Month: May 2022

Australia is waking up to a grim scene after US stock markets tumbled overnight.

New York’s benchmark index, the S&P 500 Index (SP: .INX), plunged 3.56%, cancelling out Wednesday’s euphoric gain.

The tech-heavy Nasdaq Composite (NASDAQ: .IXIC) was hit harder still. As most of Australia snored, it plummeted 4.99% in its worst session since June 2020. It’s now at its lowest level since 2020.

The Dow Jones Industrial Average Index (DJX: .DJI) also suffered in Thursday’s session overseas. It gave up more than 1,000 points, or 3.12%.

The US stock market’s downturn could spell bad news for the S&P/ASX 200 Index (ASX: XJO) on Friday, particularly ASX 200 tech stocks, which often react to the Nasdaq’s movements.

Here’s what might have dinted the US stock market overnight.

US stock markets flop in Thursday’s session

US stocks struggled overnight, with the nation’s markets giving up Wednesday’s notable gains.

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average launched 2.9%, 3.2%, and 2.8% respectively on Wednesday, likely driven by positive sentiment out of the United States Federal Reserve.

The Federal Open Market Committee decided to increase interest rates by 0.5% to between 0.75% and 1% on Wednesday – its biggest increase in 22 years – in an effort to tackle inflation.

However, Federal Reserve chair Jerome Powell also commented that the entity wasn’t “actively considering” hiking interest rates by another 0.75%.

Powell’s confidence appeared to quell the market’s nerves on Wednesday. However, concerns apparently reared their head once more in yesterday’s (Aussie time) session.

Some US stock market favourites dragged on the NASDAQ-100 (NASDAQ: NDX) overnight.

The index slumped 5% driven by the likes of Airbnb Inc (NASDAQ: ABNB) and Tesla Inc (NASDAQ: TSLA). The stocks were among the Nasdaq-100’s worst performers, both slumping 8%.

Meanwhile, the share price of eBay Inc (NASDAQ: EBAY) tumbled 11% on the back of the company’s quarterly results.  

Booking Holdings Inc (NASDAQ: BKNG) was one of only a few Nasdaq-100 stocks closing in the green on Thursday. It gained 3% on news demand for travel surged during the March quarter.

The post The US stock market just took a major dive. What’s going on? appeared first on The Motley Fool Australia.

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• Why Tesla stock dropped, then popped on Monday
• Elon Musk just sold $5.6 billion of Tesla shares. What’s the deal?
• Why Tesla stock is bouncing back today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Airbnb, Inc., Booking Holdings, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended eBay. The Motley Fool Australia has recommended Booking Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Looking for dividend shares for you income portfolio? If you are, you may want to check out the two listed below that have been rated as buys by the team at Goldman Sachs.

Here’s what you need to know about these ASX 200 dividend shares:

Harvey Norman Holdings Limited (ASX: HVN)

The first ASX 200 dividend share that Goldman Sachs is a fan of is retail giant Harvey Norman.

Goldman likes Harvey Norman due to its belief that it “has a greater preference within the boomer generation and a higher exposure to regional Australia.” Its analysts believe this shields the company from online disruption.

In addition, the broker is forecasting some very big dividend yields. It expects fully franked yields of 8.9% in FY 2022 and 8.2% in FY 2023.

In addition, Goldman sees plenty of value in the current Harvey Norman share price. It has put a buy rating and $5.80 price target on its shares.

National Australia Bank Ltd (ASX: NAB)

Another ASX 200 dividend share that Goldman Sachs is a fan of is banking giant NAB.

In fact, the broker believes it is the best option for investors in the sector right now. This is due partly to NAB’s balance sheet mix, which Goldman feels provides the best exposure to the domestic system growth. It also highlights that NAB’s franchise is performing strongly, growing at or above system growth in most segments.

The broker is also expecting the bank’s shares to provide income investors with attractive yields in the coming years. Its analysts expect yields of 4.7% in FY 2022, 5.1% in FY 2023, and 5.3% in FY 2024.

Goldman has a conviction buy rating and $34.17 price target on the bank’s shares.

The post Broker names 2 excellent ASX 200 dividend shares to buy appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Friday
• ASX 200 midday update: NAB disappoints, Qantas announces acquisition
• Here’s all what you need to know about the latest NAB dividend
• NAB share price tumbles on earnings miss and costs outlook
• NAB share price on watch amid $3,480 million half-year cash profit

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended Harvey Norman Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Goodman Group (ASX: GMG) share price has fallen by around 20% since the start of 2022.

Goodman is a large, integrated industrial property owner, manager and developer. However, being large hasn’t made it impervious to the volatility and declines that the ASX share market has seen in the last few months.

How has the business been performing recently?

The first six months of FY22 saw the business report a large increase in operating profit and it has benefited from valuation gains.

Goodman reported that operating profit rose 28% to $786.2 million. Statutory profit was $2 billion, which included items like valuation gains, non-cash items and derivative and mark to market movements.

The revaluation gains across the group and partnerships amounted to $6 billion.

Total assets under management (AUM) increased 32% to $68.2 billion, reflecting development completions and higher valuations. The business said that AUM growth is expected to continue in future years, sustained by revaluations and continuing development activity.

Goodman Group also said that it had $12.7 billion of work in progress (WIP), with 63% pre-committed and completed projects averaging 99% leased, reflecting the “strong” customer demand for the group’s sites. The development yield on cost is 6.7%.

The overall rental side of the business is seeing “high” numbers. Portfolio occupancy was 98.4% and the like-for-like net property income (NPI) growth was 3.4%.

Industrial property is delivering

The Goodman CEO Greg Goodman said:

Our strategy to provide essential infrastructure for the digital economy is delivering. The business is performing strongly across all segments, including our development projects, leasing success, rental growth, significant valuation uplift and the strong performance of our partnerships.

In addition, COVID related disruptions in FY22 have been managed to have less impact on the full year projections than we had initially assumed. The operating outlook for the business is strong and gives us confidence for the remainder of this year.

Due to the performance of the business, Goodman upgraded its market guidance for FY22, with operating earnings per security (EPS) growth projected to be 20%.

It’s expecting to pay a distribution of 30 cents per security, due to the “attractive opportunity to deploy retained earnings into the group’s development and investment inventory.”

Is the Goodman share price a buy?

Different brokers have different opinions on the business. For example, Morgan Stanley currently rates Goodman as a buy with a price target of $27.88 – that implies a potential rise of almost 30%. The broker likes the business because of the potential growth, and industry it operates in.

However, one of the brokers that is a little less enthusiastic on the company is Ord Minnett, which currently rates the business as a hold, with a price target of $25. The Goodman share price has fallen since that rating which was based on the elevated share price at the time.

Another broker that is positive on Goodman is Citi, which thinks that industrial property prices can keep rising because of all the tenants that now want logistics facilities for e-commerce and supply chain purposes.

The post Is the Goodman share price a big opportunity? appeared first on The Motley Fool Australia.

More reading

• Best ASX shares to buy in May 2022
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• 2 high-quality ASX 200 shares experts rate as buys
• Analysts name 2 of the best blue chip ASX 200 shares to buy now
• 2 highly rated ASX 200 shares analysts are tipping as buys

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison 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 Scott Phillips.

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Some ASX dividend shares have created a long-term record of consecutive annual dividend increases.

Businesses that keep growing their dividend may be attractive for investors looking for sources of income that may be able to keep up with inflation.

Here are two ASX dividend shares that could be interesting for income:

APA Group (ASX: APA)

APA is a large energy infrastructure business with a major gas pipeline network around Australia.

It also has assets relating to gas storage, gas energy generation, gas processing, solar farms, and wind farms.

The business has grown its distribution every year for more than the past decade and a half.

In FY22 it’s expecting to grow the annual distribution by another 3.9% to 53 cents per share. That would bring the distribution yield to 4.6% per security at the current APA share price of $11.56.

The business is steadily expanding its portfolio of projects. For example, it’s investing around $250 million of capital on the Kurri Kurri lateral pipeline to the Hunter power project with the ability to deliver blended hydrogen to the receipt station.

Another example is the $40 million of capital it’s investing in the Gruyere hybrid energy microgrid which is a combined gas, renewable energy, and battery storage solution.

It is steadily growing its cash flow. Nearly all of APA Group’s contracts have income linked to inflation, which is elevated right now.

APA’s cash flow is funding the rising distribution from the ASX dividend share. In the FY22 half-year result, APA’s free cash flow rose by 22.6% to $515.1 million.

Washington H. Soul Pattinson and Co Ltd (ASX: SOL)

Soul Pattinson is a large investment house that has been operating for more than a century.

It has a portfolio of various ASX shares and private businesses.

Some of the largest positions in the portfolio include TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Pengana Capital Group Ltd (ASX: PCG), BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), and Commonwealth Bank of Australia (ASX: CBA).

Some of the private businesses it’s invested in include Ampcontrol, swimming schools, financial services, agriculture, resources, and luxury retirement living.

The ASX dividend share pays out part of its annual cash flow each year, which comes from its portfolio’s dividends and distributions. The company said its dividend payout ratio in the first half of FY22 was 57.32% as a percentage of regular operating cash flows.

Soul Pattinson has grown its annual dividend every year since 2000. This is the longest dividend growth streak on the ASX.

At the current Soul Pattinson share price of $27.81, it has a grossed-up dividend yield of 3.3%.

The post 2 ASX dividend shares that keep giving investors pay rises appeared first on The Motley Fool Australia.

More reading

• Here’s why the APA share price is in the green today
• How big is the APA dividend yield going to be in 2022?
• Own the Vanguard Australian Shares High Yield ETF? Here’s what you’re invested in
• Soul Pattinson share price rises after electric deal for Ampcontrol
• 3 ASX companies that can raise prices whenever they want

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended APA Group, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Macquarie Group Limited and TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Macquarie Group Ltd (ASX: MQG) share price will be one to watch this morning.

This follows the release of the investment bank’s full-year results.

Macquarie share price on watch amid strong second-half growth

• Total operating income up 36% to $17,324 million
• FY 2022 net profit up 56% to $4,706 million
• Second-half net profit up 31% $2,663 million
• International income is now 75% of total income
• Assets under management of $774.8 billion
• Final 40% franked dividend of $3.50 per share

What happened in FY 2022?

For the 12 months ended 31 March, Macquarie reported a 56% increase in net profit to $4,706 million. This reflects a 36% jump in net operating income to $17,324 million and a 22% lift in operating expenses to $10,785 million.

The star of the show for Macquarie was arguably the Macquarie Capital business. It delivered a net profit contribution of $2,400 million in FY 2022, up 269% from $651 million in FY 2021. This reflects significantly higher fee and commission income due to mergers and acquisitions and debt capital markets activities. Investment-related income was also up substantially due to material asset realisations in the green energy, technology, and business services sectors and an increase in the private credit portfolio.

Another star of FY 2022 was the Commodities and Global Markets (CGM) business. It delivered a 50% increase in its net profit contribution to $3,911 million. This was driven by increased revenue across Commodities with strong risk management revenue driven by increased client hedging activity and trading activity. Financial Markets continued to deliver a strong performance and Asset Finance benefited from the partial sale of the UK Meters portfolio.

The Banking and Financial Services (BFS) business had a strong year and delivered a net profit contribution of $1,001 million, up 30% year on year. This reflects strong growth in its loan portfolio, funds on platform and total BFS deposits. It also benefited from releases in net credit impairments. This was partially offset by increased technology investment and higher average headcount to support business growth and regulatory requirements.

Finally, the Macquarie Asset Management (MAM) business was the laggard in the group. It delivered a net profit contribution of $2,150 million, up 4% on FY 2021’s $2,074 million. This was driven by income related to the disposition of Macquarie Infrastructure Corporation assets as well as growth in base fees. However, this was partially offset by a gain on the sale of Macquarie European Rail in the prior year and lower performance fees.

All in all, this has allowed Macquarie to pay a final 40% franked dividend of $3.50 per share, which is up a modest 4.5% year on year and represents a 50% payout ratio.

For the full year, this means the bank is paying shareholders a total of $6.22 per share. Once again, this represents a 50% payout ratio, which is the very bottom of the bank’s 50% to 70% target range.

How does this compare to expectations?

According to a note out of Goldman Sachs, it was expecting Macquarie to report second half cash earnings of $2,800 million. This means Macquarie’s second-half profit of $2,663 million has missed by 4.9%.

In addition, the broker had pencilled in a $4.40 per share final dividend compared to Macquarie’s actual dividend of $3.50 per share.

This may not bode well for the Macquarie share price today, particularly given the market selloff on Wall Street overnight.

Management commentary

Macquarie Group Managing Director and Chief Executive Officer, Shemara Wikramanayake, said:

While many of the regions and markets in which Macquarie operates saw heightened levels of volatility this year, our longstanding strategy to address key areas of unmet need in the community is unchanged. Over time, this has seen us build deep and differentiated franchises in each of our areas of activity, all of which delivered sound outcomes and strong performance in FY22.

Looking ahead, Ms Wikramanayake remans confident on Macquarie’s medium term outlook. However, she stopped short of providing any short term guidance. She commented:

Macquarie remains well-positioned to deliver superior performance in the medium term. This is due to our deep expertise in major markets; strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions; an ongoing program to identify cost saving initiatives and efficiency; a strong and conservative balance sheet; and a proven risk management framework and culture.

In the short term, the bank advised that it will continue to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that it believes positions it well to respond to the current environment.

The post Macquarie share price in focus amid FY22 profit surge appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• What is the outlook for the Macquarie share price in May?
• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• Can ASX 200 banks live up to the $11 billion ‘big expectation’ when they report this month?
• Own Macquarie shares? Here’s what to watch when the bank reports this week

Motley Fool contributor James Mickleboro 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 Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This month may be an opportune time to look for ASX growth shares amid all of the volatility that the ASX share market is seeing.

Businesses that are growing their revenue and profit margins may be candidates to consider.

Here are two that are growing quickly:

Adore Beauty Group Ltd (ASX: ABY)

Adore Beauty is an e-commerce platform that sells a wide array of beauty products.

Since the start of the 2022 calendar year, the Adore Beauty share price has fallen by around 60%.

That decline has happened despite the ongoing scaling of the ASX growth share.

The business recently announced its performance in the three months to 31 March 2022. It said that revenue increased 9% year on year to $42.7 million, while active customers rose 7% to 880,000. Returning customers rose by 47%.

The company has been focused on strategic initiatives that improve customer retention like its mobile app, growing its loyalty program, and its owned-marketing channels like podcasts.

Adore Beauty says the market it operates in is a large and growing $11 billion market. It’s planning to try to capture more of that with its own private label brand which it’s launching in the last quarter of FY22.

In the first half of FY22, the ASX growth share managed to grow its gross profit margin by 0.6 percentage points to 33.1%.

Idp Education Ltd (ASX: IEL)

IDP is an education and English language testing business.

In the first half of FY22, it generated $256.7 million of English language testing revenue, an increase of 62% year on year. It also generated student placement revenue of $106.2 million, an increase of 36%. HY22 total revenue increased 49% as the business recovered from the impacts of COVID-19.

It said that total India English language testing volumes were up 97% year on year and up 13% compared to the first half of FY20, which was before COVID-19. Management points to India which has “supportive long-term demographics, wealth and global mobility fundamentals”.

The company’s increasing profit margins helped its bottom line grow quicker than revenue. IDP Education’s net profit after tax (NPAT) rose 70% in the first six months of FY22.

Management said the ASX growth share is positioned strongly in the rebound from COVID-19. It said it delivered smarter and increasingly personalised ways to guide people in their study, career, and migration.

It said that in the first half of FY22, it “embedded transformative solutions” and its footprint is expanding in key markets. The company has invested for long-term growth, which management said is helping increase demand for its services.

The post 2 ASX growth shares that could be buys in May 2022 appeared first on The Motley Fool Australia.

More reading

• 2 top ASX growth shares Goldman Sachs rates as buys
• 3 exciting small cap ASX shares to watch
• Are these 2 growing ASX e-commerce shares buys?
• Adore Beauty share price glows following ‘strong quarterly performance’
• 2 great ASX growth shares to buy in May 2022: experts

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education Pty Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Biotechnology ASX shares have been one of the biggest victims of persistent inflation and rising interest rate fears over the past 6 months. 

The S&P/ASX 300 Pharmaceuticals & Biotechnology (ASX: AXPBKD) has lost about 15% over that time, but that understates the damage done to many stocks.

With some of the larger names softening the index, many smaller players have seen their valuations halve or worse.

But Pengana High Conviction portfolio manager James McDonald is keeping the faith in two businesses that he suspects have very blue skies coming up:

‘A real revolution’ in radiotherapy

The Telix Pharmaceuticals Ltd (ASX: TLX) share price has halved since January.

But its prostate cancer tech rival Lantheus Holdings Inc (NASDAQ: LNTH) has seen its stock rise more than 128% this year. 

And McDonald can’t see why Telix can’t do the same.

“There’s a good chance that Telix is going to follow suit over the next 12 months,” he told a Pengana webinar.

“They have a very similar product competing in prostate cancer diagnosis, and Latheus got approval seven months ahead of Telix.”

The portfolio manager has been following the radiation oncology sector for the best part of two decades, and the technology has come a long way.

“There’s a real revolution going on in radiotherapy in recent years.”

At first, radiation was crudely pointed at the problematic part of the body, then the second generation saw a more targeted treatment using radioactive beads that were injected into the bloodstream.

This third iteration of radiotherapy is seeing companies like Telix and Lantheus take that targeting to the next level.

“These are actually radioisotopes that are targeted to molecules or antibodies that selectively seek out cancer in the body.”

Looking at Lantheus’ ramp up, McDonald reckons Telix could rake in $75 million revenue for this calendar year and then $195 million in 2023.

He added that the US market for prostate cancer is about US$1.1 billion, and that Lantheus implies it can take 35% of it this year.

“Still plenty of room for Telix to take an equivalent amount of the market over the next 12 to 18 months.”

McDonald also noted that Telix has solutions for kidney and brain cancers in the pipeline.

And with the halving of the price this year, the shares are trading at about 8 to 10 times price-to-earnings ratio on 2023 projections.

“I would highlight that CSL Limited (ASX: CSL) and Resmed CDI (ASX: RMD) trade on 30 times PE. Cochlear Limited (ASX: COH) trades on 50 times PE.”

If Telix hits the projections, McDonald thinks it will end up a $10 or $20 billion company, which would make it a 10-bagger from its current market cap of $1.33 billion.

Awaiting a billion-dollar deal

Another cancer tech player that McDonald holds is Immutep Ltd (ASX: IMM).

Its share price has halved since November, giving it a current market capitalisation of around $310 million.

With the company targeting a US$50 billion addressable market in breast, lung, head & neck cancer markets, McDonald is convinced Immutep is undervalued.

“Similar biotech deals, either licensing or takeover, would probably be in the US$2 to US$5 billion range. So very substantial upside.”

Immutep has been granted a “prestigious” oral presentation at the American Society of Clinical Oncology conference on 3 June.

“It’s the largest healthcare conference in the world,” said McDonald.

“We can only assume it’s very good news… We’re greatly looking forward to that.”

The post 10-baggers? Expert names 2 super-cheap biotech ASX shares appeared first on The Motley Fool Australia.

More reading

• 48% fall: Fund names 3 ASX shares to take off after heavy crash
• Telix share price slips on quarterly update
• ASX 200 healthcare shares were chronically ill last quarter. Take a look

Motley Fool contributor Tony Yoo has positions in CSL Ltd., Cochlear Ltd., and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. and Cochlear Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Block Inc (ASX: SQ2) share price will be one to watch on Friday.

This follows a market meltdown on Wall Street and the release of the payments giant’s first-quarter update.

Block share price on watch amid strong growth but big loss

• Gross payment volume (GPV) up 31% year on year to US$43.5 billion
• Net revenue down 22% to US$3.96 billion
• Net revenue excluding bitcoin revenue up 44% to US$2.23 billion
• Gross profit up 34% year on year to US$1.29 billion
• Net loss of US$204 million

What happened during the quarter?

For the three months ended 31 March, Block reported a 22% decline in revenue to US$3.96 billion. However, this was driven by softer cryptocurrency demand. Excluding bitcoin revenue, total net revenue in the first quarter was US$2.23 billion, up 44% year over year.

This was driven by a 72% increase in subscription and services-based revenue to US$960 million and a 28% lift in transaction-based revenue to US$1.23 billion. The latter reflects a 31% jump in GPV to US$43.5 billion.

As for earnings, Block generated gross profit of US$1.29 billion, up 34% year over year. This reflects a 26% increase in gross profit from Cash App to US$624 million and a 41% lift in Square gross profit to US$661 million.

The acquired Afterpay business contributed US$92 million of gross profit in the months of February and March, with US$46 million of gross profit recognised in each of Cash App and Square. Excluding Afterpay, gross profit was US$1.2 billion, up 25% year over year.

On the bottom line, Block record a net loss of US$204 million.

How does this compare to expectations?

According to consensus estimates, Block has missed on both its earnings and revenue for the period. The latter was US$180 million short of expectations.

However, the market appears to be looking beyond this. After falling 10.5% overnight on Wall Street because of the market selloff, the Block share price is rebounding in after-hours trade.

At the time of writing, the company’s NYSE-listed shares are up 8.5% after market. While this won’t claw back all of last night’s declines, it won’t be a bad as it was looking just an hour or two earlier.

Outlook

The catalyst for the Block share price recovery appears to have been the company’s outlook commentary. Block has started the second-quarter positively, with Square GPV growth accelerating in April.

It commented: “For the month of April, in aggregate, Square GPV is expected to be up 29% year over year. On a three-year CAGR basis, GPV growth is expected to be 24% in April, compared to 22% growth in the first quarter.”

“In April, we expect Cash App gross profit, excluding Afterpay, to grow on a year-over-year and three-year CAGR basis, driven by growth in monthly transacting actives, engagement across our ecosystem, and inflows into Cash App.”

The post Block share price on watch amid Q1 earnings miss appeared first on The Motley Fool Australia.

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• Why is the Block share price slipping 6% today?
• 3 beaten-up ASX All Ordinaries shares that surged higher today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It is the dream of every investor to be able to see a positive coming for a particular company before other people have woken up to it.

The team at Wilsons pride themselves on doing exactly that.

“One way of looking for value is looking at the underlying assets of the business and identifying discrepancies between the cumulative value of the operating units versus the market value of the stock,” they said in a memo to clients.

“These hidden value stocks rely on management action to highlight value to the market, such as an asset sale or a demerger.”

Some past examples of how they benefited from this approach are Link Administration Holdings Ltd (ASX: LNK), Aventus, News Corporation (ASX: NWS) and Telstra Corporation Ltd (ASX: TLS).

“We find this subset of the portfolio can provide above-market returns that are less correlated to the rest of the market.”

But what we all want to know is: what’s the next “hidden value” ASX stock?

Massive catalyst coming this month

Wilsons analysts have identified Tabcorp Holdings Limited (ASX: TAH) as one with a current disconnect between its actual worth and share price.

The big catalyst will be that the lotteries and betting divisions will soon be demerged, to form two separated listed businesses over late this month to early June.

The Wilsons team thinks this will have multiple benefits:

• Allowing each business to adopt a more focused operating profile and capital structure more aligned to its core operations
• 2 executive teams that can focus on each business more effectively
• M&A opportunities

But the really exciting outcome could be a potential “market re-rating” of the lotteries business.

There is much to like about lotteries, which Wilsons considers “a defensive, infrastructure-like business with long-dated licences”.

“Lotteries is growing its online presence which could lead to margin expansion,” its memo read.

“Lotteries is highly cash generative and capital-light.”

This business has so much going for it during a period of potential economic slowdown that a private owner could come in with a Godfather acquisition offer after the demerger.

“We believe a bid could also be made for the lotteries business after the demerger. Private equity firms typically like annuity-like, defensive companies, just like the lotteries business.”

Professional investors gaga over Tabcorp 

Wilsons is far from the only mob who loves the look of Tabcorp.

“We estimate that Tabcorp’s lotteries division generates a return on invested capital north of 50%!” said Airlie investment analyst Will Granger.

“The market continues to undervalue the infrastructure-like qualities of this lotteries division.”

Investors Mutual analysts are also licking their lips at Tabcorp’s potential.

“We continue to see long-term value in the lotteries business and believe that post demerger, M&A interest in both the lotteries and wagering businesses could resurface,” their memo to clients read.

Shareholders will vote on the Tabcorp demerger on 12 May.

Tabcorp shares are up less than 0.5% for the year so far.

The post ‘Hidden value’: The ASX share with a major catalyst coming appeared first on The Motley Fool Australia.

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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 positions in and has recommended Link Administration Holdings Ltd. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Thursday, the S&P/ASX 200 Index (ASX: XJO) returned to form and pushed higher. The benchmark index rose 0.8% to 7,364.7 points.

Will the market be able to build on this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to sink

The Australian share market looks set to end the week deep in the red following a selloff on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 109 points or 1.5% lower this morning. In the US, the Dow Jones sank 3.1%, the S&P 500 dropped 3.55%, and the Nasdaq crashed 5%. The Dow had its worst day since 2000.

Oil prices rise

Energy producers including Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a good finish to the week after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.7% to US$108.61 a barrel and the Brent crude oil price is up 1% to US$111.19 a barrel.

Macquarie full year results

The Macquarie Group Ltd (ASX: MQG) share price will be one to watch when the investment bank releases its full year results. According to a note out of Goldman Sachs, it is expecting the bank to report second half cash earnings of $2,800 million. This will be a 38% increase over the prior corresponding period. A $4.40 per share final dividend is also expected.

Gold price rises

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a decent finish to the week after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.45% to US$1,877.2 an ounce. Investors were buying the safe haven asset amid the equities selloff.

NAB remains a buy

National Australia Bank (ASX: NAB) shares remain a buy according to Goldman Sachs. This morning the broker responded to the banking giant’s half year update by retaining its conviction buy rating and lifting its price target to $34.17. Goldman believes NAB is well-placed to continue its growth and remains the broker’s preferred sector exposure.

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• These 3 ASX 200 shares are topping the share market’s volume charts on Thursday
• Why are ASX 200 energy shares leaping higher today?
• ASX 200 midday update: NAB disappoints, Qantas announces acquisition
• Here’s all what you need to know about the latest NAB dividend

Motley Fool contributor James Mickleboro 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 Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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