosures the company made between August 2015 and October 2016. The class action was settled for $38.4 million, of which Estia paid $12.3 million and its insurers covered the rest. 

The company’s mature homes segment brought in earnings before interest, tax, depreciation, and amortisation (EBITDA) of $62.5 million. The segment reported 91.2% occupancy over FY21.

Estia Health ended the period with $33.4 million of cash and $81.1 million of debt.

What happened in FY21 for Estia Health?

Here’s what moved the Estia share price in FY21:

Royal Commission

First off, the Royal Commission into Aged Care Quality and Safety handed down its final report in February. The report contained 148 recommendations, of which, the government accepted 126.

According to Estia, the accepted recommendations will lead to higher costs, compliance, and administrative requirements. Many will need to receive legislative approval, which will require detailed assessment, research and consultation, expected to take place over the next 2 to 3 years. These include:

• A $10 per day short-term financial relief by way of an increase in daily fees. If the increase had been applied to Estia’s occupied bed days in FY21 it would have added $20.6 million to the company’s revenue
• Mandated minimum care hours from October 2023
• A wide range of regulatory, supervisory, prudential, reporting and governance improvements that will be introduced over the next 18 to 24 months

Estia was required to provide two sets of information to the Royal Commission regarding the quality of care and staff hours at its homes. The company wasn’t asked to appear before the Royal Commission following its submissions. Estia’s performance matters were also not referenced in the final report.

COVID-19

Over FY21, all of Estia’s homes were impacted by COVID-19 at one time or another.

During Victoria’s second wave, 11 of the company’s 27 Victorian homes experienced at least one infection. Those infections resulted in the deaths of 36 residents.

The outbreaks were resolved over September and October and the last of Estia’s homes with a COVID-19 infection was COVID-19 free on 10 November 2020.

No Estia homes experienced infections between November 2020 and 30 June 2021.

As of 20 August 2021, 82.4% of Estia’s residents and 82.1% of employees had been at least partially vaccinated against COVID-19. According to Estia, the Federal Government expects all states to issue public health orders before mid-September to make vaccinations mandatory for all residential aged care workers.

Developments and sales

In February, Estia opened its newest home at Blakehurst NSW. The 105-bed home reached 63.8% occupancy less than five months after opening. The home has been EBITDA positive since May.

Over FY21, the company decided to close its 46 bed home at Keilor Downs, Victoria. It stated the home wouldn’t meet community expectations for residential aged care homes in the coming years. The closure cost Estia $300,000.

Additionally, Estia sold 3 surplus land sites for $9.5 million over the period.

What did management say?

Estia Health’s CEO, Ian Thorley, commented on the news driving the company’s share price today. He said:

In the face of one of the most challenging periods the sector has ever faced Estia delivered a resilient performance which, combined with a strong balance sheet, has given us the confidence to reinstate the dividend.

The financial result, supported by temporary government funding and grants provided to cover the COVID-19 cost impacts during the pandemic, places Estia in a sound position to respond to the Government’s post-Royal Commission reforms which represent a fundamental shift in thinking towards a more transparent and competitive sector.

While we are broadly supportive of the government’s response, significant uncertainty remains over the detail of the system and program reforms and the financial and operational impacts that these will have on the sector and individual providers…

The current situation with restrictions in NSW and Victoria, and to a lesser extent in Queensland is further testing the sector. At this stage it is too early to make any statements or guidance about the consequences or impacts on the FY22 financial performance. Our focus is wholly on the well-being of our residents and our people.

What’s next for Estia Health?

Here’s what might drive the Estia Health share price in FY22:

The company didn’t give guidance for FY22, but it is planning to develop 2 new homes at St Ives and Aberglasslyn in NSW. The homes will include a total of 236 new beds.

Additionally, it’s waiting for more recommendations of the Royal Commission to be implemented by the government. These might have a large impact on the business.

Estia Health share price snapshot

The Estia Health share price has gained 24% year to date. Its also 39% higher than it was this time last year.

The post Estia Health (ASX:EHE) share price falls on FY21 earnings appeared first on The Motley Fool Australia.

More reading

• Dimerix (ASX:DXB) share price down 10% after prospectus issued
• Westpac (ASX:WBC) whacked with $10.5 million penalty
• ASX 200 midday update: Kogan crashes, Nanosonics rockets
• Sonic Healthcare (ASX:SHL) dividend rises 7%, share price falls after FY21 results
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The Federal Court has ordered subsidiaries of Westpac Banking Corp (ASX: WBC) to pay a total of $10.5 million in fines.

The penalty was determined after the High Court decided in February that Westpac Securities and BT Funds had failed to act in the best interests of their customers.

The judgment found that the businesses provided personal financial product advice to 14 clients, even though neither brand was licensed to do so.

According to Australian Securities and Investments Commission commissioner Danielle Press, Westpac was caught “actively conducting” a campaign to bring over clients into the bank’s superannuation products.

“In doing this, Westpac failed to act in the best interests of their customers,” she said.

“Consumers’ decisions about their superannuation are significant long-term financial decisions affecting their retirement income. Financial institutions seeking to influence those decisions by providing financial product advice must comply with the law designed to protect consumers.”

Westpac cops $750,000 penalty per customer

The massive total fine amounts to $750,000 for each wronged customer.

“The penalty of $10.5 million handed down related to calls made to just 14 consumers and should act as a strong deterrent to any entity breaching these provisions of the law,” said Press.

Both Westpac Securities and BT Funds attempted to convert clients via telephone sales campaigns.

ASIC found that the drive resulted in Westpac businesses increasing their funds under management by almost $650 million between 1 January 2013 and 16 September 2016. More than 30,000 customers deposited funds into Westpac super products over that time.

Federal Court justice Michael O’Bryan has not yet published the full reasoning for the penalties handed down to Westpac.

Westpac shares were up 0.43% on Tuesday morning, trading at $25.89. They’ve gained more than 31% this year.

In December 2018, the Federal Court found the Westpac subsidiaries breached their obligations to act honestly and fairly but disagreed that the provided advice was personal.

But, in October 2019, the full court of the Federal Court reversed that ruling, unanimously finding the bank dished out personal advice to the 14 customers.

The post Westpac (ASX:WBC) whacked with $10.5 million penalty appeared first on The Motley Fool Australia.

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• Westpac (ASX:WBC) share price is now trading on a forecast 3.5% fully franked dividend yield
• What’s moving the ASX 200 Index (ASX:XJO) on Monday?
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• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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At lunch on Tuesday, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of US markets and is pushing higher. The benchmark index is currently up 0.25% to 7,510.3 points.

Here’s what is happening on the ASX 200 today:

Kogan share price crashes

The Kogan.com Ltd (ASX: KGN) share price is being crushed on Tuesday following the release of its full year results. For the 12 months ended 30 June, the ecommerce company reported gross sales growth of 52.7% to $1,179 million but an 86.8% decline in net profit after tax to $3.5 million. The latter was driven by inventory issues and led to Kogan pausing its dividends. Looking ahead, July wasn’t much better, with the company reporting a small increase in gross sales and an 80% reduction in EBITDA.

Nanosonics share price rockets

The Nanosonics Ltd (ASX: NAN) share price is rocketing higher today following the release of its full year results. For the 12 months ended 30 June, the infection prevention specialist reported a 3% increase in revenue to $103.1 million and a 15% decline in net profit after tax to $8.6 million. This was better than the market was expecting and driven by a significant second half recovery. During the second half, the company’s revenue increased 39% on the first half. Looking ahead, management is guiding to double-digit revenue growth in FY 2022 if trading conditions remain consistent.

SEEK results

The SEEK Limited (ASX: SEK) share price is edging lower today after it delivered a full year result just a touch short of expectations. In FY 2021, SEEK’s revenue increased 1% to $1,591 and its EBITDA rose 15% to $474 million. The latter compares to SEEK’s guidance of $480 million and the market consensus estimate of $487 million.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Tuesday has been the Nanosonics share price with an 18% gain following its results release. The worst performer has been the Monadelphous Group Limited (ASX: MND) share price with a 15% decline. This morning the engineering company released its full year results and warned that FY 2022 would be challenging.

The post ASX 200 midday update: Kogan crashes, Nanosonics rockets appeared first on The Motley Fool Australia.

More reading

• FY 2021 results: Monadelphous (ASX:MND) share price crashes 14% on subdued outlook
• Nanosonics (ASX:NAN) share price soars 17% on ‘significant recovery’
• Kogan (ASX:KGN) share price sinks 8% after FY21 results and weak start to FY22
• SEEK (ASX:SEK) share price on watch as revenue falls flat
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Kogan.com ltd and Nanosonics Limited. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and Nanosonics Limited. The Motley Fool Australia has recommended SEEK 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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The Sonic Healthcare Limited (ASX: SHL) dividend is on the rise following a bumper full year FY21 result announced on Monday.

However, the same couldn’t be said about its shares which sold off sharply yesterday after Sonic’s results were delivered to the market.

Let’s take a look at what played out:

Sonic Healthcare share price slides on results announcement

The Sonic Healthcare share price fell flat on Monday despite revealing an 81% jump in earnings before interest, taxes, depreciation, and amortisation (EBITDA) to $2.6 billion and a 149% surge in net profit to $1.3 billion.

At the morning bell, Sonic Healthcare opened relatively flat, down just 0.19% to $42.75. However, significant selling pressure within the first two hours of trade drove it down 4.41% to an intraday low of $40.94.

The Sonic Healthcare share price bounced off those lows by market close, finishing the day 2.76% lower at $41.65.

Encouragingly, the company’s shares are trading higher on Tuesday, up 2.09% to $42.52 at the time of writing.

COVID-19 driving earnings

Sonic Healthcare flagged that its financial performance has been “enhanced” by its COVID-19 testing revenue.

The results flagged some recent volatility in testing revenue, with COVID-19 PCR volumes lower in the second half of the year compared to the first half.

However, it said that volumes have improved in the new financial year due to the emergence and increasing spread of the Delta variant.

The uncertainty surrounding its COVID-19 testing volumes could be a contributing factor to the selloff on Monday.

As a result, the company said that it will not provide any earnings guidance for FY22 due to the unpredictability of COVID-19.

Sonic Healthcare dividend edges higher

Sonic Healthcare declared a final dividend of 55 cents per share, franked to 65% (previously 30%).

This brings the company’s total FY21 dividend to 91 cents per share, a 7.1% increase compared to FY20.

Sonic Healthcare dividend key dates

The Sonic Healthcare share price will go ex-dividend on Tuesday, 7 September and the dividend will be paid out on Wednesday, 22 September.

The post Sonic Healthcare (ASX:SHL) dividend rises 7%, share price falls after FY21 results appeared first on The Motley Fool Australia.

More reading

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• Sonic Healthcare (ASX:SHL) share price down 3% despite surging FY21 profits
• ASX 200 midday update: NIB sinks and Sonic falls on full year results

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare 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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The Westpac Banking Corp (ASX: WBC) share price has stepped into the green from the opening of trade on Tuesday.

Westpac shares are up 0.45% to $25.89 after the banking giant announced changes to its fixed and variable mortgage interest rates.

Let’s investigate further.

What did Westpac do?

In a potential impact to the Westpac share price, the bank made some tweaks to its variable and fixed interest rates as part of its home mortgage business.

To illustrate, the bank advised it will reduce its introductory variable rate by 20 basis points to 1.99%. This haircut applies to loans with a 70% loan-to-value ratio, meaning homebuyers will still need a 30% deposit upfront to qualify.

The move makes Westpac the first Australian lender to sink its variable rates below the 2% mark.

However, in what seems a balancing act, Westpac concurrently increased its fixed rates on four and five-year maturities by 30 basis points.

What does this mean for Westpac and its customers?

In its third-quarter activities report, Westpac said its organic growth in home financing was on par with the average of its peer group.

Furthermore, the moves come after the bank announced it would move 1,000 jobs back on Australian soil after Covid-19-related disruptions overseas, The Australian reported today.

Moreover, Westpac will extend the variable rate through to its other brands. For example, St George Bank and Bank of Melbourne will have the lowest two-year fixed rate of 1.79%.

Westpac is “fighting to get back” into the mortgage domain, after “ceding market share to rivals” CBA and NAB, The Australian says.

RateCity.com.au analyst Sally Tindall was quoted as saying that although the variable rate change is “reserved for new customers … that shouldn’t stop existing customers from picking up the phone and asking for a lower rate”.

Westpac share price snapshot

The Westpac share price has posted a year-to-date return of 33%. It has also fallen 51% over the past 12 months.

Over the last month, Westpac shares have climbed around 5%.

These results have outpaced the S&P/ASX 200 Index (ASX: XJO)’s gain of around 23% over the last year.

The post Westpac (ASX:WBC) share price rises amid mortgage rate shake-up appeared first on The Motley Fool Australia.

More reading

• Westpac (ASX:WBC) share price is now trading on a forecast 3.5% fully franked dividend yield
• What’s moving the ASX 200 Index (ASX:XJO) on Monday?
• ASX 200 Weekly Wrap: Miners drag ASX back to earth
• Top brokers name 3 ASX shares to buy next week
• Analysts name 2 ASX dividend shares with attractive yields as buys

The author Zach Bristow has no positions in any of the stocks mentioned. TheMotley Fool Australia’s parent company Motley Fool Holdings Inc. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

What happened

Shares of electric vehicle company Tesla (NASDAQ: TSLA) jumped sharply on Monday, climbing as much as 4.5%. As of 12:30 p.m. EDT today, the stock was up 4%.

The stock’s gain was likely fueled primarily by bullish commentary from New Street analyst Pierre Ferragu. 

So what

Following Tesla’s AI Day last week, Ferragu is more confident about the company’s artificial intelligence product development, noting that the presentation made New Street more comfortable with its bullish view. More specifically, he believes the growth stock will deserve a price-to-earnings multiple of 50 to 100 in the years to come thanks to the company’s advanced technology.

Though Tesla has a P/E multiple of 373 today, analysts expect the automaker’s earnings per share to grow at an average annual compound rate of about 52% over the next five years.

The analyst has a $900 12-month price target on the stock. 

Now what

Tesla has guided for an average annual growth rate in vehicle deliveries of about 50% in the upcoming years, without specifying when it expects growth to slow. And management says it expects significant operating margin expansion. These two factors would easily lead to 50%-plus EPS growth.

If Tesla is right about its optimistic outlook and Ferragu is right about Tesla being able to command P/E ratios of 50 to 100 five to 10 years from now, then today’s prices for Tesla stock could be a good buying opportunity. But investors should keep in mind that there’s a lot that could go wrong with such bullish assumptions, from competitive challenges to potential production and supply issues and other unforeseen detours. 

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

The post Why Tesla stock jumped on Monday appeared first on The Motley Fool Australia.

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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 has recommended Tesla. 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.

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

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