Karoon Energy Ltd (ASX: KAR) shares are taking a hit on Monday morning, and investors have another setback to digest.

The oil and gas producer’s shares are currently down 12.04% to $1.57, after finishing Friday’s session at $1.785.

It’s another frustrating development for shareholders, particularly after the stock had started to recover some ground over the past month.

So, what’s happened this time?

Why are Karoon shares crashing 12%?

In its announcement, Karoon revealed another operational setback at its Bauna oil project offshore Brazil.

The company identified an electrical fault at its SPS-92 well on 21 September, shutting down production the following day to investigate.

It turns out that one of the three electrical phases supplying power to the well’s downhole pump was faulty.

Production has since resumed using the remaining two phases, although the pump is operating at reduced capacity.

Unfortunately, getting the well back to full production won’t be a quick fix.

Karoon will need a drilling rig to replace the faulty cable system and is already working to secure the necessary permits and services.

Until then, it’s expecting to lose around 3,500 barrels of oil per day.

And with production taking another hit, Karoon has had to lower its expectations for the year.

The company now expects Bauna to produce between 5.4 million and 5.7 million barrels in 2026, down from 6 million to 6.7 million barrels previously.

Who Dat guidance remains unchanged. Karoon now expects total production of 6.6 to 7.2 million barrels of oil equivalent in 2026.

That’s compared with its previous forecast of 7.2 to 8.2 million barrels.

Unit production costs are also expected to increase from US$12 to 15 to US$15 to 16 per barrel.

What about the financial impact?

The good news is that Karoon is expecting its insurance to cover much of the financial damage.

The company anticipates to recover almost all lost production revenue and repair costs, subject to the terms of its insurance policies.

However, the cause of the failure remains under investigation. This means it’s still unclear when any insurance payments will be received.

CEO Carri Lockhart said the fault as disappointing, particularly as the new pump and cable system have been operating for less than 3 months.

Management is now focused on restoring SPS-92 to full production while also looking to increase production from Bauna’s other wells.

Foolish takeaway

I think today’s announcement adds to Karoon’s challenges, especially with the company already dealing with production issues at Who Dat.

The question now is how long it will take to complete the repairs and get production back on track.

I’ll be watching next month’s quarterly update for details on when Karoon expects to restore full production.

The post This ASX energy stock just crashed 12%. Here’s what’s gone wrong 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 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.

Commonwealth Bank of Australia (ASX: CBA) shares are currently trading around $150.83 as we approach the end of the month.

Here’s what I think of the big four bank’s shares as we head into October.

What does the outlook look like?

One of the things I like about CBA is the strength of the underlying business.

The bank has leading positions across home lending and deposits, a huge customer base, and a strong digital offering. Those advantages have helped it generate consistently strong returns and make it the major bank I would most want to own.

The earnings outlook is steady rather than spectacular.

CBA generated earnings per share (EPS) of $6.58 in FY26. Consensus estimates point to this increasing to $6.67 in FY27 and $6.86 in FY28.

That is only modest growth, but I think there is value in the predictability of those earnings, particularly when combined with CBA’s dividend.

Dividends per share are expected to rise from $5.05 in FY26 to $5.15 in FY27 and $5.30 in FY28.

At today’s share price, the FY27 forecast implies a dividend yield of around 3.4%, before considering any franking benefits.

What about interest rates?

Interest rates could become an increasingly important part of the story in October.

The Reserve Bank of Australia is widely expected to raise the cash rate this week, with the possibility of another increase later in the year.

Higher rates can have mixed implications for banks.

They can provide some support for margins depending on how quickly lending and deposit rates move. At the same time, higher borrowing costs can put additional pressure on households and potentially weigh on credit growth.

For CBA, I think its large deposit base and strong position in Australian banking leave it relatively well placed to navigate that environment.

I would still watch how higher rates affect mortgage customers and competition across the sector, particularly if monetary policy remains restrictive for longer.

Is the valuation too high?

This is where the decision becomes more difficult.

At $150.83, CBA shares are trading on a PE ratio of roughly 22.6 times forecast FY27 earnings and around 22 times FY28 earnings.

That is not a cheap valuation for a mature bank expected to deliver fairly modest earnings growth.

Investors are clearly paying a premium for CBA’s quality, market position, and consistency.

For me, though, valuation is only one part of the equation. I would rather own an excellent bank at a reasonable price than choose a weaker business simply because its PE ratio is lower.

Foolish takeaway

I would still be comfortable buying CBA shares as we head into October.

The valuation is higher than I would ideally like, especially given the modest earnings growth currently forecast. But I think CBA remains the highest-quality major bank on the ASX and is well positioned to keep delivering for shareholders.

At around $150.83, I see CBA as a buy for investors prepared to own it for the long term rather than chase a quick return.

The post Should I buy CBA shares in October? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia. 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.

The ASX is home to some very impressive Australian stocks. Some are the best in the country at what they do, or even the best in the world.

I’m going to highlight two businesses that I believe are undervalued and have excellent long-term growth potential, in my view.

While they may not be the cheapest Australian stocks in price/earnings (P/E) ratio terms, I think future profit growth will help them deliver market-beating total shareholder returns (TSR).

Breville Group Ltd (ASX: BRG)

Breville is one of the world’s leading coffee machine businesses. It has a number of brands including Breville, Sage, Lelit, Baratza and a coffee beans business called Beanz. Coffee seems like of the things that Australia is a world leader at.

The global adoption of coffee continues to be a strong tailwind for the company. FY26 revenue grew by 6.7% (with global segment growth of 9.7% in constant currency).

Breville said that its young markets of China, South Korea, Mexico and the Middle East delivered collective growth of more than 70%.

Tariffs have been a significant talking point for the last year and a half for the Australian stock (and other affected businesses). Breville’s manufacturing diversification has been substantially complete, with 85% of 120-volt product in gross profit dollar terms is now sourced outside of China.

The company also reported that its FY26 second half gross profit margin was 36.8%, above FY25’s 36.6%, primarily driven by the US sourcing mix.

While profitability was impacted during FY26, it still managed to deliver growth, even if it was a small increase at 1.7%. It was enough to fund a 2.7% increase in the dividend per share to 38 cents.

The projection on Commsec suggests the company’s earnings per share (EPS) could climb to $1.08 by FY27, putting the Australian stock at 28x FY27’s estimated earnings.

Estimates also suggest that EPS could grow by 28% between FY27 and FY29. The company is on track for a promising future.

Wesfarmers Ltd (ASX: WES)

The other Australian stock I want to highlight is Wesfarmers, the owner of Bunnings, Kmart, Officeworks, Priceline and other businesses. I’d describe Bunnings as one of the most ‘Australian’ businesses you could want to own.

Wesfarmers has proven to be very effective at delivering earnings growth over the years thanks to the quality of Bunnings and Kmart. They both have incredibly high returns on capital (ROC) for physical retailers and have managed to find a number of appealing places to invest to grow their earnings.

For example, Bunnings has invested in product ranges such as pet care and auto care, allowing it to compete with leaders in those respective segments.

As value leaders, Kmart and Bunnings are well-placed to serve customers during this period of a higher cost of living, which I believe will lead to a rising market share.

Wesfarmers’ return on equity (ROE) above 30% shows how profitably it puts new money to work. Over the long term, I think Wesfarmers’ earnings per share (EPS) can grow, particularly as it expands in areas like lithium and healthcare, both of which are growth areas.

According to the projection on Commsec, the Australian stock is valued at 27x FY27’s estimated earnings.

The post 2 strong Australian stocks to buy now with $9,000 appeared first on The Motley Fool Australia.

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• If I invest $15,000 in Wesfarmers shares, how much passive income will I receive in 2027?
• How I’d build a $50,000 ASX share portfolio today
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Motley Fool contributor Tristan Harrison has positions in Breville Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.