Category: Stock Market

Call me eccentric, but I greatly enjoy running my slide rule over S&P/ASX 200 Index (ASX: XJO) stocks to uncover those passive income jewels.

In this process, I tend to stick to dividend stocks trading on the ASX 200. That’s because there’s usually more readily available information in the larger end of the market. And the bigger companies tend to be less volatile than their smaller peers.

It’s also worth screening for companies that offer fully franked dividends. This should enable me to hold onto more of that passive income at tax time.

And I prefer companies with long track records of making two (or more) annual payments, as well as those that have been growing their dividend payouts. This often bodes well for what to expect from their ongoing passive income stream.

Finally, we need to keep in mind that the yields we’re looking at are trailing yields. Future yields may be higher or lower, depending on a range of company-specific and macroeconomic factors.

With that said, we move on to the big reveal.

Pumping $150 a month in passive income from this ASX 200 dividend jewel

The ASX 200 passive income jewel that’s at the top of my radar today is petroleum refiner and fuel distributor, Ampol Ltd (ASX: ALD).

Atop its dividend payouts, the Ampol share price has gained 13% over the past year, currently trading for $35.08 a share.

Although Ampol’s March quarterly update fell short of expectations, this was largely due to temporary refinery outages and disruptions to shipping in the Red Sea, both of which we hope won’t be repeated in the current quarter.

As for the full 2023 calendar year results, Ampol reported a 2% increase in earnings before interest and tax (EBIT) from 2022 – excluding significant items – to $1.30 billion.

And total sales volumes in 2023 soared 17% year on year to reach all-time highs of 28.4 billion litres.

Despite a 25% year on year drop in net profit after tax (NPAT) to $549 million, management declared a record final fully franked dividend of $1.80 a share. Eligible investors will have received that payout on 27 March.

This 16% increase in Ampol’s passive income is precisely the kind of dividend growth trend I look for, as mentioned up top.

Ampol shares also delivered a fully franked interim dividend of 95 cents per share on 27 September.

This sees the ASX 200 dividend jewel paying $2.75 a share over the past 12 months.

So, to pump $150 a month in passive income (or $1,800 a year) from Ampol shares I’d need to buy 655 shares today.

The post Want $150 in monthly passive income? Buy 656 shares of this ASX 200 stock 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.

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is up another 0.3% following the S&P/ASX 200 Index (ASX: XJO) bank stock‘s update last week.

Today’s rise brings the gain over the last month to 12%, significantly outperforming the 2.5% gain for the ASX 200 over the same period.

The last five years have seen significant volatility for the Bendigo Bank share price, as seen on the chart below. Pleasingly, the stock price has just hit a four-year high of $11.04 during late trading on Tuesday. Is the bank entering a new phase of operating strength?

Investors liked the recent update for the ten months to 30 April 2024, with the Bendigo Bank share price up 10% since the update. The regional bank is scheduled to hold an investor day on 23 May 2024.

Trading update recap

Bendigo Bank reported cash earnings after tax of approximately $464 million for the financial year to date, down 2.3% from the previous year.

The net interest margin (NIM) in the financial year to date, after revenue-sharing arrangements, is 1.87%. Before the revenue share arrangement, the year to date NIM was 2.30%. Pleasingly for shareholders, the NIM in April 2024 was higher than the year to date average, possibly suggesting the FY25 NIM could be better than FY24.

Bendigo Bank also reported that its credit expenses remain at “low levels” across all its lending portfolios.

With the update, the Bendigo and Adelaide Bank CEO and managing director Marnie Baker said:

At our half year results in February we reiterated our commitment to managing the business for long term value. We have continued our focus on disciplined growth and prudent management of our costs.

Stronger margins led to upgrades

A number of brokers upgraded their forecasts for the ASX 200 bank stock after seeing that update.

UBS increased its cash earnings per share (EPS) estimates by 7.6%, 12.1%, and 11.1% for FY24, FY25, and FY26, respectively. This was due to the “notably higher net interest margin outlook.” The broker noted that competitive lending pressures and increasing funding costs continue to be offset by higher earnings on capital and deposits.

However, ongoing cost inflation and the ASX 200 bank stock’s investment in digitalisation led UBS to increase its operating expenditure expectations for Bendigo Bank.

How is Bendigo Bank delivering an improving NIM performance when other ASX bank shares are reporting margin compression? UBS said it was “maybe” down to three reasons:

1) the shorted duration of their capital hedge, 2) liquid asset unwind and 3) higher % of business originated through digital and prop channels. We would need more details on the sustainability of this performance, especially in the context of industry trends, but for now drive some of these changes into our NIM forecasts.

According to UBS’s numbers, the Bendigo Bank share price is now valued at 13.5x FY24’s estimated earnings.

Rating on Bendigo Bank shares

UBS increased its price target on the regional bank from $8 to $8.75, an increase of 9.4%.

However, the broker still rates the ASX 200 bank stock a sell because it’s trading 25% higher than its price target. Plus, the company is trading at “slightly above long-term historical averages” in terms of the price/earnings (P/E) ratio.

The post Guess which ASX 200 bank stock just hit a 4-year high? appeared first on The Motley Fool Australia.

More reading

• Why brokers just revised their outlook for these 4 top ASX All Ords shares
• Here are the top 10 ASX 200 shares today
• Why AIC Mines, Bendigo and Adelaide Bank, Patriot Battery Metals, and Vulcan Energy are racing higher today
• ASX 200 bank stock smashing the benchmark on Friday as a key metric strengthens

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

ASX lithium share prices remain volatile this year despite lithium commodity prices stabilising somewhat amid the ongoing surplus supply of lithium for electric vehicle (EV) battery manufacturers.

The lithium carbonate price began the year at US$13,384 per tonne. Today, it’s fetching US$14,579.48 per tonne, up 8.9% since January. The highest price it has reached this year is US$15,995 per tonne in March.

What’s happening with lithium prices?

Trading Economics says the EV industry is still working through battery gluts across the supply chain.

However, Chinese lithium producers have continued to expand capacity and look for new reserves, which has raised expectations of continuing surplus supplies.

According to Trading Economics:

… hopes that the market will eventually balance out drove Chile [to] set plans to double output for the world’s second-largest producer over the next decade.

Such developments follow cuts in battery prices as EV producers continued to take advantage of high inventories of input materials and finished product from extensive subsidies from Beijing in 2022.

Top broker Goldman Sachs predicts that lithium prices will not bottom till 2025.

For example, the broker thinks the carbonate price will average US$11,106 per tonne in 2024, down from an average of US$32,694 in 2023. It tips a further weakening to an average of US$11,000 per tonne in 2025.

Goldman says lithium prices will turn around in 2026, with the average rising to US$13,323 per tonne and then reaching US$15,646 per tonne in 2027.

With all of this in the background, Goldman Sachs recommends the following action on these two ASX lithium shares.

Which ASX lithium share is a buy?

Goldman has a buy rating on ASX lithium and nickel share IGO Ltd (ASX: IGO) and a 12-month share price target of $8.10.

The IGO share price is currently $7.87, down 2.11% on Tuesday and down 47.1% over the past 12 months.

Goldman analyst Hugo Nicolaci said:

We rate IGO as Buy, where on valuation IGO is trading on 0.95x net asset value (NAV) and pricing ~US$1,100/t spodumene, at a discount to peers (~1.2x NAV and ~US$1,300/t), with near-term FCF yields remaining >5% and attractive vs. peers (<0% on average) and supporting ahead of peer returns.

The broker noted that IGO’s Greenbushes mine is the lowest-cost lithium asset among the ASX lithium shares it monitors. It says production growth more than offsets the increasing strip ratio.

IGO owns 49% of Greenbushes and joint venture partner Tianqi Lithium Corp owns 51%.

The broker said IGO’s nickel business would likely decline without further developments or mergers and acquisitions activity.

The broker added:

We expect largely continued growth in net cash, with liquidity stable above the A$1bn threshold for excess capital management payouts from 2H FY25.

Why is this lithium stock a sell?

Goldman has a sell rating on ASX lithium junior Core Lithium Ltd (ASX: CXO) with a share price target of 11 cents. The Core Lithium share price is 15 cents, down 1.94% now and down 86% over the past year.

Nicolaci said the broker rated Core Lithium shares a sell for three main reasons.

The first is valuation, with Core Lithium looking “relatively expensive” trading at a premium of about 1.1x its NAV and an implied LT spodumene price of about US$1,200 per tonne. This compares to a peer average of about 1.05x NAV and about US$1,250 per tonne.

The second is ongoing risks to the timing of its production restart and the lesser likelihood of funding its BP33 exploration from cash flow due to weak declining lithium prices.

Lastly, the broker noted that further exploration activities underway may result in an expanded resource base. However, the development of any discoveries is likely a ways off.

The post Buy one, sell the other: Goldman’s verdict on these 2 ASX lithium shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Core Lithium. 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.

ASX retail shares can be some of the hardest stocks on the market to assess as a good investment. The retail sector is notoriously cyclical, and its players have to constantly adapt to changing consumer tastes and preferences.

As such, only the strongest ASX retail shares tend to be effective compounders of wealth over long periods of time.

Today, we’ll discuss two ASX retail shares that might just qualify for that label, at least according to one ASX broker. We’ll also cover one stock that this broker is telling investors to avoid.

ASX broker gives verdict on 3 ASX retail shares

As reported in The Australian this week, analysts at ASX broker Macquarie are eyeing two ASX retail shares that might stand to benefit from an artificial intelligence (AI)-fuelled “generational upgrade cycle in computer hardware”.

Macquarie is arguing that household appliances, computers and technology typically have a “5-7 year lifespan”. As such, the COVID boom in this corner of the market should result in an “echo” over the next 18 months or so.

Macquarie’s Ross Curran told The Australian, “An accelerated 5-year refresh rate on PCs instead of the usual 6-year cycle, along with a 15 per cent increase in price, could see a 34 per cent uplift in category”.

As such, Curran has upgraded Macquarie’s earnings estimates for the 2025 financial year for JB Hi-Fi Ltd (ASX: JBH), Harvey Norman Holdings Ltd (ASX: HVN) and OfficeWorks owner Wesfarmers Ltd (ASX: WES) by 4.5%, 3.7% and 0.5% respectively.

Consequently, Curran has lifted Macquarie’s ratings on JB Hi-Fi and Harvey Norman from ‘Neutral’ to ‘Outperform’. This implies investors should consider buying these ASX retail shares at current pricing.

However, Curran maintained a ‘Neutral’ rating for Wesfarmers, citing concerns over its current high valuation.

A tale of three retailers

To be fair, all three ASX retail shares have enjoyed some healthy rises over the past 12 months. At current pricing, Wesfarmers stock is up 33.8% since this time last year, while JB Hi-Fi has risen 26.7% and Harvey Norman, 21.25%.

Even so, Wesfarmers shares are currently trading on a price-to-earnings (P/E) ratio of 30.8. That looks elevated against JB’s 13.7 and Harvey Norman’s 14.6. Put another way, investors are currently being asked to pay more than double for $1 of earnings from Wesfarmers compared to $1 of earnings from JB or Harvey Norman.

As such, it’s not difficult to understand why Curran sees Wesfarmers shares as more overvalued than those of JB Hi-Fi or Harvey Norman.

The post 2 ASX retail shares just upgraded by brokers (and 1 downgraded) appeared first on The Motley Fool Australia.

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• Top ASX dividend shares to buy in May 2024

Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has positions in and has recommended Harvey Norman, Macquarie Group, and Wesfarmers. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Brainchip Holdings Ltd (ASX: BRN) shares are rebounding on Tuesday.

In afternoon trade, the struggling semiconductor company’s shares are up 6% to 26.5 cents.

Why are Brainchip shares rising today?

Investors have been buying the company’s shares for a couple of reasons.

One is the release of its annual general meeting (AGM) update this morning. The other is news that the company has managed to avoid a spill of its board at this meeting.

In respect to its AGM update, Brainchip CEO, Sean Hehir, acknowledged that the company hasn’t delivered meaningful revenue yet, and was disappointed by this, but remains positive on the future. He said:

Let me acknowledge right up front that our revenue numbers are not there yet. The evaluation and design cycle are longer, deeper, and more complex than we anticipated as customers plan their strategic roadmaps. However, after hearing my prepared remarks, hopefully you too will share my conviction that we are a much stronger and a better positioned company and share my optimism in our near-term and long-term success.

Licensing deals

Hehir believes the company is close to getting an answer from some potential customers after being in discussions for over a year. He said:

First and foremost, I know we need to close license sales. We have several engagements that have been in evaluation for over 1 year that are near closing in on a decision. These engagements are with leading companies in audio, IOT, and microcontroller segments.

The under pressure CEO has been heavily criticised for his big salary and bonuses and distinct lack of commercial success since joining. However, he remains confident on delivering the goods for shareholders. He adds:

The board brought me on with a critical mission: to transform a promising technology into a successful product for a challenging market, while establishing the sales and marketing capabilities to drive its adoption.

We are doing the right things. I know we are on the right trajectory. When I pair all these actions with the emergence of a true edge AI market, I am more confident than ever that we are on the cusp of generating sustainable revenue streams. BrainChip has the momentum in place and potential to emerge as the undisputed leader in the exciting and continuously growing Edge AI market.

Time will tell if this proves to be the case or if the next 12 months will just be more of the same – all hype and no substance.

Board spill avoided

Brainchip shares may also be rising today after the company avoided a disruptive board spill.

While 33.41% of votes were against its remuneration report, a sizeable 85.59% of votes were against spilling the board.

The post Why are Brainchip shares racing higher after its AGM? 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 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.

S&P/ASX 200 Index (ASX: XJO) gold stocks are back in the spotlight today as the price of the yellow metal again broke into new all-time high territory.

The gold price reached US$2,449.89 per ounce earlier today. It’s retraced a touch since then, trading for US$2,412.69 per ounce at the time of writing.

Based on current levels, the gold price has now soared by 22.4% since this time last year, when that same ounce was worth US$1,971.86.

But the real rally in the gold price, and for ASX 200 gold stocks, kicked off in late February. The yellow metal began to rocket from US$2,034 per ounce on 28 February in a rally that’s seen it gain 18.6% since then.

That price surge has helped drive the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller gold miners outside of the ASX 200 – up a whopping 29.8% since 28 February.

That compares to a 2.4% gain posted by the ASX 200.

Here’s how these top Aussie gold miners stack up compared to the Gold Index over this same period:

• Northern Star Resources Ltd (ASX: NST) shares are up 17.4%
• Newmont Corp (ASX: NEM) shares are up 43.9%
• De Grey Mining Ltd (ASX: DEG) shares are down 5.3%
• Ramelius Resources Ltd(ASX: RMS) shares are up 51.4%
• Gold Road Resources Ltd (ASX: GOR) shares are up 12.7%
• Evolution Mining Ltd (ASX: EVN) shares are up 39.8%
• Bellevue Gold Ltd (ASX: BGL) shares are up 38.7%
• Perseus Mining Ltd (ASX: PRU) shares are up 41.7%

Impressive, no?

Now, the majority of the ASX 200 gold stocks are in the red today. That may be partly due to gold’s intraday price decline from the all-time highs.

And investors may be spooked by new revelations that the RBA came closer than we’d like to think to raising interest rates earlier this month.

Gold, which pays no yield itself, tends to perform better in low or falling rate environments. Though the yellow metal has proven resilient to the lingering higher rates across most of the developed world this year.

However, today’s price dip may offer a decent entry point to buy more of these ASX 200 gold stocks if you believe, like I do, that the gold price rally has a way to run yet.

What’s sending the gold price and ASX 200 gold stocks soaring?

The gold price and ASX 200 gold stocks have been receiving tailwinds from a number of fronts.

Those include gold’s haven status in times of geopolitical uncertainty, the prospect of lower global interest rates down the road, and robust central bank buying.

China’s central bank has had a particularly voracious appetite for bullion in recent years.

According to the Stanford Institute for Economic Policy Research (cited by Bloomberg), the share of gold in the People’s Bank of China’s total currency reserves has increased from less than 2% in 2015 to 4.3% last year. The nation’s US bond holdings have fallen from 44% to 30% of total currency reserves over that same period.

Commenting on this trend, Gita Gopinath, deputy managing director of the International Monetary Fund, recently said:

[This] suggests that gold purchases by some central banks may have been driven by concerns about sanctions risk. This is consistent with a recent IMF study confirming that FX reserve managers tend to increase gold holdings to hedge against economic uncertainty and geopolitical including sanctions risk.

Regardless of their motivations, central bank buying looks to be helping drive the gold price to a series of new record highs.

If this trend continues, it should come as good news for shareholders in ASX 200 gold stocks.

The post ASX 200 gold stocks in focus as gold price smashes record highs 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.

There aren’t many S&P/ASX 200 Index (ASX: XJO) stocks that have done as well as Goodman Group (ASX: GMG) in the last year, with a rise of around 70%. Greg Goodman has chosen this point in time to transact a large sale of Goodman shares.

Greg Goodman is the current CEO and co-founder of the property giant.

When a member of the leadership team decides to sell shares, it can be a worrying sign. Let’s examine the sale and then consider whether it’s actually concerning.

Goodman share sale

Greg Goodman has a beneficial interest in the JSH Family Trust, which is the entity that sold shares.

This family trust owned 1.95 million Goodman shares before the sale and sold 1 million Goodman shares on 15 May 2024, according to the ASX announcement.

The sale raised $33.336 million, suggesting the average price per share was approximately $33.34.

Is this a worrying sign for the ASX 200 stock?

The last time Greg Goodman sold shares was in mid-September 2023 when he sold around $20 million of shares. Since then, the Goodman share price has gone up around 50%, so the just-announced sale does not mean an impending decline is certain to occur.

The co-founder still has an enormous amount of wealth tied to the ASX 200 stock. Greg Goodman has an indirect holding of 37.9 million Goodman shares, which is worth around $1.3 billion – he still has a lot of skin in the game.

Plus, Greg Goodman owns 4.3 million performance rights. He is incentivised to help the business succeed.

The FY24 third-quarter update showed ongoing success for the business, with expectations for its operating earnings per security (EPS) growth upgraded to 13%.

Goodman Group’s total portfolio is now worth $80.5 billion, with a $12.9 billion development work in progress (WIP) pipeline. It completed $0.8 billion of developments in the latest quarter, with 96% of year-to-date completions committed (by tenants). Data centres under construction currently represent approximately 40% of WIP.

The rental performance remains commendable across Goodman’s partnerships, with an 98% occupancy rate and net property income like-for-like growth of 4.9%.

Goodman share price snapshot

Since the start of 2024, the ASX 200 stock has risen 36% (as seen on the chart below), compared to a rise of just 3% for the ASX 200.

The Goodman share price is up 0.5% today amid news of this sale.

The post Guess which ASX 200 co-founder just sold $33 million worth of company shares appeared first on The Motley Fool Australia.

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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 Goodman Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is having a subdued session and is on course to record a small decline. In afternoon trade, the benchmark index is down 0.1% to 7,856.4 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Infratil Ltd (ASX: IFT)

The Infratil share price is down 5% to $9.80. Investors have been hitting the sell button today after the New Zealand infrastructure business released its full year results. This was despite the company reporting a 63% jump in proportionate EBITDA to NZ$864 million, which was above the top end of its revised guidance range. Though, it is worth noting that a substantial portion of this EBITDA increase can be attributed to the higher ownership stake in One NZ since June 2023. After adjusting for this change, EBITDA growth stood at 15.5% in FY 2024.

James Hardie Industries plc (ASX: JHX)

The James Hardie share price is down over 11% to $48.42. This has been driven by the release of the fourth quarter and full year update from the building materials company. James Hardie achieved record fourth quarter sales of US$1,004.9 million and record full year sales of US$3,936.3 million. However, despite this strong top line performance, it appears that the company’s earnings still fell short of expectations for the fourth quarter. In addition, its guidance for FY 2025 was well below the consensus estimate.

Sonic Healthcare Ltd (ASX: SHL)

The Sonic Healthcare share price is down 6% to $25.01. Investors have been selling this pathology company’s shares after it downgraded its guidance for FY 2024. It now expects FY 2024 EBITDA of approximately $1.6 billion on revenues of approximately $8.9 billion. The former is short of its guidance range of $1.7 billion to $1.8 billion. Management advised that this is due to inflationary pressures on the business. This is being exacerbated by currency exchange headwinds.

Star Entertainment Group Ltd (ASX: SGR)

The Star Entertainment share price is down 8% to 49.7 cents. This has been driven by news that a rumoured suitor, Hard Rock Hotels and Casinos, has denied that it is interested in acquiring the troubled casino and resorts operator. Hard Rock wasn’t happy to learn of the media speculation. It said: “Any misuse of the Hard Rock name in unauthorised business dealings is taken very seriously. We are currently investigating this matter and will pursue all necessary legal actions to protect our brand and reputation.”

The post Why Infratil, James Hardie, Sonic Healthcare, and Star Entertainment shares are sinking today appeared first on The Motley Fool Australia.

More reading

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• 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 recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX 200 stock James Hardie Industries plc (ASX: JHX) is the worst performer of the S&P/ASX 200 Index (ASX: XJO) today after the building materials company released its FY24 4Q and full-year results.

Despite reporting record net sales and record adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the 12 months to 31 March, investors are punishing the ASX 200 stock today.

The James Hardie share price hit an intraday low of $48.22 this morning, down 11.95% on yesterday’s close. The ASX 200 stock is currently swapping hands for $49.20, down 10.17%.

Let’s review the numbers.

ASX 200 materials stock plunges on full-year numbers

Here are the highlights of the full year ending 31 March: 

• Record net sales of US$3,936.3 million, up 4% on the prior corresponding period (pcp) of FY23
• Record adjusted EBITDA of US$1,125.8 million
• Adjusted EBITDA margin of 28.6%
• Record adjusted EBIT of US$940.8 million
• Adjusted EBIT margin of 23.9%
• Record adjusted net income of US$707.5 million, up 17%
• Adjusted diluted earnings per share (EPS) of US$1.61 per share, up 18%
• Record full year operating cash flow of US$914.2 million, up 50%  

Here are the highlights of 4Q FY24: 

• Record net sales of US$1,004.9 million, up 9% on the prior corresponding period (pcp) of Q4 FY23
• Adjusted EBITDA of US$280.8 million
• Adjusted EBITDA margin of 27.9%
• Adjusted EBIT of US$232.5 million
• Adjusted EBIT margin of 23.1%
• Adjusted net income of US$174.2 million, up 19%

The company said it plans to continue repurchasing shares under its US$250 million share buyback program instead of paying dividends.

In Q4, James Hardie bought back 1.9 million shares at an average price of US$39.42, costing approximately US$75 million.

What did management say? 

James Hardie CEO Aaron Erter said:

Our team’s focus remains simple: working safely, partnering with our customers, managing decisively, and controlling what we can control.

This focus has enabled us to deliver a strong fourth quarter and fiscal year for Adjusted Net Income.

Erter added that the FY24 results were “proof points” that the company was taking new market share.

He added:

We have a superior value proposition that helps our customers grow profitably and be successful.

Our team is focused on maintaining momentum and consistency to deliver strong financial results again in fiscal year 2025 as highlighted by our guidance range provided today.

What’s next?

James Hardie said the outlook for its housing markets “continues to remain uncertain”.

It expects its total addressable market in North America to decline by 2%. The company said it intended to outperform the market by growing the business and investing for long-term gains.

The guidance for FY25 is as follows:

• North American volumes to be in the range of 2,950 million to 3,150 million standard feet vs. 3,054 million standard feet in FY24
• North American EBIT margin in the range of 29% to 31%
• Adjusted net interest of US$25 million to US$29 million vs. US$24.3 million in FY24
• Adjusted effective tax rate of between 23.5% and 24.5% vs. 23% in FY24
• Adjusted net income in the range of US$630 million to US$700 million
• Capital expenditures of US$500 million to US$550 million

Broker says FY25 guidance ‘disappointing’

UBS analyst Lee Power says James Hardie’s FY25 earnings guidance is “disappointing”.

The broker currently has a buy rating on the ASX 200 stock and a 12-month price target of $66.50.

In The Australian today, Power said the midpoint of James Hardie’s FY25 net profit guidance range at US$665 million is 13% below the consensus expectations of $US762 million.

Power said:

The FY25 outlook is disappointing and while North American FY25 margin guidance of 29-31 per cent is broadly in line with UBS expectations, volumes are significantly below expectations.

FY25 volumes were 6 per cent below consensus, according to Power.

He noted the upper end of the FY25 NPAT guidance was eight percent below his estimates.

ASX 200 stock price snapshot 

James Hardie shares are down 13.5% in the year to date. By comparison, the ASX 200 is up 2.9%. 

The post Which ASX 200 stock just plunged 12% despite record full-year earnings? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is out of form and on course to record a small decline. At the time of writing, the benchmark index is down 0.25% to 7,843.8 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising:

ALS Ltd (ASX: ALQ)

The ALS share price is up 5% to $14.47. This has been driven by the release of the testing services company’s FY 2024 results this morning. ALS reported a 6.8% increase in revenue to $2,586 million and modest 0.2% increase in underlying EBIT to $491.8 million. The company’s CEO and managing director, Malcolm Deane, commented: “The Group has continued to deliver revenue growth and maintain industry-leading margins despite challenging market conditions.”

OFX Group (ASX: OFX)

The OFX Group share price is up almost 13% to $1.91. This has also been driven by the release of full year results this morning. Investors have responded positively to the foreign exchange company reporting a 6.3% increase in net operating income to $227.5 million and a 3.4% lift in underlying EBITDA to $64.6 million. This was in line with its guidance. CEO Skander Malcolm said: “Despite a tougher macroeconomic backdrop in our two largest markets, it was pleasing to deliver NOI and underlying EBITDA in line with guidance. Without the near-term impact of Paytron on our earnings, we would have delivered positive operating leverage.”

Skycity Entertainment Group Ltd (ASX: SKC)

The Skycity Entertainment share price is up 4% to $1.62. This follows news that Skycity has reached an agreement with the Department of Internal Affairs in New Zealand to settle its anti-money laundering and countering financing of terrorism proceedings. According to the release, the settlement includes an admission of guilt and a penalty of approximately NZ$4 million.

TechnologyOne Ltd (ASX: TNE)

The TechnologyOne share price is up 5% to $16.84. Investors have been buying this enterprise software provider’s shares following the release of its half year results. The company reported a 16% increase in revenue to $244.8 million, a 21% lift in annual recurring revenue (ARR) to $4423.6 million, and a 17% jump in profit before tax to $61.5 million. Management remains confident on the future and believes it is on track to surpass its ARR target by FY 2025. CEO Ed Chung said: “We are on track to surpass total ARR of $500m+ by FY25, from our current base of $424m. We will continue to invest for the long-term in R&D to build platforms for growth to continue to double in size every 5 years.”

The post Why ALS, OFX, Skycity, and TechnologyOne shares are surging today appeared first on The Motley Fool Australia.

More reading

• ASX 200 tech stock lifts off on another record-setting half-year profit
• 5 things to watch on the ASX 200 on Tuesday
• These ASX 200 shares could rise 15% to 50%
• 5 stellar ASX growth shares to buy for strong returns
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has positions in Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.