Day: 28 July 2022

The Block Inc (ASX: SQ2) share price is charging higher in morning trade.

Shares in the global payment services provider closed yesterday at $99.50 and are currently trading for $103.75, up 4.3%.

So, why are ASX investors snapping up Block shares?

Why is the Block share price leaping higher today?

The BNPL company is having a good day on the ASX after a stellar day for its US listed stock yesterday (overnight Aussie time), which closed up 9.6% on the NYSE.

The run up in the Block share price was spurred by a broader rally across the tech sector, seeing the NASDAQ finish the day up 4.1%.

A similar trend is emerging here on the ASX, with the S&P/ASX All Technology Index (ASX: XTX) leading the charge today. The All Tech index is up 2.8% at the time of writing, compared to a more moderate gain of 0.8% posted by the All Ordinaries Index (ASX: XAO).

Block shares and equities more broadly are rallying following yesterday’s 0.75% interest rate hike by the US Federal Reserve. The second consecutive month of an outsized rate rise by the world’s most influential central bank.

While that may seem counterintuitive, traders took heart from some modestly dovish words by Fed chair Jerome Powell, indicating that the pace of further rate hikes may soon moderate.

How that all plays out remains to be seen.

But you won’t hear shareholders complaining about the big leg up in the Block share price today, trimming the company’s year-to-date losses to 41%.

The post Here’s why the Block share price is charging higher today appeared first on The Motley Fool Australia.

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More reading

• Why Block, Iluka, Nitro, and Novonix shares are dropping today
• How are ASX 200 tech shares performing on Wednesday?
• These are the 10 most shorted ASX shares
• Why are ASX 200 tech shares having such a lousy start to the week?
• Here are the top 10 ASX shares today

Motley Fool contributor Bernd Struben 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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The Sandfire Resources Ltd (ASX: SFR) share price is rising this morning after the company bested its full-year production guidance with 4Q FY22 output rising strongly.

Shares in the copper and zinc miner are currently up 1.19% to $4.25 apiece, while the S&P/ASX 200 Index (ASX: XJO) is climbing by 0.53%.

Investors cheered Sandfire’s latest quarterly production update even though rising costs are crimping its margins.

Sandfire share price jumps on production increase

The Sandfire share price is in the green today after the company reported an increase in production of all its minerals in the June quarter of FY22.

What’s more, the miner has exceeded its full-year production guidance for copper, zinc, lead, and silver.

Sandfire produced 34,974 tonnes of copper in the last quarter of the financial year, which is 21.5% above the previous quarter.

This takes the group’s total copper output to 98,367 tonnes for FY22. This is better than the 92k to 95k tonne forecast by management.

Other minerals provide tailwind

Zinc production also increased by 42.8% in the June quarter compared to the March quarter to 22,880 tonnes. Full-year Zinc output stood at 38,907 tonnes – nearly 1,000 tonnes above Sandfire’s FY22 guidance.

The quarterly output of lead and silver came in at 2,201 tonnes and 0.8 million ounces, respectively. The full-year lead output is 4,102 tonnes and silver is 1.5 million ounces. This compares with management’s full-year guidance of 3,000 tonnes of lead and around 1.4 million ounces of silver.

MATSA lifting Sandfire’s production numbers

The growth in output is largely thanks to Sandfire’s acquisition of MATSA. And MATSA is a gift that keeps on giving as Sandfire issued a reserve upgrade for the Spanish asset at the same time as its quarterly report.

Sandfire noted that the proved ore reserve estimate increased by 41% to 26.2Mt at 1.7% copper and 2.7% zinc. Management added:

Contained ore tonnes have increased by 3% with an 8% decrease in contained copper and a 5% increase in contained zinc since the previous Ore Reserve estimate stated as at 31 July 2020. This replaces mining depletion over the intervening two years.

Rising costs casting a shadow

But it isn’t all good news for the company and potentially the Sandfire share price. Just as with other miners, rampant inflation is driving up costs for Sandfire at a time when commodity prices are coming under pressure.

The group’s C1 cash cost surged more than 34% quarter-on-quarter to US$1.57 a pound. This pushed Sandfire’s full-year C1 cost to US$1.27 a pound.

The cost pressure isn’t expected to ease either. Management believes the high cost will stick around for the rest of this financial year as it warned that FY23 C1 cost will reach US$1.57 a pound.

Sandfire FY23 production guidance

Meanwhile, detractors will also point out that Sandfire’s copper production may have already peaked. The miner issued a wide production range for FY23 of between 81k and 89k tonnes. That’s below the 98,367 tonnes it delivered in FY22.

But the takeover of MATSA will give its zinc output a big boost to 78k-83k for FY23, while lead should increase to between 6k and 10k for the year.

The post Sandfire share price rallies as miner beats production guidance appeared first on The Motley Fool Australia.

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More reading

• ASX 200 shares marching higher on successive US Fed interest rate hike
• 3 ASX 200 shares wielding a shield for returns: fundie
• 5 things to watch on the ASX 200 on Thursday
• Do Woodside shares really have a 6% dividend yield right now?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Brendon Lau has positions in Sandfire Resources NL. 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 Rio Tinto Limited (ASX: RIO) dividend has been significantly slashed following the release of the company’s half-year results.

It appears investors are shrugging off the cut, sending the mining giant’s shares 0.38% higher to $97.35 apiece today.

Below, we take a look at what were the main drivers behind the company’s decision to significantly reduce its interim dividend.

Rio Tinto delivers sub-par performance for H1 FY22

Investors are bidding up the Rio Tinto share price today despite the company’s weakened financial scorecard.

The slump in iron ore prices led the company to report revenue of US$29,775 million for the 6 months ending 30 June. This represented a 10% fall over the prior corresponding period (H1 FY21).

The steel making ingredient accounts for 55% of the group’s gross product sales.

Consequently, the board opted to downsize its interim dividend by 52% to $3.837 per share.

It’s worth noting that no special dividend was announced this time round – a reversal from the regular special dividend that has been included since 2018.

Nonetheless, Rio Tinto boss Jakob Stausholm defended the lower dividend as reported by the Australian Financial Review.

He said that the previous interim dividend was unusually high and that the latest dividend reflects the company’s payout policy.

On average, Rio Tinto returns between 40-60% of underlying earnings through the cycle.

When asked about the global economic outlook and if the company is factoring this in, Stausholm said he’s “not concerned at all”.

He noted that China has managed to keep inflation relatively low despite other industrialised nations suffering the effects.

Rio Tinto dividend key dates

Rio Tinto provided the distribution amount and payment dates of its interim dividend for the 2022 financial year. Here’s a summary of the important dates Rio Tinto shareholders will need to know.

Ex-dividend date

The ex-dividend date falls on 11 August 2022.

Investors must purchase the company’s shares before this date to be eligible for the latest Rio Tinto dividend.

If you sell your Rio Tinto holdings before the ex-dividend date, you will not receive the upcoming dividend. However, if you sell your shares on or after this date, you will still receive the dividend.

Payment date

Rio Tinto is set to distribute a portion of its profit in the form of a dividend to eligible shareholders on 22 September 2022.

This is when you can expect to see the interim dividend of $3.837 per share paid in your bank account.

The post Did the Rio Tinto interim dividend really just tumble 52%? appeared first on The Motley Fool Australia.

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More reading

• Why is the Rio Tinto share price underperforming today?
• 5 things to watch on the ASX 200 on Thursday
• Rio Tinto share price on watch after half-year earnings miss
• Top broker issues new warning on outlook for iron ore price
• 5 things to watch on the ASX 200 on Wednesday

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 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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S&P/ASX 200 Index (ASX: XJO) shares are charging ahead in early trade, putting the benchmark index up 0.8%.

This comes after a strong performance in US markets yesterday (overnight Aussie time) following on the latest 0.75% interest rate hike by the US Federal Reserve.

The S&P 500 finished the day up 2.6% and ASX 200 shares are giving chase.

Why did the US Fed hike rates?

As in Australia, where inflation just notched 20-year highs of 6.1%, inflation in the US is running hot.

Even hotter than down under, with US CPI figures leaping 9.1% in June year-on-year, the fastest pace of price increases in 40 years.

This saw the US Fed lift interest rates by 0.75% for the second consecutive month, bringing the official US interest rate to a range of 2.25% to 2.50%.

Federal Reserve chair Jerome Powell indicated another outsized increase was on the table for next month, saying “another unusually large increase could be appropriate at our next meeting”.

However, he said the Fed would not be giving specific guidance on the next rate increase. The committee will take into account new data that comes in over the next weeks before making any decisions.

Powell also dismissed fears that the world’s largest economy was heading for a recession, citing the strength of the US labour market while admitting that “spending and production have softened”.

He added that the Fed is aiming to slow the pace of the economy, however.

“We actually think we need a period of growth below potential in order to create some slack so that the supply side can catch up. We also think that there will be, in all likelihood, some softening in labour market conditions,” Powell said.

Why are ASX 200 shares surging on this news?

ASX 200 shares don’t operate in an Australian bubble. What happens in the US economy and in US markets has a large impact on many Australian companies, whether they have direct operations in the US or not.

Investors bidding up ASX 200 shares are following the exuberance in US markets, largely based on Powell’s indication that the Fed will eventually be winding back the pace of its interest rate hikes.

According to Ed Moya, senior market analyst at Oanda (courtesy of Bloomberg), “It seems traders aren’t thinking another large move will be justified in September.”

Despite the rally in ASX 200 shares and US equities, caution remains in order

Despite the strong rally in ASX 200 shares and US equities, economists aren’t quite as bullish on Powell’s comments as traders.

According to a panel of Bloomberg economists:

While many are worried that the economy is verging on recession, Fed officials see the glass as half full, with the strong labour market allowing the economy to withstand rapid monetary tightening. Bloomberg Economics thinks there’s little chance that the Fed will pause its rate hikes later this year, as markets currently expect.

Analysts at NatWest Markets said:

The markets clearly think the net of today is that the Fed will end up doing less tightening, but it was hard to come away from the Fed press conference thinking the Fed delivered a dovish pivot.

If anything, based on what we heard today, the median Fed member’s view on the path of the Fed funds rate over the remainder of this year could conceivably be higher.

What happens with inflation in the US and the rest of the world remains to be seen.

But at the moment investors are sending ASX 200 shares sharply higher.

The post ASX 200 shares marching higher on successive US Fed interest rate hike appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 shares wielding a shield for returns: fundie
• 5 things to watch on the ASX 200 on Thursday
• Do Woodside shares really have a 6% dividend yield right now?
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

Motley Fool contributor Bernd Struben 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 Audinate Group Ltd (ASX: AD8) share price is surging today after the company reported its preliminary results for FY22.

The technology company’s shares are currently up 5.42% at $8.75 apiece. However, they were earlier trading for $9.10, a 9.64% gain. For perspective, the S&P/ASX 200 Index (ASX: XJO) is lifting 0.70% while the S&P/ASX All Technology Index (ASX: XTX) is currently up 2.52%.

So what did the Audinate Group report in these results?

Audinate share price up as revenue jumps 33%

Highlights of the Audinate unaudited results for FY22 include:

• Revenue of US$33.4 million, up 33.4% from US$25 million in prior year
• Australian dollars unaudited revenue of $46.3 million, up 38.7% from FY21
• Predicted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $3.8 million to $4.3 million, up from $3 million in FY21
• Gross profit margin of 74.7%, down from 76% in FY21

What else did Audinate report?

Underpinning this large increase in revenue was better than expected chip supplies in late quarter four. This led to a “strong” finish to the financial year.

Due to a boost in chip supplies, unmet demand from the third quarter was delivered in the fourth quarter of FY22.

Further, the company was able to deliver some of Q1 FY23 demand earlier than expected. The higher variation in the US dollar compared to the Australian dollar also helped boost revenue in Australian dollar terms.

Audinate said gross profit margin was in line with expectations, despite spot inventory cost pressures.

Commenting on the results boosting the Audinate share price today, co-founder and CEO Aidan Williams said: “It is particularly satisfying to have delivered very strong revenue growth, despite a challenging operating environment over the last 12 months.”

What’s ahead?

Audinate said it expects supply chain disruption and economic uncertainty to continue in FY23.

Commenting on the future outlook, Williams said:

We continue to operate on a cautious and prudent footing.

We look forward to providing a full run-down of the FY22 results and expectations for the year ahead when we release our financial results at the end of August.

Audinate will deliver its full FY22 results on 22 August.

Audinate share price snapshot

The Audinate share price has fallen just over 1% in the year to date, while it has lost around 7% in the past 12 months.

For perspective, the benchmark ASX 200 has shed nearly 7% in the past year.

Audinate has a market capitalisation of about $3.8 billion based on the current share price.

The post Audinate share price soars 5% as revenue thrives appeared first on The Motley Fool Australia.

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More reading

• ASX 200 shares marching higher on successive US Fed interest rate hike
• Why is the Kogan share price rocketing 32% higher today?
• Netflix is the worst-performing stock in the S&P 500. But is it a buy?
• Why is the Rio Tinto share price underperforming today?
• Broker gives its verdict on the Pilbara Minerals share price

Motley Fool contributor Monica O’Shea 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 AUDINATEGL FPO. The Motley Fool Australia has positions in and has recommended AUDINATEGL FPO. 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 Kogan.com Ltd (ASX: KGN) share price has burst out of the gates on Thursday morning.

In early trade, the struggling ecommerce company’s shares are up a massive 32% to $4.12.

Why is the Kogan share price rocketing higher?

As well as getting a boost from a booming tech sector, the release of a business update appears to have got investors excited and short sellers panicking.

According to the release, for the 12 months ended 30 June, Kogan expected to report total gross sales of $1,180 million and gross profit of $184.6 million. This represents a 0.1% increase and a 9.4% decline year on year, respectively.

In addition, the company revealed that it expects to report an adjusted EBITDA of $19.1 million for FY 2022. Given the struggles it has had with margins this year, this appears to have come as a big surprise to the market. Particularly given how it reported negative adjusted EBITDA for the third quarter.

Another positive is a decent reduction in the company’s inventories. They have reduced from $193.9 million at the end of March to $161.1 million at the end of FY 2022.

Though, one slight negative that investors appear willing to overlook is that Kogan’s active customer numbers appear to have peaked, at least for the time being. After reporting 4,099,000 active customers at the end of March, Kogan finished the period with 3,972,000 active customers.

Why such a big gain for its shares?

The market has been very pessimistic on Kogan’s performance for some time. Particularly given management’s disastrous inventory mis-management and rising competition from Amazon.

This has led to the company becoming a firm favourite with short sellers. So much so, at the last count, 8.2% of Kogan’s shares were held short.

And while today’s result was not great on paper, it wasn’t as a bad as the market was expecting. It could also be a sign that the company is finally turning a corner.

In light of this, those short sellers may be in a hurry to close positions today, adding to the buying pressure and creating a short squeeze.

Management commentary

Kogan’s founder and CEO, Ruslan Kogan, believes that the company is well-placed in the current environment thanks to its value offering. He said:

Times are changing. In uncertain times, people don’t want to alter their lifestyle but they are happy to shift the way they shop. We know that in an environment where great value becomes even more important, Kogan.com serves an important need.

We are making the Business leaner to enable us to pass on cost efficiencies to customers in the form of lower prices. A leaner company means we discontinue parts of the Business that are not delivering value to customers or shareholders, and also gives us the flexibility to respond to significant ongoing changes in the macro environment.

The post Why is the Kogan share price rocketing 32% higher today? appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• Why did the Kogan share price rocket 20% this week?
• These are the 10 most shorted ASX shares
• Can the Kogan share price turn over a new leaf in FY23?
• Why Allkem, Kogan, Metcash, and Sezzle shares are sinking

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 Kogan.com ltd. The Motley Fool Australia has positions in and has recommended Kogan.com 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

This year is shaping up to be a leader in events that haven’t been seen in decades — not just inflation, gas prices, and interest rate hikes, but the stock market itself is off to its poorest start in 50 years. The S&P 500 is sitting 17% below where it started the year. And everyone thought 2020 was bad.

Yet as difficult as it’s been for stocks generally, none is having a worse time than Netflix (NASDAQ: NFLX), which is the worst-performing stock in the broad market index, with shares down over 63% year to date. Shocking subscriber losses were the primary fuel that lit the fire to the streaming video stock’s valuation. Maybe the destruction of shareholder value was justified, but has it gone too far?

Netflix is still the biggest streaming service globally and says next quarter it will recoup the 1 million subscribers it lost this time around. It’s still a powerhouse in the industry, so should investors be looking at buying this beaten-down streaming giant, or does it still have further to fall?

Trimming the streaming fat

Netflix shocked the market earlier this year when it reported a loss of 200,000 subscribers, though it noted it was primarily due to exiting Russia following that country’s invasion of Ukraine. That still meant its numbers would have been flat after promising it would add 2 million new subscribers — not very encouraging.

That could be why Netflix braced investors for the second quarter, when it said it might lose anywhere from 2 million to 4 million subscribers. As it only lost 970,000 subscribers, it looks like a win, particularly after saying it will win back at least that many in net additions in the third quarter.

So what’s changing that will improve its prospects?

Not worth the cost

Netflix maintains content is the reason viewers will come. Pointing to its hit series Ozark and Stranger Things, plus the original programming The Gray Man that just debuted, Netflix says it is committed to increasing entertainment value on the platform.

It’s about time, because anyone who’s watched Netflix in recent years knows that after movie studios yanked content to supply their own competing services, the Netflix menu was filled with vast oceans of dreck. It adopted a quantity-over-quality mindset to cover the fact that so much content had been removed from the platform, and it’s likely what is hurting the service now.

That could be a difficult hurdle to get over. Variety reports that while Netflix is still the leading, must-have streamer, customers also rank it dead last in perceived value. Warner Bros Discovery‘s HBO Max and Disney‘s Disney+ are the No. 1 and No. 2 services in the value chain.

Strategies to turn viewership around

Netflix is also counting on the addition of an advertising-based subscription tier to further bolster its business. Though it long rebuffed the idea of adding ads to its service, the success of other streaming services like Hulu that have done this likely cemented Netflix’s decision to do the same.

Its pricing is far higher than the competition’s, which also undoubtedly hurts it in customer satisfaction scores, so the addition of ads will allow it to be more competitive on price among those who don’t want to be paying $15 to $20 per month.

The risk, of course, is that Netflix ends up cannibalizing its primary streaming tiers. A Civic Science survey suggests that up to one-third of existing full-price subscribers would switch to a cheaper, ad-supported tier, potentially impacting revenue. Not to mention that there’s a bit of concern after social media company Snap reported earnings that were hit by lower ad spending. Advertisers are starting to rein in their budgets, which represents poor timing for Netflix.

Wait for better quality

Yet, Netflix stock isn’t cheap by traditional metrics. It trades at 21 times trailing earnings and 18 estimates, which may be discounted for the streamer but don’t necessarily represent bargain-basement valuations for a stock that’s lost two-thirds of its value.

At three times revenue and with earnings expected to grow 12% annually for the next five years, it seems the market may believe the streaming service stock is at best fairly valued, if not still on the high side. There may come a time when Netflix does bust out once more, but investors might want to wait to see if any of its initiatives actually hit their mark. 

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

The post Netflix is the worst-performing stock in the S&P 500. But is it a buy? appeared first on The Motley Fool Australia.

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More reading

• Netflix’s subscriber loss sell-off: Should you really ditch the stock?
• Netflix still has a long way to go
• Why did the Netflix share price lift despite losing 970,000 subscribers?
• The end of ‘Stranger Things’ might actually be a boost for Netflix
• Betting against Netflix now could be a big mistake

Rich Duprey has positions in Warner Bros. Discovery, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Netflix and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Warner Bros. Discovery, Inc. and has recommended the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool Australia has recommended Netflix and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The Rio Tinto Limited (ASX: RIO) share price is underperforming on Thursday morning.

At the time of writing, the mining giant’s shares are up a fraction to $97.00.

As a comparison, the S&P/ASX 200 Resources index is up almost 1.5% in early trade.

Why is the Rio Tinto share price underperforming?

The Rio Tinto share price is underperforming this morning after the miner’s half-year results fell short of expectations.

After the market close on Wednesday, the mining giant released its results and revealed a sharper than expected decline in earnings over the prior corresponding period.

For the six months ended 30 June, Rio Tinto reported a 10% decline in revenue to US$29,775 million and a 26% reduction in underlying EBITDA to US$15,597 million.

As a comparison, the market consensus estimate was for revenue of US$30,785 million and underlying EBITDA of US$16,813 million.

Dividend missed by a mile

But perhaps the biggest drag has been the huge miss on its interim dividend. Although Rio Tinto declared its second largest interim dividend ever at US$2.76 per share, this was still well short of the market’s expectations.

The market was forecasting a fully franked interim dividend of US$3.30 per share and a special dividend of 67 US cents. Not only did its ordinary dividend disappoint, but there was no special dividend on this occasion.

Finally, comments from the company’s chief executive, Jakob Stausholm, may have also spooked investors a touch and could be weighing on the Rio Tinto share price.

The chief executive warned that the “market environment has become more challenging at the end of the period.”

The post Why is the Rio Tinto share price underperforming today? 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 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 Pilbara Minerals Ltd (ASX: PLS) share price has been pushing higher this month.

Since the start of July, the lithium miner’s shares have risen 12% to $2.58.

Can the Pilbara Minerals share price keep rising?

If one leading broker is on the money with its recommendation, there could still be plenty of room for the Pilbara Minerals share price to climb even higher from here.

According to a recent note out of Citi, its analysts have retained their buy rating and $3.20 price target on the company’s shares.

Based on the current Pilbara Minerals share price, this implies potential upside of 24% for investors over the next 12 months.

What is the broker saying about this lithium share?

Overall, Citi was pleased with the company’s recent quarterly update. While costs were higher than expected, the company’s production was strong.

And with lithium prices remaining strong, the broker believes Pilbara Minerals is well-placed to generate significant free cash flow.

The broker commented:

Preliminary JunQ production was better than we’d expected albeit at a higher cost. Including letters of credit, PLS expects to end June with A$850m on the balance sheet. With spodumene prices remaining strong at +US$6000/t, investors can look through higher C1 costs of ~US$380-460/t.

The fact that management can get cost guidance ~30% out of the money in the space of 2 months shows just how hard cost inflation is biting.

FID for the P680 project was expected; new news is the bring-forward of crushing capacity for the P1000. We’ve pushed back our expansion timeline six months & moved total P1000 capex to the upper end. We stay at Buy. TP now A$3.20/sh. There’s a growth story here supported by expectations of +13% FCF in FY23.

The post Broker gives its verdict on the Pilbara Minerals share price appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Rocks in their heads? How young investors helped make Pilbara Minerals one of the most popular shares of FY22
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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 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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Earnings season is nearly on us, and rising inflation and hiked interest rates may prove a major weight for many S&P/ASX 200 Index (ASX: XJO) constituents.

Data released yesterday found Australian inflation hit its highest point in two decades last quarter, with the nation’s annual CPI surging to 6.1%.

A plethora of inflationary causes and effects, alongside other happenings, have seen the ASX 200 dump 10% since the start of 2022.  

And fund manager Fidelity International isn’t sitting on its hands. Its Fidelity Future Leaders Fund snapped up shares in three ASX 200 companies it believes have “defensive earnings stream[s]” and are in prime position for a post-pandemic recovery.

3 ASX 200 shares with defensive earnings: fundie

Ampol Ltd (ASX: ALD)

Shares in ASX 200 fuel and convince retailer Ampol have been performing well this year. Fidelity is expecting Ampol to deliver decent earnings in the future.

The company released an update last week announcing “unprecedented” refiner margins in the June quarter, coming in at US$32.96 per barrel.

Ampol was added as a new holding in the fund last quarter, taking up a 4.1% position.

Viva Energy Group Ltd (ASX: VEA)

2022 has also been a great year so far for the Viva share price. It has lifted 11% year to date.

The company also benefited from higher refinery margins last quarter, as well as rising sales. Its earnings before interest, tax, depreciation, and amortisation (EBITDA) are expected to have more than doubled in the first half.

Viva shares made up 2.8% of the fund’s holdings as of the end of June.  

Atlas Ateria Group (ASX: ALX)

Finally, ASX 200 toll road operator Atlas Ateria has seen its share price spike nearly 18% this year.

The company is benefiting from fewer COVID-19 restrictions, posting a 19% increase in revenue for the June quarter.

It has also been a takeover target in the eyes of private equity in recent weeks. Atlas Arteria has had two meetings with IFM after the fund noted it was considering posting an acquisition offer earlier this month. IFM announced it’s not currently interested in putting forward a bid this morning.

Atlas Arteria was added as a new position in the Fidelity Future Leaders Fund last quarter. It takes up a 2.8% spot.

The post 3 ASX 200 shares wielding a shield for returns: fundie appeared first on The Motley Fool Australia.

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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 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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