Category: Stock Market

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record another decent gain. At the time of writing, the benchmark index is up 0.5% to 7,654.7 points.

Four ASX share that have failed to follow the market’s lead are listed below. Here’s why they are falling:

Alliance Aviation Services Ltd (ASX: AQZ)

The Alliance Aviation share price is down 12% to $2.93. This follows the release of the aviation services company’s half year results. Alliance reported statutory profit before tax of $37.7 million, which was an increase of 296% year on year. Overshadowing this was the company’s growing debt. Its net debt has increased to $244.6 million, which is more than half its market capitalisation. It notes that it “is at an inflection point when viewed using the scope of an auditor,” which has noted an “Emphasis of Matter.”

Platinum Asset Management Ltd (ASX: PTM)

The Platinum share price is down over 6% to $1.07. This has been driven by the release of the fund manager’s funds under management (FUM) update for January. According to the release, Platinum reported FUM of $15,190 million, which was down from $15,447 million at the end of December. This was partly caused by net outflows of approximately $166 million for the month.

REA Group Ltd (ASX: REA)

The REA share price is down 3.5% to $177.49. This morning, this property listings company released its first half results and revealed revenue growth of 18% and profit growth of 22%. While this was ahead of expectations, its outlook commentary appears to have disappointed. This saw the company increase its cost guidance for FY 2024.

Santos Ltd (ASX: STO)

The Santos share price is down over 1% to $7.32. Investors have been selling this energy producer’s shares over the last couple of sessions after its merger talks with Woodside Energy Group Ltd (ASX: WDS) concluded without a deal being reached.

The post Why Alliance Aviation, Platinum, REA, and Santos shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• REA share price tumbles despite 22% profit jump
• 5 things to watch on the ASX 200 on Thursday
• Santos shares incinerate 8% as Woodside walks away
• Why CSR, Janison, Myer, and Santos shares are tumbling today
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended REA Group. The Motley Fool Australia has recommended Alliance Aviation Services and REA 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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The team at Morgans has been busy picking out its best ASX 200 share ideas for February.

The first two ASX 200 shares we looked at can be found here. Read on for two more picks:

Mineral Resources Ltd (ASX: MIN)

The broker remains positive on this beaten down ASX 200 mining and mining services share.

It believes it is well-positioned to handle lower lithium prices thanks to the diversity of its operations. In addition, it highlights its strong organic growth potential. Morgans said:

MIN is a founder-led business and top tier miner and crusher that has grown consistently despite barely issuing a share over the last decade. Also helping our investment view is that MIN’s diversification leaves it far more capable of tolerating volatility in lithium markets than its peers in the sector. We see MIN’s lithium / iron ore market exposures as an ideal combination to benefit from the China gradual recover. We also see MIN as well placed to grow into its valuation, even if we see unexpected metal price volatility, given the magnitude of organic growth in the pipeline.

Its analysts have an add rating and lofty $72.00 price target on Mineral Resources’ shares.

QBE Insurance Group Ltd (ASX: QBE)

Morgans is a big fan of this insurance giant and sees it as an ASX 200 share to buy.

Its positive view is based on its expectation for premium increases and cost reductions to drive solid earnings growth over the coming years. In addition, it highlights the company’s cheap valuation. It said:

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on 8x FY24F PE.

Morgans has an add rating and $17.56 price target on QBE’s shares. It also expects a very generous 6%+ dividend yield in FY 2024.

The post Morgans names more of the best ASX 200 shares to buy in February appeared first on The Motley Fool Australia.

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More reading

• 7 ASX lithium shares going gangbusters today
• These 3 ASX 200 shares just got some big broker upgrades!
• The ASX dividend dream: 18% returns to fuel your income goals
• Why Goldman Sachs thinks QBE shares are a top buy
• Why Credit Corp, Playside, QBE, and Skycity shares are pushing higher 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.

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Cettire Ltd (ASX: CTT) shares caught the eye of investors on Wednesday.

The online luxury products retailer’s shares rocketed higher after it delivered a very strong half-year result.

As a reminder, for the six months ended 31 December, the small cap ASX share reported a 90% lift in gross revenue to $460.5 million and a 56% lift in EBITDA to $26.1 million.

This was driven by a combination of higher repeat customers, a 4% lift in average order value, and an 83% increase in active customers to 576,000.

Can this small cap ASX share keep rising?

The team at Bell Potter has been looking over the result and was very impressed. It commented:

Cettire (CTT) reported their 1H24 result and sales revenue of $354m (+89% on pcp) & Adjusted EBITDA of $26m were solid beats to BPe. The 2H24 has commenced strongly with January gross revenue +80% as the company noted a healthy demand environment across its geographies and EBITDA profitability maintained. The cash position of $99m was also a beat to BPe $74m. CTT flagged exploring of capital management initiatives given the strong balance sheet at present.

In light of this, the broker has responded by retaining its buy rating and lifting its price target on the small cap ASX share by 20% to $4.80.

Based on the latest Cettire share price, this implies potential upside of 14.5% for investors over the next 12 months. Bell Potter adds:

We think CTT’s ability to outperform their peer group far outweighs others given the ~0.9% market share and further supported by the current consolidation the luxury ecommerce market. We also view CTT’s current EBITDA margins ahead of other ecommerce players with minimum risk associated with the drop-ship inventory model. We retain our BUY recommendation.

Cettire’s shares are now up 135% over the last 12 months.

The post Bell Potter says this rocketing small cap ASX share can keep climbing appeared first on The Motley Fool Australia.

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More reading

• Why Cettire, Dexus Industria, Pilbara Minerals, and Zip shares are jumping today
• Cettire share price rockets 40% on ‘exceptional result’
• 2 ASX growth stocks that could turn $10,000 into $30,000 by 2030
• $20,000 in savings? Here’s how I’d try to turn that into $1,463 a month of passive income
• Buy these ASX growth shares for market-beating returns

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 Cettire. 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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2023 was a pretty special year for Ampol Ltd (ASX: ALD) shares and the investors who owned them. For one, the year just gone saw this ASX 200 energy share rise by a rosy 27.8% – a gain that would delight any investor.

But Ampol shares shone on the income front as well. The company doled out a record level of dividend cash over 2023. The March final dividend of $1.05 per share, fully franked, was a huge increase over 2022’s corresponding 41 cents per share payment.

It was the opposite for the company’s September interim dividend though. Ampol paid out 95 cents per share (also fully franked) back in September, which was a drop from the $1.20 per share investors bagged at the same time in 2022.

Even so, Ampol’s ordinary dividend totalled $2 per share over 2023, which was a big increase on 2022’s total of $1.61. And we haven’t even got to the special dividend. Yep, Ampol shares dispatched a special cash dividend in March 2023 as well.

This payout was worth another fully franked 50 cents per share, bringing the company’s total payouts to $2.50. Both the $2 in ordinary dividend and the $2.50 in total dividends are records for Ampol in terms of passive income for shareholders.

Combined, those payments give the Ampol share price a trailing dividend yield of 6.78%. That grosses up to an impressive 9.69% yield with the value of those full franking credits.

However, these payments all reflect the past. As with any ASX dividend share, investors cannot just assume that this yield will hold over the coming 12 months. But should they? Let’s discuss whether Ampol will continue to be the divided beast it was in 2023.

Will Ampol shares shower investors with dividends again in 2024?

Well, it seems unlikely that Ampol will treat investors to the same stunning dividend in 2024 as it did in 2023.

Why? Well, the company’s special dividend that so dramatically boosted shareholder income last year appears to be something of a one-off.

At the time, Ampol told investors that this special dividend was a result of distributed “proceeds from asset sales to shareholders”. These asset sales presumably include the likes of Ampol’s NZ$522 million sale of Gull to Allegro Funds Pty Ltd in 2022.

So it’s probably safe to say investors shouldn’t be baking in an expectation of another $2.50 in dividends in 2024.

But that doesn’t mean Ampol shares won’t be generous dividend payers this year.

CommSec consensus dividend forecasts are currently predicting that Ampol will still be able to fund a total of $1.80 in dividends per share over 2024. That drops to $1.63 in 2025.

Of course, those are just projections. But if accurate, they would see the Ampol share price trading on forward yields of 4.88% and 4.42% today. Although that’s no 6.78% yield, it’s also certainly nothing to turn one’s nose up against.

The post Will Ampol shares pay another monster dividend in 2024? appeared first on The Motley Fool Australia.

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More reading

• 3 high-yield ASX shares for considerable passive income (7%-plus dividends!)
• The 3 best ASX dividend shares for 2024
• Why Ampol, APM, Liontown, and Wildcat shares are dropping today
• Guess which ASX All Ords shares are sinking after poor updates
• Here are the top 10 ASX 200 shares today

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.

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The All Ordinaries index is having a decent session on Thursday. At the time of writing, the index is up 0.3%.

And while a green day is always welcome, this gain pales in comparison to what some ASX All Ordinaries shares are recording today.

Here are three ASX shares up over 10%:

AGL Energy Limited (ASX: AGL)

The AGL share price is currently up over 12% to $8.95. Investors have been snapping up the energy giant’s shares today in response to a very strong half-year update. The company reported a 20% decline in revenue to $6,183 million but a 358.6% increase in underlying profit after tax to $399 million. This strong profit growth was driven partly by higher wholesale electricity pricing from prior periods being reflected in pricing outcomes and contract positions. This allowed the company to increase its interim dividend by 225% to 26 cents per share.

Hutchison Telecommunications (Aus) Ltd (ASX: HTA)

The Hutchison Telecommunications share price is up a sizeable 12% to 2.8 cents today. Interestingly, this is despite there being no news out of the ASX All Ordinaries share this morning. Though, it is worth noting that the company’s shares are somewhat illiquid and only a small volume has been traded so far today.

Syrah Resources Ltd (ASX: SYR)

The Syrah share price is 12% to 50.5 cents. While there has been no news out of this graphite producer either, it certainly isn’t illiquid. A lot of shares have been changing hands today as investors continue to flood back into beaten down battery materials shares. This latest gain means that Syrah’s shares are now up by an impressive 29% since this time last week. Though, that still doesn’t change much on a 12-month basis. Over that period, the company’s shares are down approximately 75%.

The post 3 ASX All Ordinaries shares rocketing over 10% today appeared first on The Motley Fool Australia.

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More reading

• AGL share price rockets 15% after half-year profit surge
• 5 things to watch on the ASX 200 on Thursday
• These are the 10 most shorted ASX shares
• Why AGL, Arcadium Lithium, Chalice Mining, and Nickel Industries shares are falling
• Is the AGL share price a buy before its half-year results drop?

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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Owning BHP Group Ltd (ASX: BHP) stock means having a small piece of Australia’s biggest company. There are a number of things investors should know about it.

BHP currently has a market capitalisation of around $240 billion, compared to $191 billion for Commonwealth Bank of Australia (ASX: CBA).

Its market capitalisation is not the most important thing to know about the ASX mining share. I’d suggest it’s important to know the following three things.

The iron ore earnings are cyclical

Humans seem to have a habit of assuming that what’s happening in the short term will continue for a long time. Sometimes that’s correct. But it’s important to recognise that some things are likely not to continue forever, particularly when they have a history of being cyclical.

Iron ore supply and demand is definitely one of those things I’d call cyclical. Most of the world’s iron ore is bought by China – sometimes demand is strong from the Asian superpower and sometimes not.

The iron ore price is currently around US$130 per tonne, but it has been under US$90 per tonne a couple of times in the 2020s so far. While BHP and other ASX iron ore shares are able to make big returns right now, thanks to growing demand in China for things like (electric) vehicles, the Chinese property market is currently reportedly weak.

It’s important not to assume that the iron ore price will stay at U$130 per tonne for years or even months.

At the moment, the estimate on Commsec suggests BHP could generate earnings per share (EPS) of $4.10, putting the BHP stock price at 11 times FY24’s estimated earnings.

BHP is a world leader

While the market capitalisation doesn’t necessarily do much to help the company make more profit, its enormous operating scale does help.

It’s one of the biggest mining businesses in the world and one of the lowest-cost miners globally.

In the ‘bad’ times, being a very low-cost operator means that it can continue making a profit even if conditions are bleak. In the good times, it means it can make exceptional profits and returns.

When the business is making good profits it can pay very pleasing dividends. The company currently has a minimum dividend payout ratio of 50%. For FY24, this could translate into a grossed-up dividend yield of 6.9% according to the estimate on Commsec.  

It’s actively diversifying towards greener commodities

BHP is best known for being an iron ore miner, but the company is working on growing its non-iron exposure and earnings.

For example, it recently acquired OZ Minerals which increased its exposure to copper.

It’s also working on a large potash project in Canada called Jansen. Potash is seen as a greener fertiliser, which could be helpful in a decarbonising world. It’s expected to earn an attractive earnings before interest, tax, depreciation and amortisation (EBITDA) margin and have a long economic life.

The world’s commodity demand changes as years go by, so having a greener focus could be increasingly important for BHP stock.

The post 3 things about BHP stock every smart investor knows appeared first on The Motley Fool Australia.

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More reading

• 7 must-see results this ASX reporting season before buying or selling
• Which major ASX mining share will pay the biggest dividend this year?
• Are investors underestimating ASX iron ore big-wigs this earnings season?
• Why is the BHP share price starting the week with a whimper?
• Buy ANZ and this ASX dividend share

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 Transurban Group (ASX: TCL) share price is edging higher on Thursday.

Shares in the S&P/ASX 200 Index (ASX: XJO) toll road developer and operator closed yesterday trading for $13.32. In morning trade on Thursday, shares are swapping hands for $13.33, up 0.1%.

For some context, the ASX 200 is up 0.3% at this same time.

This comes following the release of Transurban’s half-year financial results for the six months ending 31 December 1H FY 2024.

Here are the highlights.

Transurban share price gains on revenue increase

• Average Daily Traffic (ADT) increased 2.1% year on year to 2.5 million trips
• Proportional toll revenue increased 6.3% from 1H FY 2023 to $1.76 billion
• Proportional earnings before interest, taxes, depreciation and amortisation (EBITDA) came in at $1.33 billion
• Interim unfranked dividend of 30 cents per share, up 13% from the FY 2023 interim dividend

What else happened during the half year?

Transurban noted that the 2.1% increase in traffic over the half year was driven by growth in all its operational regions, along with the opening of new assets.

Sydney’s Rozelle Interchange opened to vehicles in November. The company said the opening of the interchange completed the final piece of WestConnex.

The Transurban share price is in the green this morning, with the company noting that it managed to keep its operational cost growth at 1.7%. That ran below inflation, meaning that in real terms costs fell.

As at 31 December, Transurban had around $3.4 billion in corporate liquidity. 94.6% of its debt book was hedged.

What did Transurban management say?

Commenting on the update seeing the Transurban share price in the green today, CEO Michelle Jablko said the solid traffic result “combined with disciplined operational and financial cost management, has underpinned the financial performance seen in the first half of FY24”.

Jablko added:

Traffic in Brisbane has continued to grow, well supported by net migration. North America saw improved traffic performance, benefitting from return to office trends. Higher congestion and the time savings offered to our customers resulted in increased average toll prices, further complemented by additional access points opening on the Fredericksburg Extension.

She said that during the half year the company had been working with Google “to provide greater transparency on Google Maps in Australia, further empowering our customers to make informed travel choices”.

What’s next for Transurban?

Looking at what could impact the Transurban share price in the months ahead, the company maintained its FY 2024 dividend guidance at 62 cents per share. That’s up 7% from the full-year payout in FY 2023.

Transurban expects the dividend to include around 4 cents per share from WestConnex cash, which was previously held during construction.

“Longer term, we are well-positioned to deliver disciplined growth through existing opportunities, supporting the significant population growth that is forecast in key markets and emerging mobility trends,” Jablko said.

Transurban share price snapshot

The Transurban share price is down 5% since this time last year.

Shares in the ASX 200 toll road operator are up 13% since the recent lows on 31 October.

The post Transurban share price in the green amid 13% dividend boost appeared first on The Motley Fool Australia.

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More reading

• These ASX dividend stocks offer 20%+ total returns
• Falling yields? I’d buy these ASX dividend beasts for a beefed-up income in 2024
• Brokers say these ASX 200 dividend shares are buys
• 3 world-class ASX retirement shares to buy now
• Retirees: 2 Top ASX dividend shares I’d buy now for passive income in 2024

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 positions in and has recommended Transurban 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.

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Alliance Nickel Ltd (ASX: AXN) shares are on fire on Thursday.

In morning trade, the ASX mining stock is up a remarkable 83% to 5.5 cents.

Why is this ASX mining stock rocketing?

Investors have been scrambling to get hold of the nickel and critical minerals development company’s shares after it made a major announcement.

According to the release, the company has signed a non-binding term sheet with Samsung SDI for the future offtake of battery grade nickel and cobalt sulphate products from the NiWest Nickel-Cobalt Project in Western Australia.

Korea-based Samsung SDI is a world-leading battery and electronic material manufacturer aiming to redefine the worlds of electric vehicles, energy storage systems, and IT devices.

Subject to final negotiations of the definitive terms and conditions and satisfaction of customary conditions, it will enter into a binding offtake agreement with the ASX mining stock for an initial period of six years.

In addition, it was revealed that Samsung SDI and Alliance Nickel will discuss a potential acquisition by Samsung SDI of an equity interest in a project company to be formed by the latter that will hold the NiWest Project.

Management notes that this approach is consistent with its commercial strategy of aligning offtake agreements and project funding.

‘Delighted’

The ASX mining stock’s managing director and CEO, Paul Kopejtka, was delighted with the news. He said:

We are delighted to introduce Samsung SDI as a new potential long term strategic partner in the NiWest Project, particularly given the current challenging market conditions facing the critical minerals sector.

The term sheet is further validation of the credentials of the NiWest Project, its strategic significance to Tier-one automakers and battery manufacturers and the importance of the supply of specialty materials that comply with the US Inflation Reduction Act. Samsung SDI has an existing business relationship with our strategic partner and cornerstone investor Stellantis N.V. and we look forward to building a strong partnership as we move towards first production from NiWest.

The post Guess which ASX mining stock is surging 80% on deal with Samsung appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX 200 stock is jumping on a 95% profit surge
• REA share price tumbles despite 22% profit jump
• AGL share price rockets 15% after half-year profit surge
• Cochlear shares jump 6% on guidance upgrade
• A boring ASX All Ords share offering an exciting 40% return

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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News Corporation (ASX: NWS) shares are popping on Thursday.

In morning trade, the ASX 200 media stock is up over 9% to a 52-week high of $43.10.

Why is this ASX 200 stock jumping?

Investors have been buying the media giant’s shares after it released its second quarter results. Here’s a summary of what the company reported:

• Quarterly revenue up 3% to US$2.59 billion
• Total EBITDA was up 15.6% to US$473 million
• Net income jumped 95% to US$183 million
• Adjusted earnings per share up 86% to 26 US cents

What happened during the quarter?

For the three months ended 31 December, the ASX 200 stock reported a 3% lift in revenue to US$2.59 billion.

This was driven primarily by higher Australian residential revenues at REA Group Ltd (ASX: REA), continued strong growth in the Dow Jones professional information business, increased digital sales, and improved returns due to better sell through of Book Publishing inventory.

Offsetting some of this growth were lower revenues at Move due to continued challenging housing market conditions in the U.S. and lower advertising revenues at the News Media segment.

On the bottom line, the ASX 200 stock posted a 95% jump in net income to US$183 million. This reflects lower costs at the Book Publishing segment, gross cost savings, and improved equity losses of affiliates.

Management commentary

News Corp chief executive, Robert Thomson, was pleased with the quarter. He said:

News Corp again saw growth in both revenue and profitability this quarter as we continue to realize the collective benefit of our strategic shift to digital and subscription revenues, and away from sometimes volatile advertising revenues. Our net income rose to $183 million from $94 million in the same quarter last year and our reported EPS was 27 cents, compared to 12 cents for the same period last year, driven by a 16% surge in Total Segment EBITDA. We had particularly robust results across the three core pillars of our business – Dow Jones, Book Publishing and Digital Real Estate Services – and believe there are strong prospects for further growth as difficult macro conditions ease in some of our markets.

Thomson also spoke about the rise of generative AI and the role that News Corp can play in it. He adds:

We expect to be a core content provider for Generative AI companies, who need the highest quality, timely content to ensure the relevance and accuracy of their products. We patently prefer negotiation to litigation, courtship to courtrooms. But let’s be clear, in my view those who repurpose without approval are stealing and are undermining the very act of creativity – counterfeiting is not creating, and the AI world is replete with content counterfeiters.

The post Guess which ASX 200 stock is jumping on a 95% profit surge appeared first on The Motley Fool Australia.

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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 REA Group. The Motley Fool Australia has recommended REA 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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The REA Group Ltd (ASX: REA) share price is under pressure on Thursday.

In morning trade, the property listings company’s shares are down 4% to $176.17.

Investors have been X the company’s shares after it released its half-year results.

REA share price tumbles on half-year results

For the six months ended 31 December, REA reported:

• Revenue up 18% to $726 million
• Operating expenses up 11% $287 million
• EBITDA (excluding associates) up 22% to $439 million
• Net profit up 22% to $250 million
• Fully franked Interim dividend up 16% to $0.87 per share

What happened during the half?

REA had another strong half, delivering an 18% increase in revenue to $726 million for the period. This was driven by a 17% increase in Australia revenue to $682 million and a 21% lift in India revenue to $44 million.

In respect to its local operations, the company revealed that its flagship realestate.com.au website continues to dominate its market.

Approximately 10.6 million people visited each month on average, with 52% exclusively using realestate.com.au. In addition, it had 126.1 million average monthly visits, with visitors spending 3.0 times longer on realestate.com.au each month on average compared to the nearest competitor.

This helped support listings growth of 4% for the half nationally, with Sydney and Melbourne listings increasing 19% and 18%, respectively.

Failing to hold up the REA share price today was news that the company delivered positive jaws during the half despite the inflationary environment. Positive jaws is the term used to describe revenue growth quicker than costs.

REA’s operating expenses were up 11% to $287 million for that half. This increase was driven by remuneration increases, growth in technology costs and higher revenue-related variable costs. Excluding the impact of the CampaignAgent acquisition, group and Australia operating costs increased by only 9%.

This ultimately led to REA’s EBITDA and net profit increasing by an impressive 22% during the half, which allowed its board to boost its dividend by 16% to 87 cents per share.

Management commentary

REA Group CEO, Owen Wilson, was rightfully pleased with the half. He commented:

REA has delivered an outstanding result driven by strong yield growth and the benefit of a more normalised listings environment. This resulted in a strong uptake of our premium products as customers sought to leverage our leading audience to maximise their campaigns in the strengthening market. REA India’s momentum also continued with price and customer growth and new premium depth products delivering strong revenue growth.

How does this compare to expectations?

Goldman Sachs was pleased with the half, noting that it came in ahead of expectations. It commented:

Sales/EBITDA/NPAT +18%/+23%/+22% vs. pcp to A$726mn/A$426mn/A$250mn, which were +0%/+2%/+2% vs. GSe, with EBITDA +2% vs. Visible Alpha Consensus Data (A$415mn). With Dec-23 listings flat, the 3% deferral drag in the half was greater than expected, but this was offset by stronger Commercial/Developer revenue growth (+11%).

Outlook

Management is feeling positive about the second half but acknowledges that it could be softer.

It advised that Residential Buy yield growth is anticipated to be lower for the second half, because the first half outperformance of Melbourne and Sydney listings is unlikely to continue for the entire period.

In addition, it has lifted its cost guidance for FY 2024. This could be partly why the REA share price is falling today.

The company advised that “group operating cost growth in the mid to high-teens is anticipated in FY24, with positive operating jaws targeted.”

Wilson concludes:

We are very pleased with our first half result. The confidence that interest rates are at or very near the peak, should see the healthy market conditions we are enjoying today continue throughout 2024. We will continue to invest in further personalisation and new experiences for our audience, new products that will deliver further value for our customers and the increasing demands of consumers around privacy and data security.

The REA share price remains up over 40% since this time last year.

The post REA share price tumbles despite 22% profit jump appeared first on The Motley Fool Australia.

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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 REA Group. The Motley Fool Australia has recommended REA 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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