Month: May 2022

The Woolworths Group Ltd (ASX: WOW) share price will be one to watch on Tuesday.

This follows the release of the retail giant’s third quarter sales update this morning.

Woolworths share price on watch amid solid sales growth

• Group sales up 9.7% over the prior corresponding period to $15,123 million
• Australian Food sales up 5.4% to $11,432 million
• Group ecommerce sales up 33.4% to $1,456 million
• BIG W sales down 3.5% to $989 million
• COVID costs down 51.8% quarter on quarter to $66 million

What happened during the quarter?

For the 12 weeks ended 3 April, Woolworths reported a 9.7% increase in sales from continuing operations to $15,123 million.

Playing a role in this growth was its key Australian Food business, which reported a 5.4% increase in sales to $11,432 million thanks to 4.4% comparable sales growth.

This reflects Woolworths Supermarkets quarterly sales growth of 2.4% to $10 billion, Metro Food Stores sales growth of 7.3% to $241 million, and WooliesX B2C eCommerce sales growth of 38.1% to $1.1 billion.

It was a similar story for the New Zealand Food business, which reported a 4.2% increase in sales to $1,736 million. This was underpinned by a 3.1% increase in comparable store sales and favourable currency movements.

The highlight of the quarter was arguably the Australian B2B business, which delivered a 217.3% increase in sales to $995 million. This side of the business includes the PFD business and its share of revenue from the spun off Endeavour Group Ltd (ASX: EDV) business.

Conversely, the lowlight of the period was the struggling BIG W business. It reported a 3.5% decline in revenue to $989 million after recording a comparable store sales decline of 3.4%.

Finally, Woolworths revealed that its total COVID costs more than halved quarter on quarter to $66 million. This represents 0.4% of sales, compared to 0.9% of sales in the second quarter. The release shows that this cost reduction reflects lower cleaning, PPE, and team costs.

How does this compare?

The good news for shareholders is that this sales performance appears to be ahead of expectations.

For example, Goldman Sachs was forecasting total sales growth of $6.4% to $14.7 billion for the three months, whereas Woolworths reported a 9.7% increase to $15,123 million. This could bode well for the Woolworths share price today.

Management commentary

Woolworths Group CEO, Brad Banducci, was pleased with the quarter but notes that customer satisfaction metrics have taken a hit. He said:

“Despite the unfailing efforts of our teams, high levels of COVID-related team absenteeism and the disruption to our broader supply chain resulted in inconsistent customer shopping experiences and negatively impacted our customer metrics. Pleasingly, in recent weeks, we have begun to see more stability across the Group but store stock service levels remain below normal levels.

Group sales growth for the quarter was strong as a return to COVID-related shopping behaviour in the early part of the quarter led to higher in-home consumption in our Food businesses along with rising food inflation.

We have not yet seen a notable change in customer shopping behaviour but remain focused on providing our customers with great value for money. The timing of Easter negatively impacted reported sales growth but given the current volatility and COVID impact in both periods, we have not reported Easter-adjusted numbers.”

Outlook

While no guidance has been given for the full year, Mr Banducci revealed that the fourth quarter has started positively. He explained:

“Trading momentum in Q4 to date has continued in Australian Food and BIG W with strong Easter seasonal trade. In New Zealand Food, we are seeing some signs of stabilisation in the operating environment but the disruptions caused by COVID are expected to impact H2 EBIT with a forecast range of NZ$120 – 140 million (a decline of 16-28% on H2 F21). The expected reduction in profit is largely a function of higher COVID costs associated with keeping our customers and team safe and minimising disruption to our supply chain.

“For the remainder of the second half, we are focused on returning to a more stable operating rhythm and delivering consistently good shopping experiences for our customers. Despite the continued business disruption, direct COVID costs have continued to moderate (0.4% of sales in Q3) as we carefully look to reduce costs in areas where no longer required. Our mix of COVID costs has shifted with lower costs on the Eastern Seaboard and higher costs in New Zealand and Western Australia.”

The post Woolworths share price on watch amid strong Q3 sales growth appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Is the Woolworths share price in the buy zone ahead of next week’s Q3 update?
• Why is the Woolworths share price missing out on the ASX party today?
• 3 ASX companies that can raise prices whenever they want
• How is the Woolworths share price managing to defy today’s sell-off?

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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In turbulent times like now, it’s not easy to find ASX shares to buy that will not wreck your confidence.

So it pays to listen when an expert has so much conviction in a particular stock that they’re willing to forecast a 45% return over the next year.

And that’s exactly the affection Morgans senior analyst Nathan Lead holds for Silk Logistics Holdings Ltd (ASX: SLH), which he rates as a definite “add”.

“We think the stock is too cheap — circa five times EV/EBITDA, circa 12 times P/E ratio (FY22F) — given its potential double-digit earnings growth and growth options.”

Recent catalyst

Lead liked last week’s result of Silk Logistics’ NSW property novation.

“The NSW property novation has Silk transferring the land purchase cost and warehouse development risk of its Kemps Creek site to the developer (ESR Australia) in exchange for a 10-year lease for purpose-built warehouses,” he said.

“Conditions precedent to the lease agreement include ESR acquiring the site land and adjacent land, as well as planning, building, and development approvals.”

The contract can be terminated if the construction cost exceeds a preset level, which is a handy inflation protector.

According to Lead, the agreement means Silk Logisitcs receives $13.5 million cash upfront and about $29 million of lease incentives spread across three tranches.

“We believe that the rent under the lease agreement is similar to what Silk is paying across its current NSW sites that it intended to consolidate at Kemps Creek, and that expiry of these existing site leases is closely matched to the expected commencement of the new lease,” he said.

“Silk’s strategy is to retain its existing sites and seek to fill the Kemps Creek warehouse with new business.”

The analyst calculated that this move is 31 cents per share net present value accretive, including the incentives and the $2 million per year incremental cash flow over the 10 years.

Better than expected

Lead explained that all this ended up far more attractive than what his team had previously forecast.

“We had assumed only $10 million of cash receipts from the lease deal in FY22,” he said.

“Forecast net cash flow across FY23-25F is $17 million higher in aggregate than we had previously forecast.”

As well as the positive financial impact, the deal supplies additional warehouse capacity that Silk Logistics can use for growth.

Silk Logistics, for a stock that’s not in the mining or banking sectors, has done pretty well in 2022.

The share price is up 13% for the year so far, or almost 24% since 9 March.

The post 45% return in a year: The ASX share that’s ‘too cheap’ appeared first on The Motley Fool Australia.

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• ‘Outlook bright’: expert picks 2 ASX shares to buy right now

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 recommended Silk Logistics Holdings Limited. The Motley Fool Australia has recommended Silk Logistics Holdings 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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It’s unfortunate for current shareholders but fantastic for those with cash to buy right now.

Australian technology shares are going for massive discounts at the moment, with the S&P/ASX All Technology Index (ASX: XTX) down more than 21% for the year — and a painful 31.6% since November.

So for bargain hunters, which tech shares are the value picks and which ones are mirages in the desert?

Morgans analyst Andrew Tang had one suggestion to buy at the moment:

‘Favourable operating conditions’ for tech stock

Jobs classifieds site Seek Limited (ASX: SEK) has seen its share price drop 24.5% since November and more than 20% since the start of the year.

But it remains a tech favourite among analysts.

Tang is no exception, saying his team viewed Seek as the best out of the classifieds sites, demonstrating “sustained listings growth”.

“The tailwinds that have driven elevated job ads (~250k currently, +35% on prior comparable period) and updated guidance (FY22 EBITDA updated ~16% at the midpoint to $490 million to $515 million) appear to still remain in place,” he wrote in Morgans Best Ideas for May.

“That is, subdued migration, candidate scarcity and the drive for greater employee flexibility.”

The coming economic conditions are favourable for Seek, according to Tang.

“With businesses looking to grow headcount in the coming months and job mobility at historically high levels according to the RBA, we see these favourable operating conditions driving increased reliance on SEK’s products.”

Others agree, Seek is cheap

Morgans is not alone in its bullishness about Seek.

Only a couple of weeks ago, The Motley Fool reported the Morgan Stanley team had a crush on the tech stock too.

“Its analysts currently have an overweight rating and $36.00 price target on its shares,” wrote my colleague James Mickleboro.

“It expects Seek to benefit from the tight labour market and higher than normal rates of job churn.”

Seek shares closed Monday at $26.93.

CMC Markets shows eight out of 16 analysts rate the stock as a buy, with seven labelling it a “strong buy”.

Back in late March, when they were still much dearer than the current price, FNArena founder Rudi Filapek-Vandyck said Seek shares are “undeservedly cheap”.

“There’s a lot of conviction out there that Seek will do well and has not been treated well.”

The post The ASX tech share ripe for picking: Morgans appeared first on The Motley Fool Australia.

More reading

• Analysts name 3 ASX 200 shares to buy now
• Broker names 3 of the best ASX 200 shares to buy in April

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 recommended SEEK 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 potentially rising very soon (maybe even later today), it’s a confusing time to buy ASX shares.

Sure, mining shares have carried the S&P/ASX 200 Index (ASX: XJO) this year.

But what if you think they are now fully priced and it’s too late to buy in?

Here are a couple of non-mining buy ideas to consider from Morgans investment advisor Jabin Hallihan. 

‘Positive momentum’ with ‘undemanding price/earnings multiple’

Challenger Ltd (ASX: CGF) shares have rewarded investors handsomely in 2022, with the share price up 6.6% while paying a dividend yield of more than 3%.

But Hallihan reckons it’s not too late to join the party.

“This financial services firm is enjoying positive momentum and its outlook is bright,” he told The Bull.

“Recent robust sales growth in the Life business is encouraging.”

Challenger’s earnings trajectory has improved this year, and the share price is still cheap by Hallihan’s standards.

“Challenger is trading on an undemanding price/earnings multiple and we retain our add recommendation and $7.74 price target at April 28.”

Since that price target was set, the share price has already rallied from $6.84 to $7.34 on Monday morning.

According to CMC Markets, eight out of 14 analysts consider Challenger shares a “hold”.

‘Investors should be rewarded’

Hallihan has previously spruiked Silk Logistics Holdings Ltd (ASX: SLH) shares as a buy, and his view has not changed.

“The company continues to deliver growth across all key metrics,” he said.

“We believe if Silk Logistics converts potential into proven earnings growth, then investors should be rewarded.”

The team at Morgans has set a $3.25 price target, which is a juicy 33% premium on the price on Monday morning.

The recent financial performance impressed Hallihan.

“This integrated logistics provider generated revenue of $182.5 million in the 2022 first half, an 18.5% increase on the prior corresponding period,” he said.

“Full year guidance has been subsequently upgraded by 6% to 20%.”

Hallihan’s colleague, senior analyst Nathan Lead, also recommended the company, saying Silk shares are “too cheap” considering “potential double-digit earnings growth and growth options”.

“Potential 45% total 12-month return,” he said in a Morgans memo.

Coverage is sparse on Silk Logistics but, according to CMC Markets, Shaw and Partners also rates the stock as a “strong buy”.

The Silk Logistics share price is up in excess of 13% so far this year.

The post ‘Outlook bright’: expert picks 2 ASX shares to buy right now appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• Challenger share price slides as top broker calls Thursday’s gains ‘surprising’
• Here are the top 10 ASX shares today
• Why Betmakers, Brambles, Challenger, and Stockland shares are charging higher
• 3 ASX 200 stocks smashing 52-week highs 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 recommended Silk Logistics Holdings Limited. The Motley Fool Australia has recommended Challenger Limited and Silk Logistics Holdings 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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Are you looking for dividend shares to add to your income portfolio? If you are, then the two listed below could be worth considering.

These dividend shares have been rated as buys by brokers and tipped to provide income investors with attractive yields. Here’s what you need to know about them:

Centuria Industrial REIT (ASX: CIP)

The first ASX dividend share that is rated as a buy right now is Centuria Industrial.

It is the largest domestic pure play industrial REIT on the Australian share market with a focus on building a portfolio of high quality industrial assets to deliver income and capital growth for investors.

Macquarie is a fan of the company and has an outperform rating and $4.27 price target on its shares. It believes Centuria Industrial’s shares trade at an attractive level, particularly given the industry tailwinds the company is benefiting from. The latter includes strong nationwide demand for industrial space, particularly from ecommerce-related tenant customers.

Macquarie expects this to underpin generous dividends in the coming years. It is forecasting dividends per share of 17.3 cents per share in FY 2022 and 17.8 cents per share in FY 2023. Based on the current Centuria Industrial REIT share price of $3.88, this will mean yields of 4.5% and 4.6%, respectively.

Super Retail Group Ltd (ASX: SUL)

Another ASX dividend share that is rated as a buy is Super Retail. It is the company behind the BCF, Macpac, Rebel, and Supercheap Auto businesses.

While the company is having a tough time in FY 2022 due to COVID headwinds, this is only expected to be temporary. In light of this, the team at Morgans appear to believe income investors should use recent share price weakness as a buying opportunity. Especially with its shares trading at just 11x estimated FY 2023 earnings.

Morgans currently has an add rating and $13.80 price target on its shares.

In addition, the broker expects big dividend yields in the near term. It has pencilled in fully franked dividends per share of 59 cents per share in FY 2022 and 61 cents per share in FY 2023. Based on the current Super Retail share price of $10.45, this will mean yields of 5.6% and 5.8%, respectively.

The post Brokers rate these ASX dividend shares as buys appeared first on The Motley Fool Australia.

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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 Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Super Retail Group Limited. 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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Can you believe May 2022 is here already? There are a number of ASX shares brokers rate as buys this month.

This article is about two smaller businesses that could be opportunities for investors to consider.

Here are two buy-rated stocks:

Elmo Software Ltd (ASX: ELO)

Elmo Software is an ASX tech share that provides HR and payroll software to small and medium businesses in Australia and the UK.

The Elmo Software share price has fallen 32% since the start of the 2022 calendar year.

Broker Morgan Stanley currently rates the ASX share as a buy with a price target of $7.80. That implies a possible rise of around 150% over the next year.

The company’s FY22 first half result included growth in a number of areas for the business. Annualised recurring revenue (ARR) rose by 35% to $98.3 million, while reported revenue rose 41% to $43.1 million.

In that result, Elmo was able to report a positive earnings before interest, tax, depreciation and amortisation (EBITDA) after it rose by $0.9 million to $0.3 million.

Due to “strong trading conditions” and increased adoption of cloud-software solutions by businesses to manage remote and hybrid workforces, Elmo upgraded its FY22 ARR guidance to $107 million to $113 million.

Elmo said that “operating leverage continues to improve with a reduction in key spend ratios across the business”.

Capitol Health Ltd (ASX: CAJ)

Capitol Health describes itself as a leading provider of diagnostic imaging and related services to the Australian healthcare market. It has clinics across Victoria, Tasmania, South Australia, and Western Australia.

The Capitol Health share price has fallen by 17% since the start of 2022.

The ASX share is currently rated as a buy by Ord Minnett with a price target of $0.44. That implies a possible upside of more than 30%.

Ord Minnett thinks the business has demonstrated the defensive nature of its earnings and that the end of COVID-19 will help the business.

In the first six months of FY22, Capitol Health announced that revenue rose by 11.2% to $94.9 million. Operating EBITDA grew by 6.9% to $22.2 million. Statutory net profit after tax (NPAT) jumped 30.2% to $8.1 million.

The company is looking to expand its network through both bolt-on acquisitions and the opening of greenfield/brownfield locations. It’s also developing various synergies from the acquisition and opening of clinics. The ASX share is working on becoming more efficient by standardising its processes across its clinics.

According to Ord Minnett’s projections, the Capitol Health share price is valued at 24 times FY22’s estimated earnings with a grossed-up dividend yield of 4.3%.

The post Brokers rate these 2 top ASX shares as buys in May 2022 appeared first on The Motley Fool Australia.

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JPMorgan Chase 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 positions in and has recommended Elmo Software. The Motley Fool Australia has positions in and has recommended Elmo Software. 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 Bendigo and Adelaide Bank Ltd (ASX: BEN) share price has travelled mostly sideways over the latter part of the decade.

In comparison, the S&P/ASX 200 Index (ASX: XJO) has zoomed higher across the 10-year timeframe.

During March 2020, Bendigo Bank shares fell to a decade low of $5.32 after the pandemic shocked global markets. Since then, the company’s shares have almost recovered and are trading near their pre-COVID-19 highs.

Nonetheless, let’s take a look and see how much an investor would have made if they had invested $10,000 in Bendigo Bank shares a decade ago.

How much would your initial investment be worth now?

If you spent $10,000 on Bendigo Bank shares exactly 10 years ago, you would have picked them up for $7.55 each. The purchase would deliver approximately 1,324 shares without reinvesting the dividends received from the company.

Looking at yesterday’s closing price, the Bendigo Bank share price finished at $10.60. This means those 1,324 shares would be worth $14,034.40.

In percentage terms, the initial investment implies a return of 40.34% or a yearly average return of 3.45%. Comparing that to the ASX 200, the benchmark index has given back 5.18% over a 10-year period.

What about the dividends?

Over the course of the last decade, Bendigo Bank has made a total of 19 dividend payments from May 2012 to 2022. It’s worth noting that the last few dividend distributions were reduced due to the pandemic, affecting the company’s bottom line.

Adding those 19 dividend payments gives us an amount of $6.09 per share. Calculating the number of shares owned against the total dividend payment gives us a figure of $8,063.16.

When putting both the initial investment gains and dividend distribution, an investor would have a total amount of $22,097.56.

As you can see from above, the banks have always been well regarded as strong dividend payers to investors.

Bendigo Bank share price snapshot

Year to date, the Bendigo Bank share price has stormed 16% higher following a rollercoaster ride for investors.

The company’s shares were heavily sold off from August 2021 after reaching a 52-week high of $11.27. Since then, its shares hit a 52-week low of $8.43 in December 2021, before surging back up again.

Bendigo Bank presides a market capitalisation of roughly $5.99 billion, making it the seventh-largest bank by value.

The post If you’d bought $10,000 of Bendigo Bank shares 10 years ago, guess how much you’d have now 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. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo and Adelaide Bank 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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An analyst has expressed an optimistic outlook for the shares of energy producer Santos.

The Santos share price climbed 2.69% in a week, from $7.80 on 26 April to the current price of $8.01.

Let’s take a look at why one expert recommends Santos.

What’s the outlook for Santos shares

Santos is an “exciting proposition”, Firetrail Investments portfolio manager Blake Henricks believes.

Speaking to Livewire, Henricks outlined how the company’s disciplined approach to capital could help the Santos share price. He outlined how the free cash flow break-even price of oil for Santos was previously close to $60 a barrel, but is now about $25. He said:

Now, one of the challenges I think of Santos, if we go back a year ago, because of all this capital expediture (CAPEX) they were spending, the break-even was probably close to $60 a barrel.

And so it looked like they weren’t going to generate much free cash flow. Subsequent to that, they have taken over Oil Search at a very good point in the cycle. And now what they’re undergoing or undertaking is an attempt to sell down some assets.

Santos reported record oil production and sales revenue of US$1.9 billion in quarterly results released in April. This was 25% higher than the previous quarter.

Free cash flow increased 186% on the previous corresponding period to US$865 million.

Henricks emphasised Santos’ asset sell-off could be positive for company shareholders. He added:

If they are successful in that, we expect very high shareholder returns for the medium term for Santos shareholders. And that’s what makes it a really exciting proposition.

Santos completed the merger with Oil Search in late 2021.

Santos share price snapshot

The Santos share price has gained 15% in the past 12 months while it has surged nearly 27% in the year to date.

In comparison, S&P/ASX 200 Index (ASX: XJO) has returned less than 5% in the past year.

Santos has a market capitalisation of about $27 billion based on the current share price.

The post Here’s what makes Santos shares ‘a really exciting proposition’: expert appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
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• Broker says Santos share price could storm 27% higher

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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On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week deep in the red. The benchmark index fell 1.2% to 7,347 points.

Will the market be able to bounce back from this on Tuesday? Here are five things to watch:

ASX 200 expected to fall again

The Australian share market looks set to continue its slide on Tuesday despite a rebound on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 25 points or 0.35% lower. On Wall Street, the Dow Jones rose 0.25%, the S&P 500 climbed 0.6%, and the Nasdaq jumped 1.6%.

Reserve Bank meeting

The Reserve Bank will be holding its most important cash rate meeting in years this afternoon. Opinion is divided on what action the central bank will take, but many in the market believe it could make a 0.5% increase to the cash rate today. Westpac Banking Corp (ASX: WBC) expects a more modest 15 basis point rise today and 40 basis point rise next month.

Oil prices rise

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a decent day after oil prices pushed higher overnight. According to Bloomberg, the WTI crude oil price is up 0.65% to US$105.38.12 a barrel and the Brent crude oil price has risen 0.65% to US$107.84 a barrel. Oil prices turned positive on supply concerns.

Gold price sinks

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a tough day after the gold price sank overnight. According to CNBC, the spot gold price is down 2.6% to US$1,861.90 an ounce. The precious metal was sold off after US bond yields rose ahead of the US Federal Reserve meeting this week.

Woolworths sales update

The Woolworths Group Ltd (ASX: WOW) share price will be one to watch today when the retail giant releases its third quarter sales update. According to a note out of Goldman Sachs, its analysts expect Woolworths to report group sales of $14.7 billion for the three months. This will be a year on year increase of 6.4%. “We expect the Australian and New Zealand foods division to report +4% and +5.5% comparable growth respectively and for BigW to see -6% decline in comparable sales,” it adds.

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

More reading

• The CBA share price was the worst performer of the ASX 200 big banks in April. What happened?
• Why is the Webjet share price beating the ASX 200 today?
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Can ASX 200 banks live up to the $11 billion ‘big expectation’ when they report this month?
• Why are ASX tech shares having such a dire run on Monday?

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Westpac Banking Corporation. 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 Webjet Ltd (ASX: WEB) share price travelled 8% higher last month after a sluggish run earlier on.

While the company’s shares wobbled during the early days of April, the easing of COVID-19 restrictions around the world sparked a turnaround.

Popular international destinations such as Bali and Thailand have driven demand yet again in the travel industry.

Indeed, this led Webjet shares to finish strongly at the backend of the month.

Notably, the company’s shares touched a two-month high of $6.15 on 22 April, before closing out April at $6.03 apiece.

What’s behind Webjet shares rise?

While it has been relatively quiet period on the news front from the company, the Webjet share price has gradually been moving on an upwards trend.

This is because after a two-year hiatus, countries are now learning to live with the virus, thus easing restrictions.

Nonetheless, Webjet has been busy taking advantage of its opportunities while the market had been in a downturn.

Webjet reported a cash surplus of $3.5 million per month in its first-half results, a significant turnaround compared to FY21. Harsh lockdowns led the company to record an average monthly cash burn of $5.5 million in the previous financial year.

Expenses were also down materially compared to pre-COVID times, reflecting strategic initiatives implemented by the company.

In addition, total transaction volume (TTV) stood at 63% of pre-COVID volumes in its WebBeds’ B2B business. And this is before many travel markets had reopened.

If the travel sector continues on its trajectory, Webjet’s TTV could reach pre-COVID levels by the second-half of FY23. On top of that, its group portfolio will be a much leaner business, having trimmed 20% of operating costs.

Webjet is scheduled to report its FY22 results towards the backend of this month.

Webjet share price summary

In the last 12 months, the Webjet share price has risen 22% following positive investor sentiment across the travel sector.

This represents a 32% gain from where its shares trade today compared to the 11 month low of $4.61 on 27 January.

When looking year to date, the company’s shares are up 18% after finishing Monday’s trading session at $6.10.

Based on valuation grounds, Webjet has a market capitalisation of around $2.32 billion.

The post Why did the Webjet share price have such a good run in April? 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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet 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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