Month: May 2022

The JB Hi-Fi Limited (ASX: JBH) share price is falling on Wednesday.

In morning trade, the retail giant’s shares are down 2.5% to $51.26.

Why is the JB Hi-Fi share price falling today?

The JB Hi-Fi share price is falling today despite the release of a strong sales update.

According to the release, the retailer continued to experience heightened customer demand and strong sales growth during the third quarter of FY 2022.

The JB Hi-Fi business was once again the star of the show, reporting total sales growth of 11.9% year on year during the quarter. This was underpinned by an 11.1% jump in comparable store sales growth.

In light of this strong quarter, the JB Hi-Fi Australia business’ year to date sales are now up 1.9% year on year.

Over in New Zealand, the JB Hi-Fi business delivered a much-improved performance. It reported a 4.8% increase in sales during the third quarter. This has reduced JB Hi-Fi New Zealand’s year to date sales decline to just 1.8%.

Finally, The Good Guys business was also on form during the quarter. It reported a 5% increase in comparable store sales, bringing its total quarterly sales growth to 5.5% year on year. This means that year to date sales are now up 1.1% over the prior corresponding period.

What about the fourth quarter?

Pleasingly, JB Hi-Fi’s sales momentum has continued into fourth quarter. Though, management hasn’t provided any numbers. Nor has it provided any guidance for the full year.

It commented: “Whilst the Group is pleased with the continued sales momentum, the end of financial year remains an important trading period. In view of the ongoing disruption to stock availability and operations arising from Covid-19 and other local and global uncertainties, the Group does not currently consider it appropriate to provide FY22 sales and earnings guidance.”

Judging by the JB Hi-Fi share price performance today, it appears that some investors were expecting an even stronger update or more colour on its margins.

The post JB Hi-Fi share price falls despite strong Q3 sales growth appeared first on The Motley Fool Australia.

More reading

• Here are the ASX retail share winners and losers of the last quarter
• 2 high-yielding ASX 200 dividend shares rated as buys by brokers
• Why is the JB Hi-Fi share price having such a rough start to the week?
• How retirees can maximise returns from ASX dividend shares: fund manager

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 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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The Medibank Private Ltd (ASX: MPL) share price has risen by around 5% over the past month. But can the leading private health insurer’s shares keep going up?

Medibank has materially outperformed the S&P/ASX 200 Index (ASX: XJO), which has fallen by around 3% over the last month.

This week, the company gave a presentation at the Macquarie Australia conference and provided an update on its outlook for FY22.

Medibank presentation

The company says that private health insurance participation growth remains “strong”.

It notes there has been a shift in customer attitudes towards private health insurance. And by the direction of the Medibank share price, it appears to be a positive one.

Medibank says that private health insurance is an improving proposition given concerns about public hospital wait times. Further, it is reportedly seen as “more affordable and better value”, and consumers continue to invest in their health and wellbeing.

The ASX share points to six consecutive quarters of industry policyholder growth. The rolling 12-month policyholder growth increased from 2.68% in September 2021 to 2.79% in December 2021.

‘New to industry’ and younger cohorts are “major contributors” to policyholder growth, which Medibank says are positive signs for industry sustainability. There has also been a “significant” improvement in policyholder lapses.

Outlook for the private health insurer

For those interested in the Medibank share price, here’s what the company expects in the coming months.

Medibank says it expects industry participation growth to be higher than pre-pandemic levels over the medium term.

Growth will be supported by population growth, continuing shifts in consumer attitudes towards health and “strong bipartisan support” for the role of private health.

However, Medibank says that affordability is still key for growth. It has deferred its April 2022 premium increase of 3.1% for six months.

The ASX share says it’s on track to achieve resident policyholder growth of between 3.1% to 3.3% in FY22. It also continues to gain market share, which increased to 27.36% as at 31 December 2021. This was a rise of 14 basis points over the 2021 calendar year.

As at 30 April 2022, the financial year-to-date resident policyholder growth was 2.3%.

The company sees further growth opportunities. Target markets include corporate and regional customers. It thinks it can improve retention, particularly in its AHM business. It points to productivity and cost discipline, which can provide opportunities to invest for growth.

The ASX share is also targeting ‘inorganic’ growth.

The underlying average net claims expense per policy unit is forecast to be around 2.3% among resident policyholders in FY22.

Finally, the FY22 health insurance management expenses are expected to be around $530 million. The FY22 productivity target of $15 million in health insurance management expenses is “on track”.

Medibank share price targets

Two of the recent ratings from brokers have been positive.

Ord Minnett rates the business as ‘accumulate’ with a price target of $3.50, implying an upside of around 10%.

Likewise, Credit Suisse rates Medibank as ‘outperform’, with a price target of $3.50. This broker thinks that the current environment is supportive for Medibank earnings.

On Ord Minnett’s numbers, the Medibank share price is valued at 21x FY22’s estimated earnings with a projected grossed-up dividend yield of 5.3%.

Thus, using Credit Suisse numbers, the Medibank share price is valued at 20x FY22’s estimated earnings with a projected grossed-up dividend yield of 6.25%.

The post The Medibank share price has leapt 5% in a month. Could it be on the comeback trail in May? appeared first on The Motley Fool Australia.

More reading

• This ASX 200 healthcare share has a fully franked dividend yield over 4% right now
• Why is the Medibank share price trailing NIB over the past year?
• Why did the Medibank share price go backwards in March?

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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The Temple & Webster Group Ltd (ASX: TPW) share price is on the slide on Wednesday.

In morning trade, the online furniture and homewares retailer’s shares are down 4.5% to a 52-week low of $5.16.

Why is the Temple & Webster share price falling?

Investors have been selling down the Temple & Webster share price this morning after the ecommerce company released a trading update and announced the launch of its new online business.

In respect to the latter, the company has now officially launched its The Build business and website. This will see Temple & Webster go head-to-head with Bunnings and Mitre 10 online in the $26 billion home improvement market

Temple & Webster is launching The Build with an initial range of more than 20,000 products across 39 categories. These include bathroom fixtures, kitchen fixtures, indoor and outdoor lighting fixtures, ceiling fans, blinds & curtains, and wallpaper.

New categories such as flooring and tiling, outdoor living and landscaping, tools and building/renovation equipment will be added in the coming months.

Management notes that home improvement spending online is significantly lower than other markets. It estimates that only 4% is online in Australia at present, whereas the UK has an online penetration rate of 25%.

Though, it will be some time until the business is profitable, which could be what is weighing on the Temple & Webster share price today.

Management is targeting The Build to make a material revenue contribution and be EBITDA positive in FY 2026. In the meantime, an initial investment across FY 2022 and FY 2023 of ~$10 million will be made to support marketing, people and working capital.

Trading update

Temple & Webster revealed that its second half performance has been in line with management’s expectations.

It revealed that revenue for the period 1 January to the 30 of April was up 23% on the prior corresponding period. This is slightly lower than the 26% growth that was previously reported for 1 January to 6 February.

In addition, it advised that it continues to expect an EBITDA margin of 3% for FY 2022, which is in line with its 2% to 4% guidance range. Though, this guidance excludes The Build business.

The post Temple & Webster share price tumbles despite launching into $26bn home improvement market appeared first on The Motley Fool Australia.

More reading

• 3 fantastic ASX growth shares with major upside potential
• 2 beaten-up ASX shares with massive upside: experts
• 2 great ASX shares to buy in April: experts
• Is this why the Temple & Webster share price surged over 6% 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 Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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So it’s finally happened.

After more than 11 years, the Reserve Bank of Australia has increased the cash rate.

Incredibly, there was an entire generation of investors and homeowners who have never directly experienced interest rates going up. 

With more rate rises expected later this year, it’s an uncomfortable feeling that they will have to get used to.

“We expect another increase in the cash rate in June (probably of 0.25% but it could be up to 0.4%), a rise in the cash rate to 1.5% by year end, and to 2% next year,” said AMP Ltd (ASX: AMP) chief economist Dr Shane Oliver.

For those reading The Motley Fool, I’m sure you’re keen to find out what the consequences are for ASX shares.

While no one has a 100% accurate crystal ball, some experts have looked back at past situations to figure out what might happen in 2022.

Rates and shares: not a simple relationship

Intuitively, one might think rising rates will cause the share market to fall. People have less money to spend or invest, so less demand for goods, services, and stocks.

But historically it hasn’t been as simple as that, according to Oliver.

“There is an ambiguous relationship between rising interest rates and the Australian share market,” he said on the AMP blog.

“While higher rates place pressure on share market valuations by making shares appear less attractive, early in the economic recovery cycle this impact is offset by still improving earnings growth.”

Certainly, on some occasions, share prices have fallen with increasing rates. But other times, the All Ordinaries Index (ASX: XAO) has done the opposite.

“For example, between 2003 and 2007, shares went up as interest rates rose, with shares only succumbing in 2008 after multiple rate hikes over several years and with the GFC.”

ASX shares to tread water in 2022

Oliver suspects 2022 will be one of those times when ASX shares will not plunge because of interest rates alone.

“Firstly, rising rates from a low base are normally not initially bad for shares, as they go with improving economic conditions,” he said.

“Secondly, rising interest rates are only really a major problem for shares when rates reach onerous levels (i.e. above “normal”), contributing to an economic downturn.”

Also, even if the RBA cash rate hits 1.5% by the end of the year, returns paid out of bank deposits would still be less than 2%. This would mean plenty of demand for shares from investors seeking decent yields.

“Finally, given the high short term correlation between Australian shares and US shares, what the [US Federal Reserve] does is arguably far more important than local interest rates,” said Oliver.

“And this is perhaps a bigger risk given higher inflation in the US.”

While rising rates may not bring down the stock market on its own, Oliver admitted it will be a bumpy ride.

“An environment of rate hikes will likely result in a continued period of volatility for shares.”

Has the RBA lost credibility?

T Rowe Price Group Inc (NASDAQ: TROW) associate portfolio manager Scott Solomon felt blindsided by the magnitude of RBA’s move on Tuesday.

“The Reserve Bank of Australia pivoted [to] hawkish and did so with a bang, raising rates to 35 basis points, which was higher than what [the] market anticipated,” he said.

“This comes after more than 12 months of dovish commentary — including a very firm view of no hikes until 2024 — and underwhelming economic forecasts.”

For Solomon, the central bank has lost credibility because of this.

“It’s very difficult to foresee RBA’s future actions based on its statements and forecasts,” he said.

“The market had been screaming about factors that would imply and demand potential rate hikes and the RBA had in the past responded with a call for patience, and grim economic forecasts followed by reminders of how inflation is different in Australia.”

He added the RBA must now further address market concerns to calm a volatile situation.

“I think what the market wants is an answer to what caused the RBA to finally flip the switch.”

The post What rising interest rates can do to ASX shares appeared first on The Motley Fool Australia.

More reading

• The AMP share price soared 21% in April. Here’s why
• These were the best performing ASX 200 shares in April
• These were the best performing ASX 200 shares last week
• 3 ASX All Ordinaries shares that soared more than 9% today
• Here are the top 10 ASX shares today

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 Scott Phillips.

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The A2 Milk Company Ltd (ASX: A2M) share price has been in the trenches for close to 2 years now.

It’s tumbled around 76% since July 2020 and hasn’t shown many signs of easing yet. In fact, it slumped another 15.5% last month.

But could the future be brighter for the S&P/ASX 200 Index (ASX: XJO) milk and infant formula company? Let’s take a look at what experts are expecting from the A2 Milk share price in the future.

The A2 Milk share price was trading at $4.34 at Tuesday’s close.

What does the future hold for the A2 Milk share price?

The former market darling has been plagued by a slew of issues over the last few years, starting with its changed position in the Chinese market. That’s recently been exacerbated by the country’s declining birth rate.

A2 Milk also outlined continued margin pressures and supply chain issues born from COVID-19 in its most recent half year results.

But such gloom could soon be in the company’s rearview mirror according to some experts.

Its expansion in New Zealand and the United States, as well as its entrance into Malaysia, Singapore, and Vietnam has Catapult Wealth’s Tim Haselum excited, reports The Motley Fool Australia’s Tony Yoo.

Further, Haselum thinks merger and acquisition activity could be on A2 Milk’s horizon due to its “strong net cash position”.

Meanwhile, Credit Suisse is warning lockdowns in China could impact the company’s bottom line in the short term. Though, the broker expects it could grow its market share in future years, my Foolish colleague Tristan Harrison reports.

It has slapped the company with a neutral rating price target of $5.15 to $5.75 – representing a potential upside of 34%.

Other brokers have varied targets for the A2 Milk share price. Citi has slapped it with a target of $4.80 while Morgans expects it to reach $6.39.

A2 Milk’s management predicts the second half of this financial year will be a better one for the company’s revenue.

However, that likely won’t be reflected in its earnings, with the extra cash earmarked to go to the company’s growth strategy.

The post What’s the outlook for the A2 Milk share price in May? appeared first on The Motley Fool Australia.

More reading

• The A2 Milk share price plunged 15% in April. What went wrong?
• Despite continuing woes in China, here’s what to like about A2 Milk shares
• It’s time to buy these 2 fallen ASX shares again: expert
• Is there still hope for the A2 Milk share price in 2022?
• These were the worst performing ASX 200 shares last week

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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 Rio Tinto Limited (ASX: RIO) share price fell by 7% in April. What could happen in May 2022?

Well, at the time of writing, it’s down another 1% since the beginning of the month.

The company reported its 2022 first-quarter production numbers a couple of weeks ago. So, let’s look at what the company announced.

Rio Tinto’s first quarter

The ASX mining company revealed that Pilbara iron ore production was 71.7mt for the quarter. That represented a decline of 6% year on year and a 15% decline quarter on quarter.

Year on year, Rio Tinto’s bauxite production was flat at 13.6mt, aluminium production was down 8% to 736kt, mined copper was up 4% to 125kt, titanium dioxide slag production was down 2% to 273kt, and Iron Ore Canada (IOC) iron ore pellets and concentrate production was up 3% to 2.4mt.

Rio Tinto admitted that the first quarter was “challenging”. It said that “ongoing mine depletion was not offset by mine replacement projects, with delayed commissioning of Gudai-Darri“. Gudai-Darri’s first ore is still forecast for the second quarter of 2022.

The ASX mining share also blamed ongoing commissioning challenges at the Mesa A wet plant that continue to impact the production ramp-up at Robe Valley.

However, the full-year shipment guidance remained unchanged.

Comments on the iron ore market

One of the biggest influencers on the Rio Tinto share price can be the iron ore price.

The mining giant said that iron ore prices had been volatile since the start of the year, with the Platts 62% Fe index up 33% to US$158 per dry metric at the end of the first quarter.

Rio Tinto said that since February 2022, “supply concerns due to the war in Ukraine has outweighed muted demand growth and a crackdown on speculative trading behaviour in China. China’s economy is getting a boost with infrastructure spending, but COVID-19 lockdowns pose downside risks to near-term construction activity.”

The miner is expecting commodity demand to be underpinned by the global energy transition, which is creating new demand for its production and near-term Chinese policies that “are becoming more growth focused.”

However, Rio Tinto noted that rising interest rates globally pose risks to economic growth. Other risks include a prolonged war and other geopolitical tensions, and extended labour and supply shortages.

What is the outlook for the Rio Tinto share price?

No one can know what a share price is actually going to do, but analysts have a guess where they think share prices will be in 12 months from now.

Some brokers are confident on Rio Tinto shares. The broker Macquarie rates Rio Tinto as a buy, with a price target of $140. That’s a potential upside of around 25%. It’s optimistic because of the performance of the iron ore price.

Citi is another broker that rates it as a buy, with a price target of $135. Citi is also confident because of the strong iron ore price.

However, UBS is only neutral on the Rio Tinto share price. The price target is $104, implying a possible decline of 7%. It thinks it will need a good performance over the rest of the year to meet the guidance.

The post After dropping 7% in a month, can the Rio Tinto share price stage a comeback in May? appeared first on The Motley Fool Australia.

More reading

• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• What’s the outlook for ASX 200 mining shares in May?
• The Rio Tinto share price delivered a disappointing performance in April. Here’s why
• ASX 200 mining shares just had their best trading day in 5 weeks. What’s next?
• Why is the Rio Tinto share price rebounding strongly on Thursday?

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 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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With interest rates now heading north, it may be worthwhile taking a look at ASX shares representing retailers Australians just can’t live without.

After all, even if the economy slows down, consumers still have to eat food, wear clothes and have a drink.

The analysts at Morgans certainly thinks so, and are currently pretty keen on two particular retailer stocks:

‘A good entry point for longer term investors’

Wesfarmers Ltd (ASX: WES) owns an enviable stable of retail brands in Australia — Bunnings, Kmart, Target and Officeworks.

The share price has taken a beating just recently though, dropping more than 17% this year so far and almost 25% since August.

According to Morgans analyst Andrew Tang, this is a blessing in disguise.

“We see the recent pullback in the share price as a good entry point for longer term investors,” he said in Morgans Best Buys memo for May.

“The company is run by a highly regarded management team and the balance sheet is healthy.”

Staff shortages are admittedly a challenge for every business right now, but especially so for one of Australia’s biggest employers.

But Tang’s not worried about that in the long run.

“The core Bunnings division (>60% of group EBIT) remains a solid performer as consumers continue to invest in their homes.”

Other analysts are torn about Wesfarmers shares.

According to CMC Markets, nine out of 15 are on the fence, labelling it a hold. There are four votes each on the buy and sell sides.

The retail giant does hand out a 3.42% dividend yield, as a nice sweetener for those who take the plunge.

Are Australians drinking at home or the pub?

Endeavour Group Ltd (ASX: EDV) runs big retail brands like Dan Murphy’s and BWS.

But it also has a hospitality division, which operates a large network of pubs around Australia.

While the retail business went gangbusters during COVID-19 lockdowns, Tang admits the hotels division suffered from low patronage.

But that just gives it plenty of upside for the coming period.

“With the Australian economy now largely reopened and we move into a ‘living with COVID’ environment, this should be positive for the hotels outlook.”

Endeavour did cop a short-term blow to its stock price on Tuesday as it announced that the managing director for Dan Murphy’s had departed to return to the UK.

The share price is still up more than 12% so far this year, and a pleasing 26.4% higher than it was 12 months ago.

Much like Wesfarmers, the wider analyst community is also divided on Endeavour.

According to CMC Markets, four out of 13 rate it as a strong buy with one other supporting it as a moderate buy. Four analysts each label it as hold and sell respectively.

The post 2 retail ASX shares Morgans rates as a buy now appeared first on The Motley Fool Australia.

More reading

• Is the Wesfarmers share price a buy or a sell in May?
• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• Endeavour share price struggles amid Dan Murphy’s leadership resignation
• Why did the Wesfarmers share price lag the ASX 200 in April?
• Analysts name 2 ASX 200 dividend 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 positions in and has recommended Wesfarmers 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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Before 2022, it would be a fair statement to say that investors in the Wesfarmers Ltd (ASX: WES) share price weren’t used to falling share prices. From 2018 until the back half of 2021, Wesfarmers shares went up in a fairly straight line, with the exception of the March 2020 COVID crash of course.

But 2022 has been telling a different tale. Wesfarmers has been one of the worst ASX 200 blue-chip share performers over the year to date. Since New Year’s Day, the Wesfarmers share price has fallen by a whopping 18.2%. Since the industrial and retail conglomerate hit its last all-time high of $67.20 in August last year, the company has now lost more than 25% of its value. Ouch.

But Wesfarmers is arguably one of the most diversified businesses on the ASX. It is certainly the most diversified company in the ASX 50. Its flagship Bunnings hardware business is almost universally praised as one of the top retail operations in the country.

But in addition to Bunnings, Wesfarmers also owns retailers OfficeWorks, Kmart, and Target. And that’s in addition to the plethora of other pies Wesfarmers has fingers in. These include mining, chemical manufacturing, and even a clothing line.

So now that Wesfarmers has given up such a significant chunk of its value in recent months, many investors might be wondering if this blue-chip share is a buy now that we are in May.

Is the Wesfarmers share price a May buy?

Well, one ASX broker who reckons Wesfarmers is a buy right now is Morgans. As my Fool colleague covered last month, Morgans currently has an “add” rating on Wesfarmers shares, together with a 12-month share price target of $58.50 a share. If that came to pass, it would result in a gain worth a tad over 19%. That’s not including dividend returns either.

The broker rates the company due to its strong balance sheet and its high quality portfolio, run by a “highly regarded management team”. Morgans even reckons Wesfarmers is in a good position to initiate future acquisitions. It is also pencilling in a big dividend increase in FY2023.

So no doubt that will come as music to Wesfarmers investors’ ears. But we’ll have to wait and see if Morgans’ predictions prove accurate.

At yesterday’s closing share price, Wesfarmers has a market capitalisation of $55.67 billion, with a dividend yield of 3.46%.

The post Is the Wesfarmers share price a buy or a sell in May? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX shares today
• Here’s why the Metcash share price just hit a 15-year high
• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

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. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers 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 Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price will be one to watch this morning.

This follows the release of the banking giant’s half-year results.

ANZ share price on watch amid $3.1bn cash profit

• Statutory operating income from continuing operation up 14% to $9,542 million
• Cash earnings from continuing operations up 4% to $3,113 million
• Net interest margin (NIM) down 7 basis points during the half to 1.58%
• CET1 ratio decreased 81 basis points to 11.53% during the half
• Interim fully franked dividend of 72 cents per share

What happened during the half?

For the six months ended 31 March, ANZ delivered cash earnings from continuing operations of $3,113 million. This represents a 4% increase over the prior corresponding period but a 3% decline on the second half of FY 2021.

ANZ’s year on year growth was driven by its Australia Retail and Commercial segment and its New Zealand segment, which offset a poor performance from the bank’s Institutional segment.

For the period, the Australia Retail and Commercial segment reported an 11% increase in cash earnings to $1,986 million. This was driven by positive balance sheet momentum after the bank increased home loan processing capacity by 30%, bringing assessment times in line with major peers.

Over in New Zealand, the bank reported a 2% lift in cash earnings to $787 million. Management revealed that it grew its home loans by 7% half-on-half. This took ANZ’s total home loan book in New Zealand to more than NZ$100 billion and increased its market share by 28bps to 30.66%.

The Institutional segment was the only real disappointment. It recorded a disappointing 23% decline in cash earnings to $730 million.

Nevertheless, this couldn’t stop ANZ from declaring a 72 cents per share fully franked interim dividend. This represents a 2.9% or 2 cents increase on FY 2021’s interim dividend.

How does this compare to expectations?

The good news for shareholders is that this result appears to have come in a touch ahead of expectations, which could bode well for the ANZ share price this morning.

For example, a note out of Goldman Sachs reveals that its analysts were expecting ANZ to report cash earnings of $2,971 million. This compares to ANZ’s actual cash earnings of $3,113 million.

This may have been driven by the bank’s better than expected NIM. Goldman was expecting a NIM of 1.56%, whereas ANZ reported a 1.58% margin.

The broker was also forecasting a fully franked interim dividend of 72 cents per share, which is what the bank declared.

Management commentary

ANZ’s Chief Executive Officer, Shayne Elliott, appears optimistic on the future. He said:

“Looking ahead, the economic environment is likely to be very different and we will continue to adjust our risk appetite, business settings and investment priorities as required. We are already seeing increased demand from our business customers and we are well placed to continue to support them as they manage in a world of higher inflation and interest rates.

“For ANZ, we will continue to focus on the long term – investing for tomorrow and not just running today. We have made good progress in building a resilient, agile bank for the future. Our culture is strong and we have an embedded sense of purpose as an organisation – to shape a world where people and communities thrive.”

The post ANZ share price on watch amid $3.1bn half-year cash profit appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• The ASX 200 shares that fund managers are buying and dumping
• Own ANZ shares? Here’s what to expect from the bank’s half-year results
• Can ASX 200 banks live up to the $11 billion ‘big expectation’ when they report this month?

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 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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Exchange-traded funds (ETFs) can be an effective way for investors to gain exposure to the share market while also achieving diversification.

There are some ETFs that provide exposure to a specific industry, while others can provide exposure to a globally diversified portfolio.

These two ETFs were recently rated as buys by leading investment experts:

Vanguard Diversified High Growth Index ETF (ASX: VDHG)

In a recent episode of ‘buy hold sell’, Ben Nash from Pivot Wealth rated the VDHG ETF as a buy.

He described this ETF as “rock solid” because of its nature as a diversified index fund and that it automatically rebalances for the investor. Nash said that it has a “reasonably” low cost and that people can sleep easy at night knowing that they will get the market return over time.

What is the ETF actually invested in?

Most of the ETF is invested in Australian shares and larger international shares, almost 80%. The Vanguard Diversified High Growth Index ETF is also invested in smaller international shares, ‘emerging market’ shares, global bonds, and Australian bonds. The bonds make up around 10% of the portfolio.

That means it provides underlying exposure to ASX shares like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL), and National Australia Bank Ltd (ASX: NAB) as well as global shares such as Apple, Microsoft, Amazon, and Alphabet.

It charges an annual management fee of 0.27%.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

This is an ETF that is based solely on international shares. There are no bonds involved.

In a different episode of ‘buy hold sell’, both Ben Nash and Felicity Thomas from Shaw and Partners rated the ETHI ETF as a buy. It’s one of Ms Thomas’ favourite ETFs.

This ETF looks to build a portfolio of global businesses that exclude fossil fuel businesses, gambling, alcohol, and other industries that are seen as ‘unethical’. Only businesses that are seen as climate leaders in their industry, or are helping the world decarbonise, are included in the portfolio.

After the above exclusions, what remains are the 200 largest businesses in the global share market. Some of the biggest positions include: Apple, Nvidia, Visa, Home Depot, Mastercard, Toyota, ASML, Cisco Systems, and Adobe.

In terms of sector allocations, there are four sectors that had a large weighting at the end of March 2022: IT with a 40.5% allocation, healthcare with a 17.2% allocation, financials with a 15.4% allocation, and consumer discretionary with a 13.1% allocation.

Past performance is certainly not a guarantee of future performance, particularly with interest rates rising. Over the past five years, the ETHI ETF has delivered an average net return of 19.4% per annum. That includes the annual management cost of 0.59%.

The post 2 buy-rated quality ETFs for May 2022: experts appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Adobe Inc., Alphabet (A shares), Amazon, Apple, CSL Ltd., Cisco Systems, Mastercard, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares) and has recommended the following options: long January 2024 $420 calls on Adobe Inc., long March 2023 $120 calls on Apple, short January 2024 $430 calls on Adobe Inc., and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Mastercard, and Nvidia. 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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