Author: therawinformant

The Ardent Leisure Group Ltd (ASX: ALG) share price is on watch today after the theme park operator announced it had received financial assistance from the Queensland Government. The company’s Theme Parks division has received support under the Queensland Government’s COVID-19 Industry Support Package and Queensland Tourism Icons Program. What will these mean for the Ardent Leisure share price?

What does Ardent Leisure do? 

Ardent Leisure owns and operates leisure assets in Australia and the United States. It is behind the Dreamworld and Whitewater World theme parks and the Skypoint attraction in Queensland. It also operates Main Event, a portfolio of family entertainment assets in the US. Many of these assets were temporarily closed with the onset of the coronavirus pandemic. 

What type of support is Ardent Leisure receiving?

The Queensland Government has granted Ardent Leisure a financial assistance package totalling $69.9 million over three years. This consists of a secured loan of $66.9 million (including capitalised interest and fees) and a grant of $3 million which can be used to fund working capital and approved capital expenditure. 

Ardent Chairman, Gary Weiss, said, “The Queensland Government’s foresight in providing this financial assistance package will enable Ardent to reopen its iconic theme parks, continue to employ hundreds of people and, once the COVID-19 pandemic is behind us, continue to invest in future tourism infrastructure and create more local jobs.” 

Reopening of Ardent Leisure’s assets

Ardent Leisure reopened its Skypoint observation deck and climb last month. Now that financial assistance for the Theme Parks division has been secured, the company plans to reopen Dreamworld and Whitewater World by mid-September. Under COVID Safe plans approved by Queensland Health, Dreamworld and Whitewater World will each reopen at 50% of historical capacity. 

Main Event sale

In June, Ardent Leisure sold a 24.2% interest in the Main Event business to a private US investment firm, Redbird. Redbird has the option to acquire an additional 26.8% interest in the business at a future date. The sale will enhance the Main Event business’ liquidity as well as its capacity to invest in future growth. 

About the Ardent Leisure share price?

The company is due to release its full year results on 27 August which will reveal the impact of park closures. But while travel restrictions remain in place, visitor numbers to Ardent’s attractions are likely to remain low. The Ardent Leisure share price has recovered 200% from its March low of 11 cents but is still down more than 75% in year-to-date trading. The Ardent leisure share price has fallen just over 72% in the past twelve months.

More reading

• Village Roadshow locked in a capital raise as it secures new $70m facility
• Ardent Leisure share price surges 10% despite facing $4.5 million fine

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. 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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Insurance Australia Group Ltd (ASX: IAG) is one to watch this morning after the insurer’s full-year earnings announcement. The IAG share price could be on the move after the company reported a 49.6% slump in underlying net profit after tax.

What did IAG announce today?

There will be no final dividend paid by Australia’s largest general insurance company. That means total FY20 distributions fell 68.8% from FY19 with just the 10 cents per share interim dividend for shareholders.

IAG reported a 5.2% increase in revenue to $18,576 million for the year ended 30 June 2020.

Net profit from continuing operations fell 49.6% to $439 million while net profit attributable to parent company shareholders slumped 59.6% to $435 million.

Gross written premium (GWP) climbed 1.1% higher to $12,125 million. Insurance profit slumped 39.5% as IAG’s underlying and reported insurance margin fell by 60 basis points (bps) and 680 bps to 16.0% and 10.1%, respectively.

That 10.1% reported margin is below the company’s revised guidance which makes the IAG share price worth watching today.

IAG’s common equity tier 1 (CET1) multiple fell 8 bps to 1.23 as diluted cash earnings per share (EPS) plummeted 68.8% to 12.12 cents.

The IAG share price is currently trading at $5.07 per share. That means a 12.12 EPS would translate to a price to earnings (P/E) ratio of 41.8 with a dividend yield of 2.4%.

What about COVID-19?

IAG did provide an update on the impact of the coronavirus pandemic on its earnings.

The low single-digit GWP growth was attributed to a modest negative COVID-19 effect. IAG reported some Australian commercial portfolios were underperforming despite personal and New Zealand commercial lines performing well.

The Aussie insurer has also increased its provision for customer refunds to $141 million after-tax for the full year.

The COVID-19 impact on underwriting profit was largely offset during the second half of the year. IAG reported lower motor claim frequency while business interruption and landlord claims weighed on profits.

Foolish takeaway

The IAG share price could be on the move this morning following the full-year update. Shares in the Aussie insurer are trading down 34.4% this year while the S&P/ASX 200 Index (ASX: XJO) has fallen 9.7%.

A near 50% fall in underlying net profit doesn’t read well. However, I don’t think IAG will be the last ASX company to report a heavy earnings hit this month.

More reading

• Magellan share price falls despite strong July inflows
• The next ASX stocks to beat expectations during this reporting season
• Is there a bull trap ahead for ASX shares like Webjet?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.7%, ResMed result disappoints

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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 August reporting season has only kicked off, but we’ve already seen some significant share price action. These S&P/ASX 200 Index (Index:^AXJO) stocks could be next to deliver positive surprises in the coming weeks.

Some of the reporting season heroes so far include the Nick Scali Limited (ASX: NCK) share price, which hit a record high yesterday of $8.80, and the Centuria Office REIT (ASX: COF) share price.

But Goldman Sachs reckons there are several other ASX stocks that are likely to beat expectations when they turn in their profit results.

Heading for the clouds

One of the standouts is the Nextdc Ltd (ASX: NXT) share price. Mind you, it isn’t only Goldman Sachs that’s a believer. Several other brokers have highlighted the data centre operator as a potential reporting season winner.

“We expect NEXTDC to have a very strong operating result with record contracted MW, underpinned by 2×6 MW Melbourne contracts,” said Goldman Sachs.

“We see upside risk to market expectations, given accelerating Enterprise demand (which are higher yielding vs. hyperscale) and ongoing growth in interconnection revenues.”

Consensus earnings upgrade candidate

Another potential profit season hero in the making is the Seven Group Holdings Ltd (ASX: SVW) share price.

I hold the stock and share Goldman’s positive sentiment.  It believes the market is underestimating the underlying strength of the heavy construction equipment rental group.

The group’s WesTrac division (Caterpillar dealer) is benefiting from increased mining activity brought on by the high iron ore price. It’s also winning market share from rival Komatsu.

Its Coats Hire business should also be holding up due to its exposure to infrastructure construction, despite Victoria’s stage four COVID-19 shutdown.

Low bar to jump over

Meanwhile, the BlueScope Steel Limited (ASX: BSL) share price could come out tops this month as expectations are set low.

This is another stock that I think is undervalued. The BSL share price is lagging the market with a 22% fall since the start of 2020.

“BSL has pre-guided their result, so outlook commentary and capital management is key,” said the broker.

“With the market already expecting downbeat (or lack of) 1H21 guidance or forward-looking commentary, we see upside risk from neutral-positive guidance.”

The steel products manufacturer’s balance sheet is also strong, which means it can sustain its dividend and is unlikely to announce a surprise cap raise.

That last point already makes the stock unusual in this coronavirus-stricken world.

More reading

• Is there a bull trap ahead for ASX shares like Webjet?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.7%, ResMed result disappoints
• Village Roadshow locked in a capital raise as it secures new $70m facility
• Harvey Norman share price gets a helping hand from competitor’s rosy outlook

Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited and Seven Group Holdings Limited. Connect with me on Twitter @brenlau.

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 value of Scentre Group (ASX: SCG) has plummeted lower this year with the Scentre share price falling 50%.

The Aussie real estate investment trust (REIT) has been aggressively sold down by investors spooked by the coronavirus pandemic.

Scentre owns and operates Westfield shopping centres across Australia and New Zealand. That means tightening restrictions have hurt foot traffic and therefore earnings in 2020.

Scentre is set to announce its half-year result on 25 August. Here’s where I think the Scentre share price will end up in August.

Why the Scentre share price has been smashed

Even experienced REIT investors are struggling to value retail real estate right now. That’s been reflected in the heavy Scentre share price losses this year.

With foot traffic plummeting and many bricks and mortar stores forced to close, the operating environment looks difficult.

Aside from supermarkets like Coles Group Ltd (ASX: COL), in-store sales for many retailers have been tough.

It’s also hard to see if and when large-scale shopping centres will be back in vogue. Restrictions look set to stay for the near future which could hurt tenants and rent collection.

However, it’s not all bad news. One thing I do like about Scentre is the high-quality real estate assets in its portfolio.

That means despite some short-term headwinds, I still think the long-term outlook could be good for shareholders.

What can we expect in Scentre’s half-year earnings?

I don’t have high expectations for Scentre’s half-year earnings. However, I think the 50% fall in the Scentre share price shows that most investors are in the same boat.

I would expect the government’s JobKeeper stimulus to help in the short term. JobKeeper has helped businesses keep the lights on and meet their obligations this year.

A new Mandatory Code of Conduct for commercial leases, however, could be a drag on earnings. That new mandate has provided relief to tenants but won’t help Scentre’s bottom line in 1H20.

Where will the Scentre share price close in August?

This is a tough one. I think much of the expected earnings downturn is already reflected in the Scentre share price.

I think we could see Scentre shares climb higher in August. Stronger than expected earnings could provide a boost despite the medium-term outlook remaining tough.

More reading

• ASX 200 up 0.6%: ResMed & Scentre tumble, big four banks rise
• Why Advance NanoTek, ELMO Software, ResMed, & Scentre shares are dropping lower
• Scentre share price falls 3% following results update
• Is the National Storage share price a buy in August?
• Why I would add Coles and this ASX share to my retirement portfolio

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Scentre Group. 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 Redbubble Ltd (ASX: RBL) share price has been a very strong performer over the last few months.

After an incredibly underwhelming performance during the first half of FY 2020, the pandemic has shifted spending online and given the ecommerce company a much-needed boost.

So much so, the Redbubble share price hit a record high of $3.07 on Thursday.

The good news for shareholders is that its shares could continue this positive form on Friday after the release of a positive business update this morning.

What did Redbubble announce?

According to the release, the leading global marketplace operator for independent artists recorded marketplace revenue of $122 million during the fourth quarter of FY 2020. This represents a 107% (97% in constant currency) increase on the prior corresponding period.

This strong finish to the financial year led to Redbubble recording full year marketplace revenue of $368 million. This was a 43% (36% in constant currency) increase on FY 2019’s marketplace revenue.

Pleasingly, management revealed that its strong sales growth has continued during the early stages of FY 2021.

Redbubble’s marketplace revenue was $49 million in July, up a massive 132% (133% in constant currency) on the prior corresponding period.

Management advised that a good portion of this growth has been driven by a spike in demand for face masks on its platform during the pandemic. 

It commented: “Topline trends seen in 4Q continued into FY2021, propelling both of RB Group’s marketplaces. The increasing shift to online shopping resulted in YoY growth across all core geographies and product categories. Face masks have contributed $26 million of Marketplace Revenue from launch at the end of April until 31 July.”

No earnings update for FY 2020 was provided with this announcement. This will be released to the market with its full set of financial results on 21 August 2020.

More reading

• Why the Redbubble share price is trading higher today
• Why 5G Networks and these ASX shares just hit record highs
• These ASX eCommerce shares are riding the online shopping wave
• The Redbubble share price is up almost 500% from its low: Is it too late to invest?
• 2 ASX tech shares with stellar growth prospects

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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Are we seeing a bull trap for beaten down ASX shares?

Yesterday was a good day for some of this year’s biggest losers. The oOh!Media Ltd (ASX: OML) share price led the S&P/ASX 200 Index (ASX: XJO) winners with an 8.3% gain.

Similarly, Corporate Travel Management Ltd (ASX: CTD) and Webjet Limited (ASX: WEB) shares climbed 6.9% and 6.0%, respectively.

But it’s not all good news in the market right now. Here’s why I’d be wary of buying shares in volatile industries based on recent gains.

What is a bull trap?

A bull trap is a false signal that occurs in share markets. It’s also often referred to as a ‘dead cat bounce’ where a beaten-down share climbs before falling back down.

Effectively, investors see a beaten-down ASX share like Webjet climbing higher. Thinking this is the time to buy cheaply, investors pile in and see some gains. However, there is often a trigger like an announcement or more data that shows it was just a false positive, and the ASX share falls lower again.

Why a bull trap could be coming for some ASX shares

The ASX 200 benchmark index has largely moved sideways since recovering from the March bear market. However, investors continue to be flighty and worried about the impacts of the coronavirus pandemic.

On the one hand, everyone knows we have immense job losses on the way. There are also concerns for high-profile industries like hospitality, travel, outdoor media and the arts.

Interestingly, the Webjet share price has rocketed 14.5% higher since Monday. ooh!Media shares have climbed 9.9% while the Corporate Travel share price is up 11.9% this week.

That’s despite Victoria reaching stage 4 lockdowns and a precarious situation remaining in many states across Australia.

That could mean we’re at the beginning of a classic bull trap. As investors cling to some optimism, particularly amid the August earnings season, some of these beaten-down ASX shares may climb.

However, this probably isn’t based on anything fundamental. I’d rather wait to see the August results and make a buy, hold or sell decision with more information in my hands.

Foolish takeaway

If you’re brave and willing to take some risks, now could be a chance to buy some ASX shares cheaply. However, I think I’ll be steering clear of some at-risk industries for the time being.

More reading

• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises 0.7%, ResMed result disappoints
• Village Roadshow locked in a capital raise as it secures new $70m facility
• Why the Corporate Travel Management share price is racing 7% higher today
• Deepening partnership with Telstra fails to excite the Dubber share price

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended oOh!Media Ltd. 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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Is the Newcrest Mining Limited (ASX: NCM) share price a good buy this month? Shares in the Aussie gold miner are up 23.4% this year as global gold prices continue to climb.

With Newcrest set to report its full-year result next Friday, what can we expect from the Newcrest share price for the rest of the year?

Why the Newcrest share price has rocketed higher

Newcrest is one of the world’s largest gold mining companies. The company is an unhedged gold producer that generates strong operating cash flow.

In fact, Newcrest’s FY19 free cash flow surged 34% higher to $804 million with record gold and copper production numbers.

The company also had its lowest-ever annual all-in sustaining cost (AISC) of $738 per ounce. I think that bodes well for the company’s FY20 result next week.

The Newcrest share price has already climbed higher but I think we could see a surprise earnings performance.

Global gold prices have smashed previous all-time highs and continue to climb past US$2,000 per ounce. With the coronavirus pandemic causing a spike in demand for gold, that means Q4 earnings could be particularly strong.

If Newcrest can keep its AISC low this year with a higher realised price, that could spark a share price rally in August.

Is August the time to buy?

ASX gold shares like Newcrest have had a strong run in 2020. There’s always the risk of a disappointing earnings result ruining that momentum.

However, I’m quietly confident about the Newcrest share price. I think the company’s unhedged nature could also help boost earnings given the rocketing gold prices.

The real question is whether or not the Aussie gold producer is a good value buy.

The company trades at a price-to-earnings (P/E) ratio of 36.1 which is cheaper than some of its peers. For instance, Saracen Mineral Holdings Limited (ASX: SAR) trades at a P/E of 44.4.

Foolish takeaway

If you want to invest in ASX gold shares, I think the Newcrest share price could be a good option.

Whether you’re keen on buying or not, I think the 14 August earnings result will be one to watch.

More reading

• 5 things to watch on the ASX 200 on Friday
• Expert warns that record-breaking gold price is facing painful correction
• Why this leading fundie likes the Newcrest share price
• Up 21% in a month, is the Northern Star share price a buy?
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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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