The Australian share market was on form again on Wednesday and raced notably higher.

Some shares climbed more than most, with a few managing to even hit 52-week highs or better.

Three that have achieved this feat are listed below. Here’s why they are scaling new heights:

ASX Ltd (ASX: ASX)

The ASX Ltd share price continued its positive run and hit a record high of $89.71 on Wednesday. Investors have been buying the stock exchange operator’s shares this year due to its defensive qualities and strong share market activity. This morning the company reported a 49% increase in capital raised on the ASX during the month of May compared to the prior corresponding period. It also revealed that the total number of trades on the ASX is up 29% year to date to 423.3 million.

Integrated Research Limited (ASX: IRI)

The Integrated Research share price climbed to a two-year high of $3.66 yesterday. Investors appear confident that demand for the services of this global provider of performance management software for critical IT infrastructure, payments, and unified communications will remain strong during the pandemic. The market has not heard from the company since its half year results in February. This could be a case of no news is good news.

Zip Co Ltd (ASX: Z1P)

The Zip Co share price continued its remarkable run and hit a record high of $6.79 on Wednesday. Investors have been fighting to get hold of the payments company’s shares since it announced an agreement to acquire New York-based buy now pay later provider QuadPay. This deal will see the company go head to head with Afterpay Ltd (ASX: APT) in the United States market. QuadPay is a leading, high growth, instalment provider with 1.5 million customers and 3,500 merchants on its platform. From these it is currently generating annualised total transaction value of over $900 million and annualised revenue of $70 million. This is just the smallest fraction of a U.S. retail market estimated to be worth a staggering $5 trillion.

More reading

• ASX 200 jumps 1.8%, Australian headed for recession
• Sezzle Inc shares and 2 other small cap ASX techs surge higher today
• Why Afterpay, Infigen, Qantas, & Zip Co shares are charging higher
• The Zip Co share price just zoomed to a record high: Is it too late to invest?
• ASX 200 rises 0.3%, Zip rockets higher

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Integrated Research Limited and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 will be on watch on Thursday after announcing the results of its investigation into the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) compliance issues. 

This follows the launching of civil proceedings against Westpac by AUSTRAC on 20 November 2019.

Westpac Chairman John McFarlane explained: “In line with the Board’s commitment at the 2019 AGM, we are now making public the results of reviews into the Bank’s AML/CTF compliance failings.”

“It’s been my experience since joining the Bank that Westpac deeply regrets this matter. Indeed, recognising the seriousness of the issues raised by AUSTRAC, the former CEO stepped down and the former Chairman brought forward his retirement. We are all committed to fixing these issues so they don’t happen again.”

What did Westpac announce?

Westpac has blamed its International Funds Transfer Instructions (IFTIs) non-reporting failures on a mix of technology and human error dating back to 2009.

Whereas the failure to properly adhere to AUSTRAC guidance for child exploitation risk occurred due to deficient financial crime processes. This was then compounded by poor individual judgements.

All in all, three primary causes of the AML/CTF compliance failures have been identified by Westpac. They are as follows:

• Some areas of AML/CTF risk were not sufficiently understood within Westpac.
• There were unclear end-to-end accountabilities for managing AML/CTF compliance.
• There was a lack of sufficient AML/CTF expertise and resourcing.

Board governance.

Westpac also released the Advisory Panel Report into Board governance of AML/CTF obligations and the promontory assurance letter on management’s accountability review.

The bank advised that the Advisory Panel has formed a range of views on financial crime related governance.

The report notes that the way the Westpac Board organised its general governance responsibilities was mainstream and fit for purpose.

However, with the benefit of hindsight, it feels that directors could have recognised earlier the systemic nature of some of the financial crime issues Westpac was facing. The Panel also noted that the reporting of financial crime matters to the Board was at times unintentionally incomplete and inaccurate.

Westpac’s new CEO, Peter King, advised that the bank has looked back over ten years and where fault was identified, appropriate action has been taken.

He said: “Consequences that have been applied to individuals include significant remuneration impacts and disciplinary actions. A number of relevant staff had already left the company.”

“A range of remuneration consequences were applied to 38 individuals. Consequences applied to prior year awards, including withheld FY19 short term variable reward, totalled approximately $13.2 million. In addition, cancelled FY20 short term variable reward, including for the CEO and Group Executives, is valued at approximately $6.9 million assuming an outcome of 50% of target opportunity,” he added.

What now?

Mr King has acknowledged the need for cultural change within Westpac.

He commented: “We recognise we need to change. We completely accept that some important aspects of Westpac’s financial crime risk culture were immature and reactive, and we failed to build sufficient capacity and experience in some important areas.”

“We have learned from this and are absolutely committed to making amends for this event,” the CEO concluded.

This brings to an end Westpac’s investigations. It will continue to work with AUSTRAC on the legal process, following the submission of its defence and admissions on 15 May 2020.

More reading

• ASX 200 jumps 1.8%, Australian headed for recession
• ASX 200 up 1%: Big four banks jump, Afterpay hits record high
• Is the Westpac share price a buy?
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 down 0.1%: Big four banks drag ASX lower ahead of RBA meeting

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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 Xero Limited (ASX: XRO) share price has been a top ASX tech performer for quite some time. Shares in the Aussie software provider are up 11.66% this year while the S&P/ASX 200 Index (ASX: XJO) has slumped 11.11% lower.

But there’s one that thing that really stands out about Xero right now. The Aussie tech group’s shares trade at a price to earnings (P/E) ratio of 4,122.29. That’s a pretty astonishing number, but does it mean Xero is overvalued today?

Is the Xero share price overvalued?

Xero is currently trading at $89.33 per share. A P/E ratio of 4,122 means that for every $4,122 you pay for the share, you can expect the company to generate $1 worth of earnings.

That’s an incredibly high number. Let’s compare that figure that to a strong dividend share like Fortescue Metals Group Limited (ASX: FMG). Fortescue shares are currently valued at $14.66 with a P/E ratio of 6.04.

Of course, we have to compare apples with apples. This means it might be more appropriate to evaluate the Xero share price against that of its WAAAX peers. The Altium Limited (ASX: ALU) share price, for example, currently trades at a P/E ratio of 62.16. Therefore, on the surface it might appear that Xero shares are grossly overvalued.

However, I don’t think it’s that simple. The Xero share price has consistently climbed over the years and investors continue to buy into the company. The group continues to sign big clients and I think small and medium business clients will rely on Xero software throughout the COVID-19 crisis. 

Furthermore, many ASX tech shares don’t actually post positive earnings or ‘profit’. That means the earnings component of the P/E ratio is useless and won’t provide any decisive value. However, if a company posts a 1 cent per share profit, all of a sudden their P/E ratio will be enormous.

Foolish takeaway

I don’t think it’s wise to just use P/E ratios to value the Xero share price, particularly in the current climate. If Xero retains key customers and manages to reduce churn, the ASX tech share could still be a good buy in 2020 and beyond.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 3 high quality ASX shares to buy and hold for decades
• These ASX 200 shares could be perfect for a retirement portfolio
• The latest ASX 200 stocks to be upgraded to “buy” amid the recession
• Why I’m not afraid to invest in shares during this recession

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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