Author: openjargon

A couple of ASX 200 stocks are moving in very different directions on Tuesday morning after updating their respective earnings guidance for FY 2024.

Let’s now take a look at which stock has upgraded its guidance for the full year and which one has disappointingly downgraded its expectations.

AGL Energy Limited (ASX: AGL)

The AGL Energy share price is rising on Tuesday after the energy company released an update on its guidance for FY 2024.

At the time of writing, its shares are currently up almost 7% to $9.95.

According to the release, the company now expects its underlying EBITDA to be between $2,120 million and $2,200 million in FY 2024. This compares to its previous guidance of $2,025 million and $2,175 million.

This represents a sizeable 56% to 61.5% increase on FY 2023’s underlying EBITDA of $1,361 million.

Also getting an upgrade was the ASX 200 stock’s underlying net profit after tax. This is now expected to be between $760 million and $810 million, compared to its previous guidance of $680 million and $780 million.

In FY 2023, AGL reported underlying net profit after tax of $281 million. This new guidance represents an increase of 170% to 188% year on year.

Management explained that business has been booming during the second half. It said:

The update to guidance reflects the continued strong operational and financial performance of the business since the half year results, due to improved plant availability, flexibility and generation, higher consumer demand over the summer period in New South Wales and Queensland, and continued strong Customer Markets performance.

Sims Ltd (ASX: SGM)

The Sims share price is sinking today after the ASX 200 scrap metal stock downgraded its earnings guidance for FY 2024.

Its shares are currently down a sizeable 9.5% to $10.71.

Management advised that second-half underlying EBIT will be marginally lower than the first half. This compares to its previous guidance for underlying EBIT “to improve in H2 FY24 compared to HY1 FY24.”

Commenting on the guidance downgrade, Sim’s CEO and managing director, Stephen Mikkelsen, said:

Ongoing market challenges have continued across the industry. SA Recycling and ANZ Metal have faced increased challenges compared to the first half. Pleasingly, despite North America Metal facing similar market challenges, we anticipate an improved second-half performance as early positive outcomes of the targeted strategies for margin improvement are emerging. We remain confident in the medium to long-term fundamentals, driven by global decarbonisation efforts.

The post One ASX 200 stock that just upgraded earnings guidance (and one that downgraded) appeared first on The Motley Fool Australia.

More reading

• Down 24% since July, are AGL shares a cheap buy?
• Here’s how I’d aim for a tonne of passive income from $20,000 in an ASX share portfolio
• 2 unexpected ASX 200 stocks to buy now for the AI revolution
• Here’s how the ASX 200 market sectors stacked up last week
• Here are the top 10 ASX 200 shares today

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.

The National Australia Bank Ltd (ASX: NAB) share price is falling on Tuesday.

In early trade, the banking giant’s shares are down almost 2.5% to $33.88.

This is despite the ASX 200 index pushing 0.5% higher this morning.

Why is the NAB share price tumbling?

The weakness in the bank’s share price today could actually be classed as good news for its shareholders.

That’s because the NAB share price is falling today in response to trading ex-dividend for the bank’s upcoming interim dividend payment. This means pay day is approaching for eligible shareholders!

Going ex-dividend

When a company’s shares go ex-dividend, it means the rights to a pending dividend payment are now settled. As a result, anyone buying its shares from this point will not be entitled to receive this payout when it is made.

Instead, the rights to the dividend remain with the seller, even if they no longer own those shares when the payment date arrives.

Given that a dividend forms part of a company’s valuation, its share price will tend to drop in line with the value of the payout on the ex-dividend date. After all, new buyers of its shares don’t want to pay for something they won’t receive.

In the case of NAB, last week it released its half-year results and declared its latest dividend. NAB reported a 0.9% decline in net operating income to $10,138 million and a 12.8% decline in cash earnings to $3,548 million. The latter was largely in line with the consensus estimate of $3,553 million.

This earnings decline couldn’t stop the NAB board from increasing its interim dividend by 1.2% to a fully franked 84 cents per share. It is this dividend that NAB’s shares are going ex-dividend for this morning.

Eligible shareholders can now look forward to being paid this dividend in just under two months on 3 July.

What’s next for the NAB dividend?

A recent note out of Goldman Sachs reveals that its analysts expect another 85 cents per share fully franked final dividend in November. This will bring its total dividends for FY 2024 to $1.68 per share.

After which, the broker expects the NAB board to keep its dividend on hold at this level for the foreseeable future.

It is forecasting fully franked $1.68 per share dividends each year until at least FY 2028. Based on the current NAB share price of $33.88, this will mean dividend yields of 5% per annum over the period.

The post Why is the NAB share price sinking today? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• What you need to do to secure the next NAB dividend
• Forget NAB and buy these ASX dividend shares
• Here’s the NAB dividend forecast through to 2028
• Are NAB shares a buy following the bank’s results?

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 Goldman Sachs Group. 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.

In the bustling world of retail, not all that glitters is gold. The Reject Shop Ltd (ASX: TRS), an established discount retailer, has seen its share price touch 52-week lows recently. A combination of sector-wide and company-specific challenges has driven the stock price down. Investors must now decide if these issues are merely bumps in the road or indicative of fundamental flaws.

The Reject Shop’s plunge

The Reject Shop, known for its budget-friendly offerings, has seen its stock price fall to $4.13, down from $5.80 late last year. The fall can be attributed to several factors. Firstly, there have been significant changes in the company’s leadership, including the resignation of the General Counsel and Company Secretary, and other shifts within the board. Such leadership transitions can often lead to uncertainty among investors​.

Despite improvements in earnings per share (EPS) in FY23 compared to the previous year, consensus EPS estimates were adjusted downwards in October 2023, dampening investor sentiment​.Â

Comparing ASX retail share rivals

Another contributing factor has been the general challenges faced by the retail sector in Australia. Shifts in consumer behaviour and competitive pressures have impacted the entire industry. According to the Australian Bureau of Statistics, household spending on discretionary items decreased by 0.1% in the year to March, with rising interest rates forcing households to cut back.Â

Other ASX-listed retail stocks have also felt the pinch. Take, for example, Adairs Ltd (ASX: ADH), which has seen its share price fall more than 5% over the past year. Adairs reported a decrease in earnings before interest, tax, depreciation and amortisation (EBITDA) of 14.6% in 1H24. The Reject Shop saw a 16% decrease.Â

Retail is also grappling with broader economic factors such as fluctuating consumer confidence and the undeniable impact of e-commerce. For traditional stores like The Reject Shop and Adairs, adapting to this new digital reality is crucial for survival. Sector-wide, there is a strong push towards adopting digital innovations to enhance efficiency and customer engagement.

Is recovery on the horizon for this ASX retail share?

Retailers are expected to continue facing economic pressures such as inflation and high interest rates. This will squeeze profit margins and challenge operational costs. Nonetheless, consumer habits are shifting towards more value-driven purchases due to high living costs. This trend favours discount retailers who can offer compelling price points.

Foolish takeaway

The Reject Shop’s recent stock price woes are emblematic of the broader pressures facing the retail sector. The question for investors is not just whether The Reject Shop can adjust to these challenges, but whether it can leverage them as opportunities.

With consumers increasingly price-conscious, discount retailers like The Reject Shop could be well-positioned to capture market share. To do so, they will need to adapt and innovate effectively.

The post Is this crushed ASX retail share a buy? appeared first on The Motley Fool Australia.

More reading

• 4 ASX All Ords shares with ex-dividend dates this week

Motley Fool contributor Katherine O’Brien 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 Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you are on the lookout for some exchange-traded funds (ETFs) to bolster your portfolio, then it could be worth getting acquainted with the three that are listed below.

They have all been tipped as top ideas by analysts at Betashares this year. Let’s dig a little deeper into them and see what they could offer investors.

BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)

If you are wanting some exposure to the local technology sector, then it could be worth considering the BetaShares S&P/ASX Australian Technology ETF. It offers easy access to the leading tech players on the Australian share market.

This ETF was recently highlighted as one to look at by the team at Betashares. The fund manager commented:

With the nascent adoption of AI, cloud computing, big data, automation, and the internet of things, there’s a good chance that the next decade’s major winners will come from the tech sector. Despite Australia’s sharemarket skewing heavily towards financials and resources, investors can gain direct exposure to Aussie tech stocks via ATEC.

Betashares Global Cash Flow Kings ETF (ASX: CFLO)

Another ASX ETF that is highly rated by the fund manager is the Betashares Global Cash Flow Kings ETF.

Betashares recently named it as one to consider when interest rates start to fall. It said:

For those looking for international exposure, Betashares Global Cash Flow Kings ETF focuses on global companies with strong free cash flow. The fund can serve as a core exposure to global equities or alongside existing low-cost passive global ETFs to enhance a portfolio’s emphasis on cash-generating companies.

Betashares Energy Transition Metals ETF (ASX: XMET)

Finally, if you are looking for exposure to the decarbonisation megatrend, then the Betashares Energy Transition Metals ETF could be for you.

It provides investors with easy exposure to global producers of copper, lithium, nickel, cobalt, graphite, manganese, silver, and rare earth elements.

Betashares named it on its list of 12 ASX ETFs ideas for 2024. It appears to believe the companies included in the fund are well-positioned to benefit from increasing demand for these metals. It commented:

The Earth is blessed with all the minerals we need to power the transition to CO2-free energy. However, defining, extracting, and processing all those deposits is going to require significant new investment. […] Both electric cars and clean energy use notably more metals than their conventional counterparts, and many of these minerals have highly concentrated and insecure supply chains.

The post 3 top ASX ETF ideas for investors in May appeared first on The Motley Fool Australia.

More reading

• The pros and cons of buying this ASX tech ETF after its 30% rally

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.

The Qantas Airways Limited (ASX: QAN) share price has seen its fair share of pain over the past year. It’s still down more than 10% since July 2023, as we can see on the chart below, despite a rally over the past two months.

Qantas has faced a number of negatives in the last few years, including the pandemic.

The ACCC launched a Federal Court against Qantas in August 2023, alleging that between 21 May 2021 and 7 July 2022, Qantas advertised tickets for more than 8,000 cancelled flights. It was also alleged that, for more than 10,000 flights scheduled to depart in May to July 2022, Qantas did not promptly notify existing ticketholders that their flights had been cancelled.

But the airline and ACCC announced yesterday, as reported by my colleague Bernd Struben, that Qantas had agreed to $20 million payments to customers and that Qantas would pay a $100 million penalty.

Investors may now be able to judge the Qantas share price on its merits. One investor is very bullish on the airline.

L1’s bullish view on the Qantas share price

The fund manager said Qantas remains “very well placed” over the next few years because it has “Australia’s best loyalty business which is expected to double earnings over the next five to seven years”. Qantas also has a range of new, more fuel-efficient aircraft, and ‘project sunrise’, which can enable direct flights from Melbourne and Sydney to London and New York.

It was noted by L1 that Qantas shares rallied in April after outlining plans to improve the loyalty offer to enable easier access for frequent flyer members to use their points. The revision to the loyalty offer had a “smaller impact on earnings than market expectations and the company clearly articulated the strong medium-term benefits of investing in the program.”

L1 also noted the airline has “sufficient balance sheet capacity” to continue its share buyback and recommence fully franked dividends next year.

Another positive for Qantas is that the new CEO, Vanessa Hudson, is “rapidly and methodically addressing customer ‘pain points’, which should improve sentiment from both customers and potential investors.”

L1 said the Qantas share price is trading at just 6x FY25’s estimated earnings, despite a “dominant industry position, exposure to the structural tailwinds of Asian inbound tourism to Australia and a high growth, capital-light loyalty division, which remains incredibly underappreciated by the market.”

Qantas share price snapshot

Since the start of 2024, the Qantas share price has risen by 10%.

The post 4 reasons this fund manager thinks Qantas shares are a cheap buy appeared first on The Motley Fool Australia.

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• 10 top ASX shares to buy in May
• Why 29Metals, Base Resources, Qantas, and South32 shares are storming higher

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.

Westpac Banking Corp (ASX: WBC) shares were on form on Monday.

The banking giant’s shares rose over 2.5% to $27.12.

Investors were buying the company’s shares in response to its half-year results.

In case you missed it, Westpac’s net profit before one-offs came in at $3,506 million. This represents an 8% decline on the prior corresponding period and a 1% fall on the second half of FY 2023.

However, this was ahead of expectations. As was its interim dividend of 75 cents per share and surprise 15 cents per share special dividend, and its $1 billion on-market share buyback.

This gain leaves Westpac’s shares trading within touching distance of their 52-week high of $27.70.

But can they go higher from here? Let’s take a look at what one leading broker is saying after updating its financial model.

Can Westpac shares keep rising?

According to a note out of Goldman Sachs, its analysts believe that Australia’s oldest bank’s shares are fully valued at current levels.

The broker has responded to the result by retaining its neutral rating with an improved price target of $24.10.

Based on its current share price, this implies potential downside of 11% for investors over the next 12 months. Though, with Goldman estimating a 6.1% dividend yield this year, the overall potential loss on investment is reduced to 5%.

While Goldman sees a number of positives, it also sees risks on the horizon. So, with Westpac’s shares trading at a reasonably large premium to historical multiples, it doesn’t believe the risk/reward is sufficient right now to have a more positive recommendation. The broker explains:

We believe that low industry-wide RWA growth and WBC’s strong capital position, which even on a pro-forma basis is >12%, well above its 11.0-11.5% target ratio, underpins a sustainable payout ratio at the top of its 65-75% target range.

However, against this, WBC’s technology simplification plan comes with a significant degree of execution risk, given historically banks’ large-scale transformation programs have struggled to stay on budget, and we are currently operating in a stickier-than-expected inflationary environment. Therefore, trading on a 12-mo forward PER of 14.5x (14.0x ex-dividend adjusted, which is one standard deviation above its 15-year historic average of 12.7x), we stay Neutral.

Nevertheless, shareholders aren’t likely to be too disheartened. After all, the Westpac share price is up almost 25% over the last 12 months. And that doesn’t include the fully franked dividends the bank has paid to shareholders over the period.

The post What are brokers saying about Westpac shares following the bank’s results? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Everything you need to know about the supersized Westpac dividend
• Westpac shares charge higher on half-year earnings beat and buyback
• Westpac share price on watch amid results, special dividend and $1b buyback
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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.

Any ASX investment – whether that be an ASX share or an ASX real estate investment trust (REIT) – that seemingly offers a dividend yield of 7.89% is going to attract at least some attention.

After all, that kind of yield is rather unusual on the ASX, at least outside those shares that have a high chance of turning out to be a yield trap.

Yet that’s exactly what investors eyeing off the Charter Hall Long WALE REIT (ASX: CLW) will notice today.

The Charter Hall Long WALE REIT is a real estate investment trust that holds a portfolio of property assets that all share relatively long weighted average lease expires (WALEs). These include offices, shopping centres, industrial warehouses and hotels.

Long WALE REIT units finished trading on Monday flat at $3.42. At this pricing, this ASX REIT is trading on a trailing dividend distribution yield of 7.75%.

To be fair, this yield comes without the franking credits that most income investors enjoy alongside their regular dividend income from ASX shares. But this is the case for almost all ASX REITs, so we can’t hold that against Charter Hall.

This high dividend yield is no illusion. It stems from the Long WALE REIT’s last four quarterly dividend distributions. Those consisted of three payments worth 6.5 cents per share (the latest of which is due on 15 May later this month), as well as the 7 cents per share distribution from last August.

But, as most dividend investors would know, a trailing dividend yield doesn’t guarantee that new investors can expect to receive that same yield going forward.

Even so, one ASX expert is calling the Charter Hall Long WALE REIT a buy anyway.

ASX expert names Long WALE REIT as a buy today

As reported by The Bull, Dylan Evans, of Catapult Wealth, has recently named the Charter Hall Long WALE REIT as one of his buy recommendations. Evans cited the Long WALE REIT’s low exposure to office properties, as well as the REIT’s 99% occupancy rate, as being central to his bullish outlook. Here’s what he said in full:

CLW is a diversified real estate investment trust. A key attraction is a quality property portfolio with an occupancy rate of 99 per cent. An average lease expiry of 10.8 years provides long term income security. Office exposure is only 18 per cent in an environment of more people working from home.

CLW has struggled in the past two years in response to rising bond yields. But the stock is appealing at these levels. The dividend yield was recently above 8 per cent. Also, any asset sales to lower debt would be positive for the stock.

No doubt Charter Hall investors will welcome this sunny appraisal. However, whilst longer-term investors have enjoyed healthy dividend income recently, the Long WALE REIT remains down 23.49% over the past five years. Only time will tell if Evans is on the money with this one.

The post Buy this ASX REIT for 99% occupancy and a 7.8% dividend yield! appeared first on The Motley Fool Australia.

More reading

• Almost ready to retire? I’d buy cheap ASX dividend shares for income
• New investor? I’d buy these ASX shares for $10k in annual passive income
• Why your retirement income may take a hit — and what to do about it
• With its 7% yield, is this recovering ASX 200 stock a passive income earner’s dream?

Motley Fool contributor Sebastian Bowen 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.

The ANZ Group Holdings Ltd (ASX: ANZ) share price will be one to watch on Tuesday.

That’s because the banking giant has become the latest big four member to release its half-year results this morning.

Let’s now take a look at what the bank reported.

ANZ share price on watch following results release

• Statutory profit after tax down 4% half on half to $3,407 million
• Cash profit down 1% to $3,552 million
• Net interest margin down 2 basis points to 1.63%
• Partially franked interim dividend up 2.5% to 83 cents per share
• $2 billion on-market share buyback

What happened during the half?

For the six months ended 31 March, ANZ posted a cash profit of $3,552 million. This represents a 1% decline compared to the second half of FY 2023.

The good news for shareholders is that this result is a touch ahead of the consensus estimate of $3,531 million.

The key driver of its result was the Institutional business, which reported a 12% lift in cash profit to $1,522 million. This reflects a 27% increase in Markets income driven by higher customer activity and favourable trading conditions. Management notes that it was the business’ strongest first half performance since FY 2017. It also highlights that international profit was up 19%, which it believes demonstrates the benefit of its globally diversified business.

Also delivering growth was the New Zealand business, which saw its cash profit increase 2% to NZ$852 million. This reflects moderate balance sheet growth with lending up 1% and deposits up 2%, despite challenging economic conditions.

The Australia Commercial business had a soft half, reporting a 5% decline in cash profit to $665 million. This was despite strong balance sheet growth with lending up 4% and deposits up 3%.

But the main drag on its profits was the Australia Retail business. It posted a 9% decline in cash profit to $794 million for the half. Management advised that this was despite delivering above system home loan growth with pricing above cost of capital.

Dividend increase and share buyback

ANZ’s softer earnings didn’t stop its board from increasing its dividend by 2 cents or 2.5% to 83 cents per share. As with its final dividend, this interim dividend will be partially franked (65%).

This dividend was also ahead of the consensus estimate of 81 cents per share.

But the returns don’t stop there. Following in the footsteps of Westpac Banking Corp (ASX: WBC), ANZ has declared a $2 billion on-market share buyback this morning. This is part of its capital management plan. The bank advised that it reflects its strong capital position and the benefits of the partial sale of its share in AmBank.

This means it was three for three for ANZ, with analysts at Goldman Sachs only forecasting a $1.5 billion share buyback. This could bode well for the ANZ share price on Tuesday.

Management commentary

ANZ CEO, Shayne Elliott, was pleased with the half. He said:

This half’s strong performance is a direct consequence of peer-leading diversification as well as our disciplined focus on productivity and delivery. Coming off a record 2023, each division delivered for the Group and we’ve made good progress on the things we said we would: preparing for the integration of Suncorp Bank, growing ANZ Plus, leveraging our Institutional processing platforms, and further driving productivity.

Commenting on the bank’s outlook, Elliott appears cautiously optimistic. He adds:

Both the domestic and international environments are expected to remain challenging across the remainder of the year. The Australian and New Zealand economies are likely to remain subdued, while geopolitical tensions, electoral uncertainty and the introduction of interventionist trade and industry policies will continue internationally.

Despite these conditions, we are well positioned with the diversity of our businesses, prudent management, and the strength of our customers holding us in good stead. In fact, our work to build a well-managed, de-risked and diversified bank, coupled with our unique international presence, means we are well placed to succeed in this environment.

The ANZ share price is up 21% over the last 12 months.

The post ANZ share price on watch amid first-half earnings beat and $2b buyback appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Brokers say these ASX dividend stocks are buys
• Own ANZ shares? Here’s your first-half results preview
• Here’s how I’d aim for a tonne of passive income from $20,000 in an ASX share portfolio
• An ASX dividend giant I’d buy over ANZ shares for 2024

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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.