Day: August 11, 2022

Why did the Qantas share price fly higher today?

A smiling woman in a hat holding a ticket takes selfie inside a Qantas plane next to the window.A smiling woman in a hat holding a ticket takes selfie inside a Qantas plane next to the window.

The Qantas Airways Limited (ASX: QAN) share price closed 1.08% higher at $4.69 today after one of its partially acquired companies posted optimistic FY22 results.

Alliance Aviation Services Ltd (ASX: AQZ) announced a 21% increase in total revenue to $369.4 million. For FY2023, it expects to see increased profitability due to the investments it made in FY2022 and a growing contract client base.

Qantas bought a 19.9% stake in Alliance Aviation in February 2019, and in May this year, the airline announced it would buy the remaining shares.

Let’s learn more about why investors were bullish today on this iconic ASX airline share.

What happened with Alliance?

Alliance Aviation said that in addition to its strong revenues, earnings were also stable from its contracted revenue clients. 

Another positive highlight from the report was that flight hours grew 25% to 47,519, and this growth trend is expected to continue in the future.

However, its operating experiences and finance costs grew significantly during the same period, contracting its earnings before interest, taxes, depreciation, and amortisation (EBITDA) by 27%, for a $47 million total loss.

Other developments fueling a Qantas lift today?

Alongside the Alliance results, today’s Qantas share price boost may be attributed to other developments impacting the airline industry. Airline rivals Southwest Airlines Co (NYSE: LUV) and Air New Zealand (ASX: AIZ) both made gains today, closing at 2.45% and 2.56%, respectively.

Shares in these companies might have lifted due to a reduction in the oil price, which is a major cost to airlines. According to Bloomberg, the price of WTI crude oil has fallen 0.41% today, while Brent Crude also fell 0.27%.

Jet fuel costs airlines around 11% of their operating expenses on average.

Travel takes off

On the demand side, there is also a major tailwind. According to the World Tourism Organisation, international travel is set to soar to 55% to 70% of pre-COVID travel this year. That’s a 90 to 140 per cent increase from 2021 levels.

The pent-up demand for travel may be unleashed during this period, similar to the post-pandemic spending spree seen in countries that spent months or longer under lockdown.

New Zealand, one of Australia’s favourite travel destinations, fully reopened its borders to international travellers on 31 July and resumed the processing of visas.

On a global scale, Kayak reported that 167 countries are open to travel with no COVID-19 testing or quarantine required, while 32 are open to travellers with testing. 

People now have the freedom to travel to most countries without the inconvenience of self-isolating, including the world’s most popular tourist destinations. Many haven’t visited these places in months or sometimes years.

Thus, the share price gains of major airlines such as Qantas could reflect these changes in the demand and cost of international travel.

Qantas share price snapshot

Gains made by Qantas today outperformed the S&P/ASX 200 Industrials Index (ASX: XNJ), which delivered a 0.09% return.

The Qantas share price is currently down 8.9% year to date, trailing behind the S&P/ASX 200 Index (ASX: XJO), which has contracted 6.84% over the same period.

The airline’s market capitalisation is $8.85 billion from today’s gains.

The post Why did the Qantas share price fly higher today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Matthew Farley 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 Alliance Aviation Services 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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Is the Megaport share price back on track after a broker upgrade?

A mother and her young son are lying on the floor of their lounge sharing a tech device.A mother and her young son are lying on the floor of their lounge sharing a tech device.

The Megaport Ltd (ASX: MP1) share price jumped 3.27% on Thursday to end the day’s trading at $8.84.

Megaport shares seem to have benefitted from an ASX tech tailwind started by a positive session from its peers listed on the Nasdaq Composite (NASDAQ: .IXIC) overnight. 

On top of that, broker Jefferies initiated an upgrade in the Megaport share price target from $5.94 to $9.60

Before diving into the performance of the NASDAQ and the broker upgrade, here is a quick recap of Megaport’s full-year financial results, which the company released on Tuesday.

Megaport FY22 recap

Highlights of the Megaport FY22 results included: 

  • Revenue jumped 40% from $78 million to $109 million 
  • Net loss improved by 12% from ($55 million) to ($48.5 million) 
  • Operating cash flow went backwards from ($8.6 million) to ($9.8 million)
  • No dividend declared

The Megaport share price soared 10% on the back of the results on Tuesday, but fell almost 5% on Wednesday.

Broker raises Megaport share price target

Broker Jefferies liked the financial results, pushing up its price target to $9.60 from $5.94. 

According to Thomson Reuters, Jefferies said, “This result proves that management is capable of delivering strong operating leverage.”

While these set of results indicate an improvement in profitability, I would not consider it to be a strong display of operating leverage. 

Investors ought to be mindful of the consistent decline in net income since the cloud networking company listed in late 2015. 

I would prefer to see more evidence of improvement in profitability before putting it in such a basket.

The broker upgraded its guidance for FY23 and FY24 revenue by 9% and 14% respectively. 

Jefferies also flagged risks in the tightening of IT expenditure in a recession and higher capital expenditure (capex) due to inflation and supply chain issues. 

Despite noting these risks, Jefferies has maintained a “hold” rating. 

NASDAQ rallies overnight 

The NASDAQ includes tech giants like Apple (NADSAQ: AAPL) and Microsoft (NASDAQ: MSFT). It rose by 2.9% yesterday, bringing its gains to 20.7% from lows recorded in June. 

According to the Financial Times, consumer prices in the US rose 8.5%, falling below economists’ forecasts of 8.7%. Further, there was no increase in inflation in July as opposed to a 1.3% monthly rise in June. 

This might partly explain the recent rally on the NASDAQ and the flow-on effect on tech and growth stocks on the ASX.

Some notable tech stocks like Life360 Inc (ASX: 360) and Block Inc (ASX: SQ2) experienced jumps of 13% and 8% today respectively. 

Megaport share price snapshot

The overall equities market has been engulfed in a sea of red this year and the Megaport share price is no exception. 

Year to date, the Megaport share price has more than halved, dropping by 53%. However, in the last month, the Megaport share price has rallied to jump by nearly 44%. 

The S&P/ASX 200 Index (ASX: XJO) is down 7% year to date but has clawed its way back in the last month to post a gain of 7%. 

Megaport suffered from the big tech and growth sell-off this year. The Megaport share price is showing signs of recovery, so it could be worth monitoring over the short to medium term. 

The post Is the Megaport share price back on track after a broker upgrade? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Megaport Ltd right now?

Before you consider Megaport Ltd, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Megaport Ltd wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

See The 5 Stocks
*Returns as of August 4 2022

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Motley Fool contributor Raymond Jang 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 Apple, Block, Inc., Life360, Inc., MEGAPORT FPO, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool Australia has recommended Apple and MEGAPORT 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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Why is the Evolution share price up 13% in a month?

rising gold share price represented by a green arrow on piles of gold blockrising gold share price represented by a green arrow on piles of gold block

The Evolution Mining Ltd (ASX: EVN) share price has been in fine form in the past month.

Since 11 July, the gold miner’s shares have gained 12.65%, making it one of the best performers across the sector.

In retrospect, the Newcrest Mining Ltd (ASX: NCM) share price has fallen by 2.53% across the same timeframe.

At market close, the Evolution Mining share price finished the day taking a slight breather to exchange hands at $2.76, up 1.10%.

What’s driving Evolution Mining shares higher?

The sharp acceleration in the price of gold has boosted investor sentiment leading investors to snap up Evolution Mining shares.

Gold prices recovered lost ground on Wednesday after US consumer price inflation data slowed to an 8.5% yearly rate in July.

This has sparked confidence in the yellow metal as the Federal Reserve could slow down its aggressive rate hikes.

When the US central bank rises interest rates, the price of precious metals gets dragged down. However, investors appear to be positive for the moment which is giving rise to the Evolution Mining share price.

Currently, the price of gold has rebounded toward US$1,785 an ounce, an increase of almost 2% in the past week.

If the Reserve Bank of Australia takes a breather on its monetary tightening policy next month, then Evolution Mining shares could receive another boost.

The company is scheduled to release its full year results for the 2022 financial year on Thursday 18 August.

What do the brokers think?

A number of brokers rated the Evolution Mining share price with different price points in late July.

According to ANZ Share Investing, the team at UBS cut its 12-month price target by 1.7% to $2.90 apiece.

Based on the current share price, this implies an upside of 5% for investors.

On the other hand, Morgan Stanley analysts reduced their rating on Evolution Mining shares by 2.1% to $2.35. Its analysts had a bearish outlook noting that the company’s shares are slightly overvalued for now.

This implies a current downside of 15% from where it trades today.

The post Why is the Evolution share price up 13% in a month? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of August 4 2022

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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 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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Mirvac share price lifts on ‘strong result ahead of guidance’ for FY22

Happy couple receiving key to apartment.Happy couple receiving key to apartment.

The Mirvac Group (ASX: MGR) share price was on the move today after the property developer released its full-year results for FY22.

Mirvac shares opened the day at $2.17 and reached a high of $2.205 in early trading.

At the market close, the Mirvac share price finished at $2.17, up 3.83% for the day.

Investors raise Mirvac share price despite modest profit gain

The highlights of Mirvac’s results are as follows:

  • Statutory profit of $906 million, up 0.55% on the prior corresponding period (pcp)
  • Operating profit after tax of $596 million, up 8% on pcp
  • Operating earnings before interest and tax (EBIT) of $773 million, up 10% on pcp
  • Full-year distributions of $404 million to shareholders, up 3% on pcp
  • Operating earnings per share (EPS) of 15.1 cents per share, up 8%.

In its statement, Mirvac said it was “delivering a strong result ahead of guidance, with a statutory profit of $906 million and operating profit of $596 million, representing 15.1 cents per stapled security (cpss)”.

The increase in profits and distributions on FY21 is modest. However, FY22 was “a more challenging operating environment”, says Mirvac CEO and managing director Susan Lloyd-Hurwitz.

What else happened in FY22?

Mirvac reported that it exchanged approximately 2,900 residential apartments and settled 2,523 in FY22. This is in line with the company’s settlement target of more than 2,500 lots.

The company also reported on its sustainability initiatives. It said it “achieved net positive carbon for scope 1 and 2 emissions nine years ahead of our target”.

Over the 12-month period to 30 June, the Mirvac share price lost approximately 30% of its value.

What did management say?

Lloyd-Hurwitz said:

There is no doubt that FY22 presented a more challenging operating environment. We experienced the ongoing impacts of COVID-19, supply chain issues, labour shortages, rising inflation and interest rates, geopolitical tension, and extreme wet weather, particularly across the east coast of Australia.

Despite this, we have delivered a strong financial and operational result ahead of guidance, demonstrating the continued resilience of our people and the value of our integrated and diversified business model.

At the same time, we maintained a strong balance sheet and capital position, with sufficient liquidity and appropriate hedging. Combined with our planned $1.3bn of non-core asset sales, this helps ensure that we are well placed to capitalise on opportunities as they emerge, so that we can continue to deliver value to our securityholders into the future.

What’s next?

In its FY22 report, Mirvac said it was now managing $10.2 billion worth of assets, up 3% on the pcp.

But that number is about to skyrocket as a result of Mirvac scoring the management rights to the $7.7 billion AMP Wholesale Office Fund (AWOF) in July.

AMP shareholders voted to give Mirvac control of the fund. As my colleague Brooke reported at the time, the deal will lift Mirvac’s capital under management by about 76%. Mirvac shareholders loved the news and pushed the share price 1% higher on the day.

Lloyd-Hurwitz said the deal was “accelerating our Funds Management strategy, broadening our investor base, and introducing new accretive income streams”.

Mirvac will take control of the fund in mid-October.

Regarding the softer residential property market, Lloyd-Hurwitz said selling conditions had “normalised” but “the underlying fundamentals of the residential market in which we operate remain solid”.

She said:

Our apartment projects are expected to complete into an undersupplied market, positioning us well to capture demand. Our brand, focus on owner occupiers, diversity of product, and reputation for quality, will help us to remain resilient in a rising interest rate environment.

Mirvac said if there was no material change in the operating environment, the company was targeting operating earnings of at least 15.5 cents per share and distributions of at least 10.5 cents per share in FY23. It maintains the same goal of settling more than 2,500 residential lots in FY23.

Mirvac share price snapshot

The Mirvac share price is down 28% in the year to date. But like many other ASX 200 shares, it has rebounded in the past month and is up 4.83%.

The post Mirvac share price lifts on ‘strong result ahead of guidance’ for FY22 appeared first on The Motley Fool Australia.

Should you invest $1,000 in Mirvac Group right now?

Before you consider Mirvac Group, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Mirvac Group wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

See The 5 Stocks
*Returns as of August 4 2022

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Motley Fool contributor Bronwyn Allen 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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