Category: Stock Market

QBE Insurance Group Ltd (ASX: QBE) shares have been in fine form over the last 12 months.

During this time, the insurance giant’s shares have stormed 22% higher.

This is almost triple the return of the ASX 200 index over the same period.

Can QBE shares keep rising?

The good news for investors is that it isn’t too late to invest according to analysts at Goldman Sachs.

According to a note, its analysts have retained their buy rating and $20.90 price target on the company’s shares.

Based on its current share price of $18.32, this implies potential upside of 14% for investors over the next 12 months.

In addition, the broker is forecasting dividend yields of 5%+ each year through to at least FY 2026. This boosts the total potential 12-month return to approximately 19%.

If this proves accurate, it would turn a $10,000 investment into approximately $11,900 if you reinvest the dividends.

Why is the broker bullish?

Goldman notes that the insurance giant has recently held a number of investor meetings. It was pleased with what management said, highlighting that it is confident in can deliver a combined operating ratio (COR) of 95% in North America by 2025. As a reminder, anything below 100% is profitable for insurers.

In light of this, the broker believes that there is upside risk to consensus COR estimates. It said:

In this context, we flag 1) Upside risk to FY25 consensus COR of 92.8% (VA) – we see <92.5% as possible reflecting improvement from North America non core + organic upside. 2) North America non core run off we think could support ~0.7% -1.2% improvement to Group COR alone. 3) Organic trends also suggest possible underlying COR expansion into FY25.

Goldman also highlights a number of other key items and reasons why it thinks QBE shares could re-rate higher from here. It adds:

Rate increases earning through FY25 versus moderating claims inflation expected to remain supportive into FY25 – 1Q24 Group rate was 7.3% versus inflation assumption of 5% for FY24. b) Reinsurance markets increasingly more positive with commentary from 1 June renewals suggest lower rates (particularly in upper layers) which are supportive of direct insurer margins and positive read into 2025. c) QBE’s 2024 perils allowance was rebased to an 80% probability of sufficiency (out of the last 10 years) perhaps suggesting less pressure into FY25 and perils growth more in line with book. Perils experience to date has been below expectations. d) All in, there appears to be strong COR tailwinds to offset moderating yield pressures which is supportive of ROE / Valuation into FY25. 4) Valuation comparison versus global peers also suggests upside for QBE across P/E and P/B particularly in context of strong ROE.

The post Why QBE shares could deliver huge returns for investors that buy them today 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 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.

The Steadfast Group Ltd (ASX: SDF) share price has dropped 8.9% over the past 12 months to close at $5.41 on Wednesday. The insurance broker’s shares have underperformed the S&P/ASX 200 Index (ASX: XJO), which is up 8% over the past year.

The following chart shows that the Steadfast share price has exhibited little volatility. Over the last 10 years, the maximum drop from the high price to the low has been 16%, except in March 2020 during the height of the COVID-19 pandemic.

While past share price movements don’t predict future trends, the resilient performance of the Steadfast share price seems to be supported by its strong fundamentals, in my view.

So, is this a buying opportunity for this consistent dividend payer?

Strong business fundamentals

Steadfast Group is Australia’s largest general insurance broker network, providing businesses and individuals with a broad range of insurance products and services. The company operates through a network of brokerages, offering risk management solutions and support to its members. Steadfast also has interests in underwriting agencies, giving it a diversified presence in the insurance industry.

Steadfast reported a robust set of numbers in its 1H FY24 results. Underlying revenue rose 19.4% to $790.4 million, and underlying earnings before interest, tax, and amortisation (EBITA) soared by 21.4% to $229 million. While acquisitions supported the growth during the reporting period, the organic growth was also strong at 13.4%.

Its underlying net profit after tax (NPAT) increased by 17.5% to $106 million, while statutory NPAT rose similarly by 18.5% to $100 million. On a per-share basis, underlying diluted earnings rose 12.2% to 10.2 cents per share (cps).

Steadfast’s pricing power and volume growth underscored the strong results, while the company attributes its acquisition strategies as key to success. Managing director & CEO Robert Kelly explained:

Once again, our underlying earnings growth for the half year was driven by sustained organic growth from higher prices from insurers and volume increases in the Group’s insurance broking and underwriting agencies, and continued delivery of our acquisition strategy.

Consistent with our growth strategy, Steadfast Group acquired Sure Insurance, a business that is complementary to the existing portfolio. This acquisition, together with our Trapped Capital acquisitions made during the half year, further enhances Steadfast Group as the largest general insurance broker network and the largest group of insurance underwriting agencies in Australasia.

Additionally, we are progressing well with the implementation of our US expansion strategy with the acquisition of ISU Group with its established and trusted network and experienced management team.

For the full year in FY24, management guides for a 22% growth in its underlying EBITA and 18% in NPAT at the midpoint of its estimated range. Underlying diluted EPS growth is forecast to grow between 11% and 16%.

Consistent dividend payer

Among ASX investors, Steadfast is known for its steady increase in dividends.

Encouraged by a 12.2% growth in its underlying EPS in its half-year FY24 results, the company raised its fully-franked dividend by 12.5% to 6.75 cps.

Since its initial public offering in 2013, the company has consistently increased its dividend payments from 4.5 cps in FY14 to 15.75 cps in the last 12 months to March 2024. All these years, the company maintained 100% franking on its dividends, offering tax benefits to its shareholders. Its payout ratios have also increased over time, hovering around 60% to 75% in recent years.

At the current share price, Steadfast shares offer a dividend yield of 2.9%.

How expensive are Steadfast shares now?

Steadfast shares are trading at 20x FY24’s estimated earnings, which is near the midpoint of its historical trading range of 13 to 25 times.

Its smaller competitor, AUB Group Ltd (ASX: AUB), is trading at a similar multiple with a price-to-earnings ratio (PER) of 20 times based on FY24 earnings estimates provided by S&P Capital IQ.

For comparison, NIB Holdings Limited (ASX: NHF) is trading at a PER of 16 on FY24 earnings estimates, noting nib is an insurance company, which is different from insurance brokers.

Foolish takeaway

While the Steadfast share price has been moving sideways, I think its business fundamentals remain strong.

Based on its historical trading range and compared to its smaller peer, AUB Group, its shares appear to be inexpensive to me. I think it’s a good candidate for any portfolio seeking stable growth.

The post Down 9% in a year, is it time to buy this ASX 200 dividend stock? appeared first on The Motley Fool Australia.

More reading

• Buy and hold these ASX dividend shares until 2034
• Guess which ASX 200 stock just boosted its dividend payout ratio
• Why QBE shares could deliver huge returns for investors that buy them today
• Woodside shares hit a multi-year low this week, should you buy?
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Kate Lee 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 positions in and has recommended Steadfast Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Woodside Energy Group Ltd (ASX: WDS) share price hit a 52-week low this week, dropping to $26.99 on Tuesday. It could be a contrarian buy when resource and cyclical businesses hit lows. The Woodside share price is down around 20% in the past year, as shown on the chart below.

It’s common for share prices of companies in sectors like iron ore or retail to be volatile over the years as investors react to what’s happening.

As reported by my colleague Bernd Struben, the Organization of the Petroleum Exporting Countries and its partners (OPEC+) will lift production in October, with current production cuts removed by June 2025. Higher supply could result in lower prices.

But, Struben also reported earlier this week that energy prices are rebounding, with the Brent crude oil price up to around US$82 per barrel (up from US$79.62 on Friday).  

Is the Woodside share price a buy?

Sometimes, the best time to buy a cyclical share is when there are numerous negatives which are expected to stick around the foreseeable future. It’s under those conditions where the share price can reach the most appealing low, making it the best time to invest.

The company is one of the region’s biggest oil and gas businesses, so its scale provides it with several benefits, including solid profit margins and a sturdy balance sheet.

I like the moves by the company to improve its balance sheet further. In the last few months, the company has completed the sale of a 10% stake in the Scarborough joint venture to LNG Japan for US$910 million, and it announced the sale of a 15.1% stake in the Scarborough joint venture to JERA for US$1.4 billion.

We can’t know what energy prices will do in the short term, but unlocking some of the value of its projects is wise, in my opinion. It gives the company more funding for existing projects such as Trion while also giving it a cash pile for future projects, acquisitions and/or shareholder returns.

Another recent positive for the business was that its Sangomar project achieved ‘first oil’, which will soon generate another stream of earnings for the company.

My verdict

With the lower Woodside share price, prospective investors can receive a larger dividend yield. The broker UBS currently projects that Woodside could pay an annual dividend per share of US$1.05, which translates into a grossed-up dividend yield of approximately 8%.

If investors are interested in Woodside shares, this could be a good time to consider investing because of its lower valuation, the high projected dividend yield and the first oil achievement at Sangomar. But, some investors may not like the company because of the fossil fuel element.

The post Woodside shares hit a multi-year low this week, should you buy? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy today
• Why Bapcor, Botanix, Judo Capital, and Woodside shares are rising today
• These 3 ASX 200 shares were just rerated by top brokers

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.

On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was out of form again and dropped into the red. The benchmark index fell 0.5% to 7,715.5 points.

Will the market be able to bounce back from this on Thursday? Here are five things to watch:

ASX 200 expected to jump

The Australian share market looks set to jump on Thursday following a strong night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 53 points or 0.7% higher this morning. In the United States, the Dow Jones was down 0.1%, but the S&P 500 rose 0.85% and the Nasdaq jumped 1.5%. The S&P 500 and Nasdaq indices both climbed to new record highs overnight.

Oil prices rise

ASX 200 energy shares including Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a good session after oil prices rebounded overnight. According to Bloomberg, the WTI crude oil price is up 0.85% to US$78.57 a barrel and the Brent crude oil price is up 0.8% to US$82.60 a barrel. Summer fuel demand optimism has given oil a boost this week.

US inflation report

Investors were celebrating on Wall Street overnight after US inflation came in softer than expected. According to CNBC, the consumer price index (CPI) showed no increase in May. This compares to expectations of a 0.1% increase according to economists surveyed by Dow Jones. Following the release of the CPI data, futures traders lifted the chances of the US Federal Reserve cutting interest rates in September. This would be the first move lower since the early days of the pandemic.

Gold price rises

It could be a positive session for ASX 200 gold miners such as Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) today after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 1.2% to US$2,353.9 an ounce. The precious metal rose after the US inflation report sparked hopes that interest rates could fall this year.

WiseTech rated as a hold

The WiseTech Global Ltd (ASX: WTC) share price could be almost fully valued according to analysts at Bell Potter. This morning, the broker has reaffirmed its hold rating on the logistics solutions company’s shares with an improved price target of $100.00. This implies just 3.2% upside from current levels. It said that the price target “is a modest premium to the share price so we maintain the HOLD. Potential catalysts for the stock include a beat in the FY24 result – most likely at EBITDA – and strong guidance for FY25 consistent with or ahead of consensus.”

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

More reading

• Woodside shares hit a multi-year low this week, should you buy?
• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy today
• Why Bapcor, Botanix, Judo Capital, and Woodside shares are rising today
• These 3 ASX 200 shares were just rerated by top brokers

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 WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Japanese share market has generated significant returns over the past year. The Betashares Japan-Currency Hedged ETF (ASX: HJPN) is an exciting investment to consider.

On the Tokyo Stock Exchange, we can find some of the leading Asian companies, including Toyota, Sony, Mitsubishi, Hitachi, Nintendo, Honda, Daikin Industries, Canon and Bridgestone.

I think there are a few good reasons to consider the HJPN ETF beyond just its past performance.

Diversification

The Japanese share market can provide exposure to under-represented sectors in the ASX share market.

Looking at the sector allocation, five industries have a weighting of more than 10% in the HJPN ETF: consumer discretionary (24.3%), industrials (23.4%), IT (17.9%), financials (10.4%), and healthcare (10.1%). Meanwhile, around half of the S&P/ASX 200 Index (ASX: XJO) is weighted to just two sectors, ASX bank shares and ASX mining shares.

Plenty of the leading Japanese businesses generate a “substantial portion” of their revenue outside of Japan, according to BetaShares, which is good underlying diversification of their earnings. A lot of the profit generated by large ASX blue-chip shares is generated within Australia (and New Zealand).

It’s currently invested in around 150 businesses, which is ample diversification in terms of holdings, in my opinion.

Improving situation for Japanese stocks

In the 12 months to 31 May 2024, the HJPN ETF delivered a net return of 37.47% and I think it could keep performing solidly. Remember, past performance is not a reliable indicator of future performance with this ASX ETF.

New rules and disclosures by the Tokyo Stock Exchange are targeting companies with “poor capital efficiency, asking them to disclose plans for how they will realise corporate value for shareholders”, according to investment outfit Alliance Trust.

Japan may be breaking from the shackles of its deflationary situation, which has affected its economy for decades. ‘Real’ wage growth – where wages rise faster than inflation – could keep deflation at bay.

Japan’s biggest union recently agreed to its first “significant” pay rise for its workers in 33 years.

Alliance noted that WTW economists believe wage growth and easing inflation could increase domestic consumption, benefiting Japanese shares, particularly domestic-focused Japanese stocks.

Reasonable fee

It’s not the cheapest ASX ETF, with an annual management fee of 0.56%. There are plenty of cheaper ASX ETFs out there, but I think it’s a fair cost for the specific Japanese allocation it can give to an Aussie’s portfolio. Active managers would typically charge at least 1% to invest in Japanese shares.

This fund also has currency hedging for the Japanese yen exposure, reducing the effect of currency fluctuations on portfolio performance.

Foolish takeaway

I think it’s a compelling ASX ETF to consider with actions that are supporting the Japanese economy and stock market. I don’t know what the short-term returns will be, but I’m optimistic about the longer term as companies better utilise their capital for growth and/or improve shareholder returns.

The post This ASX ETF has soared almost 40% in a year! Should you buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Alliance Trust Plc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nintendo. 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.

Leading internationally-focused ASX-listed exchange-traded funds (ETFs) have gone on a strong run in recent months. In 2024 alone, the iShares S&P 500 ETF (ASX: IVV) unit price has risen 16%.

Fearful investors may be wondering if they’ve missed out. We don’t know for sure what’s going to happen next; my crystal ball isn’t working at the moment.

But, it may create envy to see ASX ETFs like iShares Global 100 ETF (ASX: IOO) and Vanguard MSCI Index International Shares ETF (ASX: VGS) reaching new highs.

Have we missed out on all the gains? Not necessarily…

Profit growth drives share prices

As the chart below shows, the IVV ETF, the IOO ETF and the VGS ETF have all delivered strong long-term gains for investors.

This has been driven by the performance of the underlying holdings – capital growth of an ETF’s investments drives the net asset value (NAV) of the ASX ETF.

Global powerhouses like Nvidia, Alphabet, Microsoft, Amazon and Apple have all seen their share prices climb in recent months, helping the international ASX ETFs rise.

It’s true that these funds are at, or close to, all-time highs. But they have reached all-time prices many times over the years – it would have been a mistake to avoid investing at those other times.

Business profits at Nvidia, Microsoft, and others keep rising, increasing their underlying value. Yes, interest rates are still high, but those US giants are delivering earnings growth to justify higher share prices, even if the price/earnings (P/E) ratio doesn’t change.

Should we invest?

For investors who regularly plan to buy one (or more) of these international ETFs, I suggest they stick with their plan and continue buying on schedule. Share markets can be high sometimes and dip sometimes. Dollar-cost averaging will hit those different peaks and troughs.

As for investors that prefer to be selective about price with their investment decisions, the above chart doesn’t say ‘great value’ at the moment. However, I believe the long-term has shown the share market can climb over a ‘wall of worry’, such as wars, pandemics, economic downturns and so on.

I believe the IVV ETF, IOO ETF, and VGS ETF could all be materially higher in five years than they are today, with those strong underlying businesses driving ongoing success.

I’d be happy enough to buy some units today for the long term of any of the international ASX ETFs I’ve mentioned, but if I won the lottery, I wouldn’t invest it all in one go – I’d tactically want to spread out the investing over the next year or two.

The post Is it too late to buy these soaring international shares ASX ETFs? appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 positions in and has recommended Alphabet, Amazon, Apple, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Microsoft, Nvidia, Vanguard Msci Index International Shares ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

More reading

• 7 ASX All Ords shares rocketing higher while the market sinks
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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 positions in and has recommended Pro Medicus. The Motley Fool Australia has recommended Jb Hi-Fi and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

During today’s session, a good number of ASX shares tumbled into the red.

And unfortunately for the two in this article, they fell to 52-week lows during today’s play.

But if analysts at Goldman Sachs are to be believed, this could have created a compelling buying opportunity for investors.

Here’s what the broker is saying about these beaten down ASX shares:

IGO Ltd (ASX: IGO)

The IGO share price dropped to a 52-week low of $6.49 on Wednesday. Investors have been hitting the sell button this year amid concerns over how weak lithium prices are impacting the battery materials miner’s performance.

However, Goldman believes that IGO is well-placed to navigate the tough operating conditions thanks to the low costs of its Greenbushes operation. It said:

Greenbushes is the lowest cost lithium asset in our coverage; Production growth more than offsets increasing strip ratio: The addition of CGP3 (under construction) and CGP4 (planned) should take Greenbushes production capacity from ~1.5Mtpa today to ~2.4Mtpa (excluding tailings processing of ~0.3Mtpa), and they are planned to be funded from existing Greenbushes debt facilities, combined with Greenbushes cash flows (though we factor in below nameplate). We reiterate our belief that further Greenbushes expansion remains one of the most economically compelling brownfield lithium projects.

Goldman has a buy rating and $8.10 price target on the ASX share. This implies potential upside of 25% for investors over the next 12 months.

Orora Ltd (ASX: ORA)

Another ASX share that fell to a new 52-week low on Wednesday is Orora. It is a leading packaging company.

Its shares dropped to a low of $2.03 during today’s session, which means they are now down by 30% on a 12-month basis.

While this has been driven by a disappointing performance from Orora this year, Goldman Sachs believes the selling has been overdone and created a buying opportunity. It said:

We believe the legacy business benefits from relative top-line defensiveness, continued self-help in the Americas and growth capital investments that are underway in the Australasian business, while Saverglass is likely to experience near-term volume headwinds, though revert to benefit from the alcohol premiumisation trend, albeit at a slower rate than in the past ~15 years of rapid growth. We are Buy rated on the stock and believe the current market implied valuation of Saverglass provides a favourable risk-reward skew.

Goldman has a buy rating and $3.00 price target on the ASX share. This suggests that it could rise by 46% over the next 12 months.

The post 2 ASX shares to buy that are at 52-week lows 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 Goldman Sachs Group. The Motley Fool Australia has recommended Orora. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The All Ordinaries index (ASX: XAO) may be having another off day, but thankfully it isn’t all doom and gloom on the ASX boards today. In fact, some ASX All Ords shares are even charging higher today.

Let’s take a look at a few that are rising even as the market tumbles. They are as follows:

Accent Group Ltd (ASX: AX1)

The Accent share price is up 2.5% to $2.00. This is despite there being no news out of the footwear retailer. Though, it is worth noting that Bell Potter reiterated its buy rating and $2.50 price target on the company’s shares this week.

Bapcor Ltd (ASX: BAP)

The Bapcor share price is up 1.5% to $5.14. This is likely to be due to investors buying the auto parts retailer’s shares in response to the receipt of an unsolicited, indicative, conditional and non-binding takeover proposal from Bain Capital this week. If the deal goes through, Bapcor shareholders would receive $5.40 cash per share from the private equity giant. Though, it is worth noting that the offer price is well short of Bapcor’s 52-week high of $7.09.

DroneShield Ltd (ASX: DRO)

The DroneShield share price is up a further 4% to $1.36. This counter drone technology company’s shares have been on fire this year. So much so, this ASX All Ords share is now up approximately 260% since the start of the year. Strong demand for its technology has been getting investors excited.

Emerald Resources NL (ASX: EMR)

The Emerald Resources share price is up 6% to $3.65. This is despite there being no news out of the Western Australian gold explorer and developer.

Judo Capital Holdings Ltd (ASX: JDO)

The Judo Capital share price is up 4% to $1.36. This has been driven by news that the business lender will be added to the ASX 200 index next week. S&P Dow Jones Indices has announced that ASX All Ords share Judo Capital will replace building materials company CSR Ltd (ASX: CSR) when it is removed from the index week. This remains subject to shareholder and final court approval of the scheme of arrangement which will see CSR acquired by Compagnie de Saint-Gobain.

Kelly Partners Group Holdings Ltd (ASX: KPG)

The Kelly Partners share price is up 4.5% to $7.73. Today’s strong gain is a mystery given that there has been no meaningful news out of the accounting company for some time. Though, its shares have been flying recently and now sit just short of a record high.

Tuas Ltd (ASX: TUA)

The Tuas share price is up 3% to $4.13. Once again, there has been no news out of this Singapore based telco. However, this ASX All Ords share is just a few cents off a record high. This has been driven by a strong performance in FY 2024.

The post 7 ASX All Ords shares rocketing higher while the market sinks appeared first on The Motley Fool Australia.

More reading

• Why Bapcor, Botanix, Judo Capital, and Woodside shares are rising today
• 1 ASX share on the cusp of profitability
• Guess which ASX All Ords stock just rocketed 9% after being added to the ASX 200
• 5 things to watch on the ASX 200 on Wednesday
• 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 positions in and has recommended DroneShield and Kelly Partners Group. The Motley Fool Australia has recommended Accent Group, Bapcor, and Kelly Partners Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Shares in S&P/ASX 200 Index (ASX: XJO) gold stock Evolution Mining Ltd (ASX: EVN) are taking a tumble today.

Evolution Mining shares closed yesterday at $3.76 apiece. In earlier trade today, shares were swapping hands for $3.64, down 3.2%. After some likely bargain hunting, the Evolution Mining share price has recovered to $3.72 a share, down 1.2%.

Despite that recovery, the ASX 200 miner is trailing the benchmark, with the ASX 200 down a lesser 0.6% at time of writing. And in a better comparison of apples to apples, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) is down 0.5%.

Here’s what’s happening.

What’s pressuring the ASX 200 gold stock

When analysing share price moves among ASX 200 gold stocks, the first point of call is the gold price.

The yellow metal slipped 0.1% overnight to trade for US$2,313.96 per ounce, down from highs north of US$2,425 per ounce on 20 May. But the gold price remains up more than 14% in 2024, with most analysts forecasting further gains ahead.

So, that’s unlikely to be why the ASX 200 gold stock is underperforming today.

That underperformance is more likely linked to the miner’s market update.

This morning, Evolution Mining reported that its June quarter gold production had taken a hit from inclement weather and earthquakes.

According to the release:

The Cowal and Mt Rawdon operations have been impacted by continued high levels of rainfall. Restrictions to open-pit operations at Cowal and Mt Rawdon have necessitated the processing of lower grade stockpile ore at various stages during the past two months to maintain full processing feed rates.

Management said the rain had not impacted the underground operations at Cowal. The planned ramp-up would continue at the mine following the successful commencement of commercial production in April.

As for those earthquakes hampering the ASX 200 gold stock, the company said:

Material handling systems at Red Lake have been disrupted by localised seismic events at the Balmer and Cochenour areas. Mining rates have improved materially this quarter and there is a high level of mined ore available underground but haulage rates available via alternative systems have lowered near-term capacity

All told, the net impact of the heavy rains and earthquakes on Evolution’s gold production quarter to the end of May is around 26,000 ounces.

On the plus side of the ledger, the company reported that “significantly higher cash flow” had delivered a current cash balance of more than $320 million.

That works out to a quarter-to-date cash flow of some $145 million. And that’s after Evolution Mining paid its FY 2024 interim dividend, which totalled around $40 million.

Evolution Mining share price snapshot

Despite today’s dip, the Evolution Mining share price remains up 11% since this time last year.

The ASX 200 gold stock has gained 29% since the market close on 28 February.

The post Up 29% since February, why is this ASX 200 gold stock tumbling today? appeared first on The Motley Fool Australia.

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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 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.