Day: 17 February 2023

The QBE Insurance Group Ltd (ASX: QBE) share price is off to the races today. 

Shares in the S&P/ASX 200 Index (ASX: XJO) insurance company closed yesterday trading for $13.40. Shares are currently changing hands for $14.69, up 9.6%.

This comes following the release of QBE’s full-year 2022 results (FY22).

Here’s what’s piquing ASX 200 investor interest on Friday morning.

QBE share price soars amid dividend growth

• Statutory net profit after tax (NPAT) of $770 million, up from $750 million in FY21
• Adjusted cash profit after tax increased 5.2% year on year to $847 million
• Adjusted cash return on equity of 10.5%, up from 10.3% the prior year
• Adjusted gross written premium of $20.1 billion, up 13% from FY21
• Declared a final, fully franked dividend of 30 cents per share, up 57% from the 19 cents per share paid out in FY21

What else happened during the year?

ASX 200 investors may also be bidding up the QBE share price today on the insurer’s continuing premium growth.

The company reported 13% gross written premium growth, driven by a 7.9% increase in its group-wide renewal rate.

In other action during the year, QBE entered into a broad-based reinsurance transaction with Enstar Group Limited (NASDAQ: ESGR). The company said this de-risks its exposure to reserves totalling around $1.9 billion. That transaction remains subject to regulatory approvals.

And the QBE share price doesn’t seem to be negatively impacted today by the rather poor performance of the company’s investment portfolio.

QBE reported a total investment loss in 2022 of $776 million, or a loss of 2.7%. In 2021 the investment portfolio returned a gain of 0.4% for a return of $122 million. QBE said unrealised losses associated with significant increases in bond yields over the year were responsible for much of those negative returns.

What did management say?

Commenting on the results sending the QBE share price rocketing today, CEO Andrew Horton said:

Our new purpose, vision and strategic priorities launched at the start of 2022 have been embraced by our people, helping to bring us together and become a more consistent organisation.

As we look forward, we have the right foundations in place, the right team and importantly, strong enterprise-wide engagement around a clear and consistent strategy…

2022 has been about laying the foundations and embedding our new vision, purpose and strategic priorities.

What’s next?

Looking ahead at what might impact the QBE share price down the road, the insurer expects 2023 constant currency gross written premium growth to be in the mid-to-high single digits.

QBE also flagged a significant expected improvement in its investment returns.

QBE share price snapshot

As you can see in the chart below, with today’s big intraday spike factored in, the QBE share price is up 16% over the past 12 months.

The post QBE share price leaps 10% amid explosive dividend growth appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Power up your passive income with these high yield ASX dividend shares: expert
• 10 ASX stocks to buy before they report this earnings season: Goldman
• Why QBE, Pinnacle, Rio Tinto, and Virgin Money shares are dropping
• 5 things to watch on the ASX 200 on Thursday

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 Baby Bunting Group Ltd (ASX: BBN) share price is tumbling on the release of the company’s earnings for the first half of financial year 2023.

Shares in the baby goods retailer plummeted 9.8% on open before recovering. Right now, the stock is trading 2.44% lower at $2.40 a share.

Baby Bunting share price slumps as dividend slashed

Here are the key takeaways from the S&P/ASX 300 Index (ASX: XKO) company’s first half:

• $254.9 million of sales – a 6.6% improvement on the prior comparable period (pcp)
• $2.7 million of statutory net profit after tax (NPAT) – down 67%
• Pro forma NPAT was $5.1 million – a 59% fall
• Comparable store sales growth of 0.4% – down from 6.8%
• Gross margin came in at 37.2% – down from 39.3%
• Declared 2.7 cents per share fully franked interim dividend – a 59% tumble

The company’s gross profit margin was dinted by supply chain and shipping costs, better-than-expected engagement with its loyalty program, and the play gear category’s contraction – driven by price deflation and reduced demand.  

What else happened last half?

Consumer behaviour at the business shifted last half as shopping patterns normalised post-pandemic.

Instore sales grew 12.2% to make up 80% of all sales while touchless click-and-collect sales fell 30.2%. Meanwhile, online delivery sales grew 6.5%, with online sales making up 19.7% of all sales.

Five new Baby Bunting stores opened during the period while progress was made on the company’s ongoing transformation program.

What did management say?

Baby Bunting CEO and managing director Matt Spencer commented on the news driving the company’s share price today, saying:

Over the last 3 years, our sales have grown 36.7% noting that all Baby Bunting stores remained open during the COVID period. As life has normalised, the market share gains made through COVID have predominantly been held onto.

Post-COVID, our product segment performance is normalising. Nursery essentials – being a core category – continue to grow strongly and were up 12.7% in the half (over three years, this category is up 39.4%). Consumer staples, which are more widely available across general retail, saw a decline of 4.7%. Play time items (including Play gear) declined 3.6% in the half.

What’s next?

Baby Bunting provided a trading update for the first seven weeks of 2023 today.

It recorded 3.3% of total sales growth in the period. Though, its comparable store sales came in 2.1% lower.

Looking forward, the company previously announced it expects its full-year pro forma NPAT to come in between $21.5 million and $24 million and its gross profit margin to be between 38% and 39%.

Meanwhile, Baby Bunting Marketplace – presenting a “significant revenue opportunity” – is set to launch in the final quarter of this financial year.

Finally, the company announced Spencer’s resignation this morning. He will continue in the role until his successor is appointed.

Baby Bunting share price snapshot

The Baby Bunting share price has had a rough trot as of late.

The stock has tumbled 12% since the start of 2023 and is now trading 53% lower than it was this time last year.

For comparison, the ASX 300 has gained 6% year to date and 0.6% over the last 12 months.

The post Baby Bunting share price plunges as profits tumble 67% appeared first on The Motley Fool Australia.

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More reading

• Earnings preview: Here are the ASX shares reporting on Friday
• Supercharge your passive income with these buy-rated ASX dividend shares: analysts
• 1 oversold ASX dividend stock (yielding 6%) to buy in 2023
• Why I think these 2 ASX dividend shares offer great buying right now

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Baby Bunting Group. The Motley Fool Australia has recommended Baby Bunting Group. 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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A2 Milk Company Ltd (ASX: A2M) shares are ending the week strongly.

In morning trade, the infant formula company’s shares are up over 6% to $7.12.

Why are A2 Milk shares rising?

Investors have been bidding A2 Milk shares higher today after the company released an update on its quest for regulatory approval in China.

According to the release, its dairy processor partner, Synlait Milk Ltd (ASX: SM1), has announced that China’s Ministry for Primary Industries will commence an audit of Dunsandel facility on behalf of China’s State Administration for Market Regulation (SAMR) next week.

If everything goes to plan, A2 Milk’s China label infant milk formula products will soon be given the thumbs up in relation to the new national standards registration process. This would ensure that the company’s supply of China label products continues.

Should you invest before its results?

Investing before the release of a result can be a risky endeavour. As we have seen plenty of times this month, a poor result can send a share sinking lower. Conversely, a strong result can lead to a share hurtling higher.

And with A2 Milk shares trading within a fraction of their 52-week high and ahead of most broker valuations, it would seem that the risk is to the downside ahead of Monday’s results.

Though, it is worth noting that UBS has a price target well-ahead of the consensus at NZ$9.75 (A$8.87). This suggests that its shares could still rise 25% from current levels.

UBS believes that the company could more than double its FY 2022 net profit after tax by FY 2025 thanks to strong infant formula sales. It also highlights that China’s border reopening has led to share gains in the key market for A2 Milk and believes that there is currently no significant recovery priced into its shares.

Time will tell if the broker has made the right call.

The post Should I pour in and buy A2 Milk shares before the ASX 200 company reports on Monday? appeared first on The Motley Fool Australia.

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More reading

• The A2 Milk share price has lagged the ASX 200 in 2023. Time to pour in?
• Why this ASX 200 share has ‘great further upside potential’ in 2023: fund manager
• A2 Milk shares are up 30% in a year, is this price sweet or sour?
• 3 ASX shares to cash in on China’s reopening to the world: Jun Bei Liu
• If I invest $1,000 in A2 Milk shares now, what could my return be this year?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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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Software maker Getswift has copped “the largest ever penalty” against a company for breaching continuous disclosure laws.

The Federal Court has handed down an unprecedented fine of $15 million on delivery management app provider Getswift, which used to be listed on the ASX under ticker code GSW.

Getswift’s former executive chair Bane Hunter copped a penalty of $2 million and barred from managing corporations for 15 years. 

Former director, chief executive and retired AFL player Joel Macdonald copped a $1 million fine and was banned from managing companies for 12 years.

Another former director, Brett Eagle, was fined $75,000 and disqualified from managing corporations for two years.

According to the court, Getswift became an ASX darling as a result of “an unlawful public-relations-driven approach to corporate disclosure” deliberately executed by those running the company.

‘Laser-like focus on making money for himself and Mr Macdonald’

After listing for 20 cents on the ASX in December 2016, one year later Getswift shares were trading around the $3.70 mark.

While investors were popping champagne corks then, the series of customer signings announced to the market that inflated the stock price were later found to be gross exaggerations at best.

By March 2019, Getswift shares had deflated to 18 cents after its tactics unravelled.

The business was delisted from the ASX in January 2021 to flee to the Canadian NEO exchange, but the entire operation finally went into liquidation last July.

Federal Court justice Michael Lee was stinging in his criticism of those in charge of the company.

He said Hunter “had a laser-like focus on making money for himself and Mr Macdonald”, and if that happened to coincide with breaking stock market laws or exposing Getswift to liabilities, it was “of little concern to him”.

Macdonald was also solely concerned with making money for himself and had “little understanding or regard for his legal obligations as a director”.

After a settlement last month, former investors will be fortunate to receive 1 cent for each dollar they put in.

Justice Lee noted in his decision that there is “no evidence of contrition or remorse” by Hunter or Macdonald, who have fled overseas.

The three directors and the company were also ordered to pay the legal costs of the Australian Securities and Investments Commission, which brought the case to the court.

The post ASX company bosses punished for getting rich from misleading investors appeared first on The Motley Fool Australia.

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More reading

• Own Pilbara Minerals shares? Here’s what the market is expecting from its half year results
• Westpac share price lower on mixed quarterly update
• WiseTech share price lower despite blockbuster $600m acquisition
• Should I buy the dip on Whitehaven shares?
• Bought $1,000 of Suncorp shares 10 years ago? Here’s how much passive income you’ve received

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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Pilbara Minerals Ltd (ASX: PLS) shares will be on watch next week.

That’s because the lithium giant is scheduled to release its half year results on 22 February.

Ahead of the release, let’s take a look at what the market is expecting.

What is the market expecting from Pilbara Minerals’ half year results?

It is fair to say that a blockbuster result is expected from the miner next week thanks to sky high lithium prices. In addition, Pilbara Minerals recently announced plans to pay its maiden dividend in FY 2023, so all eyes will be on that.

According to a note out of Goldman Sachs, its analysts are expecting the company to post half year revenue of $2,121 million. This will be up a whopping 627% over the prior corresponding period but 1% short of the consensus estimate of $2,152 million.

Goldman is expecting the company’s operating expenses to increase 151% to $351 million, compared to consensus estimate of $361 million.

This is expected to underpin a 1,067% increase in underlying EBITDA to $1,770 million according to the broker, which is just a touch shy of the consensus estimate of $1,792 million.

And on the bottom line, an underlying net profit after tax of $1,211 million is expected by Goldman, which is broadly in line with the consensus estimate of $1,219 million. Both will be up over 1,300% year over year.

Finally, Goldman believes this will underpin a maiden 10 cents per share dividend. The broker summarised:

PLS will release 1H23 results in late February. We forecast underlying earnings of A$1.2bn (up >14x on PcP); underlying EBITDA of A$1.8bn, net cash of A$2.1bn (as reported), and DPS of A$10cps (slightly below the bottom end of the target payout ratio at 20-30%). PLS expect to update FY23 guidance with the result.

The post Own Pilbara Minerals shares? Here’s what the market is expecting from its half year results appeared first on The Motley Fool Australia.

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More reading

• Why this US$1 trillion milestone matters for ASX 200 lithium shares
• Pilbara Minerals shares: Future dividend darling?
• Could this new advancement reignite ASX 200 lithium stocks?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Own Pilbara Minerals shares? Here’s why China is set to remain a ‘key customer’

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 Westpac Banking Corp (ASX: WBC) share price is edging lower on Friday.

At the time of writing, the banking giant’s shares are down 0.5% to $22.64.

Why is the Westpac share price in the red?

The Westpac share price is edging lower on Friday following the release of the bank’s first quarter update.

Although the update didn’t provide any profit or margin figures, it did give investors an idea of how Westpac is performing.

The bank revealed that its credit quality and capital position remain strong, with Australian 90+ day mortgage delinquencies falling five basis points to 0.7% and a CET1 ratio of 11.13%.

Westpac also revealed that its liquidity coverage ratio (LCR) was up 7 percentage points to 139%, its net stable funding ratio (NSFR) was up 1 percentage point to 122%, and its deposit to loan ratio came in 1.1 percentage points higher at 84%.

Broker reaction

Goldman Sachs has responded to the update and notes that there are both positives and negatives. It explained:

WBC has released its Dec-22 (1Q23) Pillar 3 update, which suggests WBC’s asset quality was run-rating slightly better than what was implied by our prior 1H23E forecasts, while the CET1 ratio was broadly consistent. As we had expected, no earnings update was provided. However, the slightly lower than expected RWAs could imply that either i) earnings were slightly below, and/or ii) capital deductions were slightly higher than what was implied by our 1H23 forecasts.

Should you invest?

While not blown away by the update, Goldman remains positive on the Westpac share price and has reiterated its conviction buy rating with a price target of $27.74.

This implies potential upside of 22% for investors over the next 12 months.

The post Westpac share price lower on mixed quarterly update appeared first on The Motley Fool Australia.

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More reading

• Why term deposits can’t compete with these 5 ASX dividend machines
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• Westpac share price on watch following Q1 update
• 5 things to watch on the ASX 200 on Friday
• Why CBA, Corporate Travel Management, Treasury Wine, and Westpac shares are dropping

Motley Fool contributor James Mickleboro has positions in Westpac Banking. 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. 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 WiseTech Global Ltd (ASX: WTC) share price is on the move on Friday morning.

At the time of writing, the logistics solutions company’s shares are down 3.5% to $56.51.

Why is the WiseTech share price falling?

Investors have been selling down the WiseTech share price this morning after weakness in the tech sector offset news of a blockbuster acquisition.

According to the release, WiseTech has acquired Blume Global for US$414 million (A$600 million) from funds managed by Apollo, EQT, and other minority shareholders.

Blume Global is a provider of a leading solution facilitating intermodal rail in North America.

The release notes that North America is the world’s largest domestic logistics region and Blume manages intermodal containers and chassis on behalf of 6 of the 7 Class 1 US railroads, ocean carriers, and other intermodal equipment providers. This includes global freight forwarders and Beneficial Cargo Owners (BCOs).

Much like WiseTech itself, Blume is a high-growth recurring revenue business and is expected to generate FY 2024 revenues in the range of US$65 million to US$70 million, which represents annual growth of 45% to 55%.

Before operational synergies, on a standalone basis, Blume expects to achieve FY 2024 EBITDA margins of approximately 10% and be cash flow breakeven by the end of FY 2024.

Deal funding

WiseTech revealed that it will fund the acquisition through a combination of cash, debt, and shares.

This will comprise US$134.8 million from existing cash reserves, US$155 million of debt from new facilities, and US$124.2 million new WiseTech shares. This represents a funding mix of 70% cash and 30% WiseTech Global shares, with the latter to be escrowed for 12 months.

‘Strategically significant’

Founder and CEO of WiseTech Global, Richard White, believes the acquisition is strategically significant. He said:

This is another strategically significant acquisition that follows our acquisition of Envase Technologies last month. It further extends our capability in one of our six key CargoWise development priority areas, integrating rail into our landside logistics offering in North America, the most complex and largest logistics region in the world. Blume also brings significant new talent, a portfolio of other valuable product capabilities, and further enhances our product development skill set. This transaction demonstrates WiseTech’s continued investment in its CargoWise ecosystem, improving visibility and process efficiencies end-to-end across the supply chain for our customers.

The post WiseTech share price lower despite blockbuster $600m acquisition appeared first on The Motley Fool Australia.

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More reading

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• Happy days! 8 ASX 200 shares smashing new 52-week highs on Thursday

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 WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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 Whitehaven Coal Ltd (ASX: WHC) share price has dropped 26% since 21 December last year.

After such a significant, rapid drop in the ASX coal miner’s share price, could it make sense to invest in the business?

Firstly, Whitehaven reported its half-year result yesterday. That gives us a good insight into how much profit the company is making.

Earnings recap

Whitehaven reported that for the six months to 31 December 2022, it made $1.8 billion of net profit after tax (NPAT).

The coal miner also reported $2.7 billion of earnings before interest, tax, depreciation, and amortisation (EBITDA), which was significantly higher than the $0.6 billion of EBITDA in the first half of the prior year.

This came with $3.8 billion of revenue, thanks to an achieved average coal price of A$552 per tonne, up from $1.4 billion of revenue and an average price of A$202 in the first half of last year.

It generated $2.5 billion of operating cash flow, up from $567.4 million in the first half last year.

Whitehaven declared a fully franked dividend of 32 cents per share and noted it had bought back around 7% of its issued share capital through its share buyback, which came at a price of $592.8 million.

Its FY23 half-year shareholder payments amount to $641.4 million, representing a total payout ratio of just 36% of half-year net profit.

The just-declared dividend of 32 cents per share amounts to a grossed-up dividend yield of 5.7%.

Guidance

The Whitehaven share price can also be influenced by the outlook and guidance.

Management pointed out that there is a global energy supply shortfall, particularly for “high-quality thermal coal”. The company expects the rebalancing of global energy demand and supply to take “several years”.

It notes that baseload fuels will continue to be needed, particularly for coal that Whitehaven produces which has a higher energy content and lower emissions profile compared to other coal products.

The lack of Russian coal being sold to Europe and Japan is also providing price support for high-quality thermal coal.

It stated it’s on track to deliver within its guidance ranges of overall production, sales, and cost guidance for FY23.

NSW coal reservation scheme update

Whitehaven also announced that from 1 April 2023 to 30 June 2024, its mines will be obliged to make a certain volume of thermal coal available for domestic power stations. In total, those volumes are capped at the lower of 200,000 tonnes per quarter, or 5% of each mine’s expected saleable thermal coal production.

The required volumes under the scheme are to be made available at a maximum delivered price of A$125 per tonne for 5,500 kcal coal. If the production cost of the delivered coal, plus royalties, and a reasonable margin exceeds the price cap, an application can be made to push the price cap up.

Is the Whitehaven share price a buy?

Whitehaven shares are valued at two times FY23’s estimated earnings and four times FY25’s estimated earnings, according to Commsec. The company could pay a grossed-up dividend of 17% in FY23.

I think it’s highly likely that net profit is going to reduce over the next few years as energy prices normalise. However, the price/earnings (P/E) ratio could be so low that it can achieve market-beating returns if the dividend payout ratio (DPR) is healthy enough.

But, the idea of investing in a business with the prospect of falling earnings isn’t appealing to me.

The post Should I buy the dip on Whitehaven shares? appeared first on The Motley Fool Australia.

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More reading

• What’s going so wrong for ASX coal shares today?
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• Everything you need to know about the monster Whitehaven dividend
• Whitehaven Coal share price sinks despite 423% profit jump

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 Suncorp Group Ltd (ASX: SUN) share price has lifted nearly 11% over the last 10 years.

An investor buying $1,000 worth of the company’s stock in February 2013 likely would have walked away with 86 shares, paying $11.54 apiece.

Today, that parcel would be worth $1,100.80. The Suncorp share price closed Thursday’s session at $12.80.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted 47% in that time.

So, have the dividends on offer from the financial services conglomerate made up for its stock’s sluggish performance? Let’s take a look.

All the dividends offered by Suncorp shares since 2013

Here are all the dividends paid to those invested in Suncorp shares over the last 10 years:

Suncorp dividends’ pay date	Type	Dividend amount
September 2022	Final	17 cents
April 2022	Interim	23 cents
September 2021	Final and special	40 cents and 8 cents
April 2021	Interim	26 cents
October 2020	Final	10 cents
March 2020	Interim	26 cents
September 2019	Final	44 cents
May 2019	Special	8 cents
April 2019	Interim	26 cents
September 2018	Final and special	40 cents and 8 cents
April 2018	Interim	33 cents
September 2017	Final	40 cents
April 2017	Interim	33 cents
September 2016	Final	38 cents
April 2016	Interim	30 cents
September 2015	Final and special	38 cents and 12 cents
April 2015	Interim	38 cents
October 2014	Final and special	40 cents and 30 cents
April 2014	Interim	35 cents
October 2013	Final and special	30 cents and 20 cents
April 2013	Interim	25 cents
Total:		$7.18

As the chart above shows, Suncorp has paid $7.18 of dividends per share since February 2013.

That means our figurative parcel has likely yielded $617.48 of passive income in that time, bringing our return on investment (ROI) to 73%.

And that’s before considering the potential tax benefits the company’s fully franked dividends could have brought, or the further gains compounding those dividends could have brought.

Right now, Suncorp shares are trading with a 3.1% dividend yield.

And eager passive income investors won’t have to wait much longer to receive another payout.

Suncorp declared a 33 cent per share interim dividend last week. That will be paid late next month.

The post Bought $1,000 of Suncorp shares 10 years ago? Here’s how much passive income you’ve received 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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The fund manager Wilson Asset Management (WAM) has revealed two ASX shares that could deliver good earnings growth in the coming years.

WAM tries to fund undervalued growth companies that could outperform the market. Ideally, the investment team aims to find a catalyst that can accelerate returns for investors.

The fund manager runs a number of listed investment companies (LICs) including WAM Capital Limited (ASX: WAM) and WAM Leaders Ltd (ASX: WLE).

Every month, WAM likes to pick out some of the ASX shares that it thinks have compelling futures. Below are two of them, which are growing worldwide.

Pro Medicus Limited (ASX: PME)

WAM describes Pro Medicus as a business that provides medical imaging software and services to hospitals, imaging centres and healthcare groups worldwide.

The fund manager noted last month that the business announced it had signed a seven-year, $25 million contract with the University of Washington for its academic health system.

The ASX share also announced a $12 million contract with Oregon-based Samaritan Health Services spanning eight years, which has a network that includes five hospitals.

WAM pointed out that contracts will see its cloud-engineered imaging platform implemented at the institutions and will reinforce Pro Medicus’ “strong presence” in the north west region of the US.

The fund manager explained why it’s optimistic:

We expect its strong sales pipeline will continue and we look forward to the possible announcement of new contracts in the months to come.

Pro Medicus recently reported its FY23 half-year result which showed revenue growth of 28% and net profit after tax (NPAT) growth of 31.5%.

PWR Holdings Ltd (ASX: PWR)

WAM described PWR Holdings as a business that specialises in cooling products and solutions to the motorsports and technology sectors.

In January, the company announced that it had acquired Bespoke Motorsport Radiators (BMR), which is reportedly one of the leading manufacturers and suppliers of high-performance motorsport radiators, intercoolers and oil coolers in the UK.

BMR has a four-year average revenue of £520,000 per annum.

WAM said that it’s expected that BMR will operate as part of PWR Holdings Europe and expand the ASX share’s manufacturing capabilities.

The fund manager explained:

We believe the acquisition will continue to expand PWR Holding’s European business and strengthen its ability to execute large projects over the medium-term.

The post 2 ASX shares to buy with exciting global growth potential: fund manager appeared first on The Motley Fool Australia.

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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 PWR Holdings and Pro Medicus. The Motley Fool Australia has positions in and has recommended PWR Holdings and Pro Medicus. 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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