Category: Stock Market

The REA Group Limited (ASX: REA) share price is trading lower on Wednesday morning.

At the time of writing, the real estate listings company’s shares are down 4% to $114.75.

Why is the REA share price falling?

Investors have been selling down the REA share price on Wednesday following the release of the company’s first quarter update.

According to the release, REA delivered a 16% increase in revenue to $305 million and an 11% lift in operating EBITDA to $131 million.

This was supported by a 5% increase in national listings during the period and the leadership position of the flagship realestate.com.au website. The latter delivered an average monthly audience of 12.4 million during the quarter, representing 61% of Australia’s adult population.

This led to 121.9 million average monthly visits during the period, which is 3.3 times more visits than the nearest competitor.

So why are investors selling?

While this would appear to be a solid quarter, it is worth remembering that REA has been targeting “positive jaws” in FY 2023 with mid to high-single digit operating cost growth.

Positive jaws is when your revenue grows quicker than your costs, leading to margin expansion and earnings growth.

However, first quarter operating costs grew 22% over the prior corresponding period, well ahead of its revenue growth for the period. This was driven by higher employee costs from its continued investment to deliver strategic initiatives, increased marketing, and travel costs.

Though, it is worth noting that management continues to target positive jaws in FY 2023. It commented:

The Group continues to target full year positive operating jaws for Australia in FY23. Australian operating cost growth is expected to be mid to high single-digits, with growth rates varying between quarters given operating expenses in the prior year were more heavily weighted to the second half.

Outlook

Management advised that national residential listings were down 18% in October. But thanks to price increases, the impact of Premiere Plus, and continued growth in depth penetration, management remains positive on its outlook.

REA CEO, Owen Wilson, commented:

We’ve seen the heat come out of the property market in recent months and while positive underlying fundamentals remain, we expect this moderation to persist as interest rates rise. REA is well positioned in this environment, and we will continue to invest in the growth of our platforms and adjacent businesses to further increase the value we provide to our customers and consumers.

Broker response

Goldman Sachs has responded to the update. Here’s what it had to say:

We note full year REA opex guidance has been reduced to high single to low double digit growth vs. low double digit growth previously (GSe +11%) – suggesting REA is more cautious on FY23 listings outlook than previous (forecasted mid single digit declines, noting 1Q23 +5%, with October -18%). Compositionally core Australia revenues was marginally stronger than GSe (+14% despite Finance declines), with India growth also higher than expected (+47% vs. GSe +40%).

The post REA share price tumbles despite 16% revenue boost appeared first on The Motley Fool Australia.

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More reading

• How I’d find ASX growth shares to buy today to double my money
• 5 ASX shares to buy for the Christmas rally: expert
• How I’d build a portfolio by investing in top ASX shares now
• Which ASX 200 shares could benefit from the federal budget?
• Experts say these top ASX 200 shares are buys

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 REA Group Limited. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened 

Cryptocurrencies didn’t just wake up on the wrong side of the bed this morning; they had a terrible night. At 9:45 p.m. ET on Monday, the bottom fell out of the FTX Token (CRYPTO: FTT) and the race was on to sell everything in crypto. 

The worst of the decline was reserved for smaller cryptocurrencies, but as of 9:40 a.m. ET, Bitcoin (CRYPTO: BTC) has fallen 5.8% in the last 24 hours, Ethereum (CRYPTO: ETH) is down 7.5%, and Aptos (CRYPTO: APT) has dropped 13.3%. 

So what 

Drama has been building in the crypto space for about a week after CoinDesk reported that Sam Bankman-Fried’s trading arm, Alameda Research, has $14.6 billion in assets and $8 billion in liabilities. That’s not a problem in itself, but CoinDesk also said that $5.8 billion of the assets were the FTX Token, FTT. It’s notable that Bankman-Fried also founded the FTX exchange, which is one of the top exchanges in cryptocurrencies.

Over the weekend, Binance CEO Changpeng Zhao announced that he would be selling nearly $500 million in FTX Tokens, causing speculation that their value would plummet. That’s exactly what happened on Monday night, whether it was because of Binance’s selling or traders anticipating the sale.

At the same time, customers are pulling money off of FTX’s exchange, which could cause a “run on the bank”. Nansen reported that FTX has had $1.2 billion worth of Ethereum and ERC-20 tokens withdrawn in the last 24 hours compared to $540 million in deposits. CryptoQuant says FTX’s Bitcoin reserves were zero at one point.

Banks and exchanges typically don’t keep enough reserves to pay all customers their money if they withdraw all at once, which is known as a run on the bank. This can cause panic selling and leave a company insolvent relatively quickly. 

Now what 

This is reminiscent of the summer collapse of Three Arrows Capital, which brought down Celsius Network and Voyager with it. Leverage that investors didn’t know about on the balance sheet suddenly became problematic when crypto values fell and loans were called back. 

We’re not sure this is what’s happening at Alameda with the FTX Token, but given the price action and money moving out of FTX, investors are taking a cautious approach. 

It’s not clear what happens next. FTX is still one of the largest exchanges, and if it fails, the impacts on crypto could be enormous. I wouldn’t be surprised if this isn’t the end of the decline in crypto prices, although that means a buying opportunity for long-term investors, because an exchange can go bankrupt, but a token can’t.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Bitcoin and Ethereum were down big on Tuesday morning appeared first on The Motley Fool Australia.

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More reading

• This one trend could send Bitcoin even higher
• Ethereum and Bitcoin price crash spells the end for these Aussie crypto ETFs
• Up 18% in a month, could it still be worth buying Ethereum at its current price?
• The Bitcoin price leapt 10% in October. Here’s why
• Why one of the smartest investors bought Bitcoin and thinks you should too

Travis Hoium has positions in Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has positions in Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Novonix Ltd (ASX: NVX) share price is on the move on Wednesday morning.

At the time of writing, the battery materials and technology company’s shares are up over 2% to $2.52.

Why is the Novonix share price rising?

Investors have been bidding the Novonix share price higher today after the company released an announcement.

According to the release, the company has opened its new pilot production facility in Nova Scotia, Canada, which aims to position Novonix as an industry leader in cathode technology.

Management notes that the program will be housed in a newly opened, 35,000-square-foot facility and leverage Novonix’s all-dry cathode synthesis technology to pilot its patent-pending technology for material production with the target of servicing the rapidly expanding electric vehicle (EV) and energy storage sectors.

It also highlights that the pilot scale facility will allow the company to demonstrate the feasibility of large-scale production, with the production target of up to 10 tonnes per annum.

This could be great timing. With over 50% of all new car sales predicted to be EV by fiscal 2030, according to BloombergNEF, millions of tonnes of anode and cathode material will be needed.

Novonix founder and CEO, Chris Burns, commented:

Launching our cathode pilot facility is another significant step in NOVONIX’s efforts to pioneer a North American battery supply chain and revolutionize the sector with high quality materials and more efficient production methods. NOVONIX is committed to enhancing the production of cathode material through its proprietary process while providing scalable solutions that address skyrocketing battery materials demand.

Darcy MacDougald, president of Novonix Battery Technology Solutions, added:

We’re expecting to have the pilot line operational shortly after opening. Our goal is to demonstrate our technology at scale in the first year. NOVONIX continues to innovate, and the launch of this pilot line will help us drive the shift to EV battery and energy storage forward.

The post What’s boosting the Novonix share price on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• Why are Novonix shares listed on the Nasdaq as well as the ASX?
• Why did the Novonix share price jump 50% in October?
• Why is the Novonix share price gaining today?
• Why is the Novonix share price tanking 5% today?
• A major shareholder sold off most of its Novonix shares last week. What’s happening?

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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The CSL Limited (ASX: CSL) share price has been largely flat over most of 2022. However, it is actually down by around 5% in 2022, which isn’t bad considering the S&P/ASX 200 Index (ASX: XJO) is down 8%.

At the time of writing, the Betashares Nasdaq 100 ETF (ASX: NDQ) has fallen 28% in 2022. So, compared to a group of US-listed shares with global addressable markets, CSL has done well.

What’s going on with CSL?

The CSL share price has likely been impacted by the ongoing volatility with inflation and higher interest rates.

But, share prices often follow profit over time. Let’s have a look at what CSL is expecting to achieve in FY23.

CSL has said that it’s expecting the CSL revenue growth to be in the range of 7% to 11% compared to FY22, at constant currency.

CSL’s net profit after tax (NPAT) is expected to be approximately in the range of US$2.4 billion to US$2.5 billion, in constant currency terms. On a like-for-like basis, this would represent growth of between 10% and 14%.

CSL said that NPAT from Vifor, a business that the company recently acquired, is going to be between US$300 million and US$330 million.

Adding those two elements together, CSL is expecting its total underlying net profit to be between US$2.7 billion and US$2.8 billion.

The company recently outlined its research and development pipeline which could deliver further earnings for the business. In FY22 it spent over US$1.1 billion on R&D.

What do brokers think of the CSL share price?

Brokers are largely optimistic that the ASX healthcare share can deliver a double-digit return over the next year.

Morgans currently has an add rating on the business, with a price target of $312.50. That implies a rise of just over 11%. It noted the promising outlook for a number of CSL’s developments.

Morgan Stanley is another broker with a positive rating. It has an overweight rating on CSL, with a price target of $327. That implies a rise of around 16%.

Ord Minnett has a positive outlook on the business, not only does it think that the CSL share price can rise by 17% to $330, but it thinks there is optimism surrounding demand for CSL’s products and that plasma collection is improving.

One of the most optimistic brokers is Citi, with a price target of $340 and a buy rating. That implies a possible rise of just over 20%. On Citi’s numbers, CSL shares are valued at 36x FY23’s estimated earnings and 29x FY24’s estimated earnings.

Foolish takeaway

Not every broker is bullish, for example, Credit Suisse is only neutral on the ASX healthcare share. Even so, the price target of $305 implies a rise of almost 10%.

Most brokers seem positive on the business, though they aren’t expecting huge returns from here over the next 12 months.

The post Are CSL shares a good buy right now? appeared first on The Motley Fool Australia.

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More reading

• 2 big name ASX companies ready for a ‘share price recovery’: experts
• Leading brokers name 3 ASX shares to buy today
• Own CSL shares? Here’s what brokers are saying about its R&D pipeline
• Why I’m seriously considering investing $10,000 in these ASX 200 shares
• 5 things to watch on the ASX 200 on Friday

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 BETANASDAQ ETF UNITS and CSL Ltd. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. 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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There are plenty of problems going on in the world right now. Inflation, higher interest rates, a war, and so on. It’s not surprising that some investors may be worried about investing in ASX shares.

How are investors to know what to do?

For starters, it may be worthwhile remembering that the world has survived these sorts of things before. There was very strong inflation in the 1980s, with extremely high interest rates as well. A war regularly occurs somewhere in the world, sadly.

Higher interest rates and more costs can have an impact on how profitable a business is. So, let’s learn some of the things to look out for from Motley Fool expert Scott Phillips, who was recently talking to NABTrade on a webinar.

Pricing power

How much control does a business have over its prices? Costs are only one side of the equation when it comes to generating profit. Phillips said:

Number one is simply, pricing power. Does your company have the ability to pass on any cost increases you may incur? if you’re a miner — mining a global commodity like iron, or gold or coal or copper or something else — your ability to pass on those higher costs with higher prices is exactly zero.

Think about brands, think about contracts, think about businesses that are so institutionalised in terms of being inside a business — so a business-to-business software package, for example — very hard to change out if the price goes up. If they’re a mission-critical piece of software, for example. So anything that locks you in, or gives you the ability to pass on prices.

… That allows you to make sure your margins don’t get crushed with that higher inflation.

For example, ASX shares like Coles Group Ltd (ASX: COL), Telstra Corporation Ltd (ASX: TLS) and Xero Limited (ASX: XRO) have been increasing prices for customers.

Debt could be an issue

When interest rates were virtually zero, businesses were able to take on a lot of cheap debt, if they wanted to. But now interest rates have shot up, it’s a very different picture for some ASX shares.

What was Phillip’s view on debt? He said:

Be very careful of companies with significant levels of debt. Not because they’re necessarily going to go broke, but because higher debt with higher interest costs, higher interest costs means lower profits. So even if you don’t go broke with higher rates, your company profits can be materially impacted.

Businesses such as real estate investment trusts (REITs) and buy now, pay later are typically ones that have higher debt levels.

Capital needs

Some ASX shares are able to fund their growth organically. Whereas others may have needed to tap investors for more cash to accelerate their growth plans, or perhaps make an acquisition.

What’s the expert view on this situation? Phillips said:

The last point is, think about capital. If you’re a business that needs more money – think about small biotechs or technology businesses, miners – and you’re hoping to raise more capital from the market. That’s getting harder and harder to come by as rates go up.

Companies sometimes see their share prices fall in anticipation of a capital raising because investors can see that the business is going to need more cash, so those investors are looking for a discount. It might be fairly easy to work out which businesses are going to do a capital raising if they are burning through their cash pile.

Some ASX shares are now focusing on cash flow breakeven so they don’t run out of cash and a capital raising isn’t necessary.

Foolish takeaway

I think it’s worthwhile that investors pay attention to Phillips’ advice, to avoid some of the pitfalls of the current economic situation.

The post Nervous about buying ASX shares right now? Here are some top tips from Scott Phillips appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Woolworths shares are ‘fully valued’ and investors should buy Coles instead: broker
• Why is the Telstra share price trailing the ASX 200 on Monday?
• How I’d find ASX growth shares to buy today to double my money
• Analysts name the ASX growth shares to buy

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 Xero. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET, Telstra Corporation Limited, and Xero. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened 

The cryptocurrency market went into free fall overnight after Binance CEO Changpeng Zhao and FTX and Alameda Research founder Sam Bankman-Fried escalated their feud. The fallout has been widespread but there were some key moves among certain digital currencies.

As of 7:30 a.m. ET, FTX Token has fallen 22.7% in the last 24 hours, Solana (CRYPTO: SOL) is down 10.2% and hit a low of $25.51, and Dogecoin (CRYPTO: DOGE) has dropped 13%. The one token that hasn’t lost a significant amount of value is BNB (CRYPTO: BNB), which is off 1.8% in the past day.

So what 

Over the last week, a feud between Bankman-Fried and Zhao has erupted. The exact origins aren’t clear, but the two have been publicly sparring on Twitter in recent days. A final straw for the market was when Binance said it would sell the $500 million in FTX tokens that it owns. 

Alameda’s CEO offered to buy the tokens back for $22 apiece in an over-the-counter deal, but that doesn’t appear to have been completed. Late Monday night, the bottom fell out of FTT’s price and it appears Bankman-Fried is selling tokens like Solana to buy back FTT and Binance is selling FTT and buying BNB. We don’t know exactly whether these trades are being completed by Zhao and Bankman-Fried, but the market is reacting to them even if they aren’t. 

Where this gets dangerous for the crypto market broadly is the collateral positions FTX and/or Alameda might have. According to a report from CoinDesk, Alameda has $8 billion in liabilities and much of that may be backed by $5.8 billion in FTT tokens (the value CoinDesk reported before last night’s drop). It’s not clear the terms of the debt or what the exact collateral is and when positions might be liquidated, but investors are certainly worried. If FTT is used as collateral in a meaningful way and gets liquidated, it could fuel continued selling pressure on the token and send a shockwave across the crypto market. 

The worry about contagion or any insolvency is largely tied to Alameda Research’s trading, but FTX is at least tied to the trades because of the FTT token the company owns. It’s not clear if FTX has provided any loans to Alameda Research.

Now what 

We only have to look back to the summer of 2022 to see how quickly a leveraged trading firm can cripple the crypto market. The insolvency of Three Arrows Capital eventually cost investors millions and brought down Celsius Networks and Voyager with it.

The big move in FTT tokens is understandable today, but we don’t know exactly what Bankman-Fried may be forced to sell if Alameda is indeed in trouble. Alameda had a large position in Solana, which is why that token is down today, but there could be others.

Not only is Alameda a big player in crypto trading, but FTX is a widely used crypto exchange, so there have been a lot of traders moving off the exchange. That could make the declines even worse, which is something for everyone in crypto to watch over the next few days.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why cryptocurrencies went into free fall overnight appeared first on The Motley Fool Australia.

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More reading

• Forget Dogecoin, this crypto could be the even bigger winner from Elon Musk’s Twitter takeover
• How Elon Musk caused Dogecoin, Shiba Inu, and BNB to spike again on Monday

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

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The ASX is home to a large number of companies that pay shareholders dividends each year.

Two buy rated dividend shares that offer investors good yields right now are listed below. Here’s why analysts rate them highly:

HomeCo Daily Needs REIT (ASX: HDN)

The first ASX dividend share that analysts say is a buy is the HomeCo Daily Needs REIT. It is a property company that invests in convenience-based assets across the neighbourhood retail, large format retail, and health and services sub-sectors.

Goldman Sachs is a fan of the company and has a buy rating and $1.57 price target on its shares.

The broker believes HomeCo Daily Needs REIT’s shares are “undervalued at its current valuation given its diversified tenant base.” Goldman also highlights that the company’s portfolio is “well positioned to benefit from secular trends toward last-mile fulfilment offerings.”

As for dividends, its analysts are forecasting dividends per share of 8.3 cents in FY 2023 and 8.5 cents in FY 2024. Based on the current HomeCo Daily Needs share price of $1.25, this will mean dividend yields of 6.6% and 6.8%, respectively.

Rural Funds Group (ASX: RFF)

Another ASX dividend share that has been named as a buy is Rural Funds. It is an Australian agricultural property company with a portfolio of high quality assets.

Bell Potter is positive on the company and recently upgraded its shares to a buy rating with a $2.75 price target.

Once again, its analysts believe that Rural Funds’s shares are undervalued at the current level. The broker notes that “the current discount to adjusted NAV reflects what historically would be considered an attractive entry point.”

In addition, the broker is forecasting Rural Funds to continue to pay generous dividends in the coming years. It is expecting an 11.7 cents per share dividend in FY 2023 and then a 12.7 cents per share dividend in FY 2024. Based on the current Rural Funds share price of $2.45, this represents yields of 4.8% and 5.2%, respectively.

The post 2 dirt cheap high yield ASX dividend shares to boost your income: analysts appeared first on The Motley Fool Australia.

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More reading

• Experts name 2 ASX dividend shares to buy with great yields
• These ASX dividend shares have been named as buys
• Set for life: 5 ASX dividend shares I’d invest in if I ever had a million-dollar windfall
• Experts name 2 ASX dividend shares to buy with great yields
• Analysts say these top ASX dividend shares are buys right now

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 positions in and has recommended RURALFUNDS STAPLED. 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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If you’re wanting to strengthen your portfolio with some ASX 200 shares, you may want to look at the two listed below.

Both have recently been named as buys by leading brokers. Here’s why they could be buys:

ResMed Inc. (ASX: RMD)

The first ASX 200 share for investors to look at buying this month is ResMed.

It is a leading medical device company with a focus on sleep treatment solutions, which is a great market to be in. With education around sleep disorders improving every year, ResMed’s total addressable market continues to increase.

This certainly bodes well for demand for ResMed’s world class hardware and software solutions in the coming years. Particularly given how management estimates that only 20% of sufferers have been diagnosed.

Morgans is a fan of ResMed and currently has an add rating and $37.00 price target on its shares. This compares to the latest ResMed share price of $32.57.

TechnologyOne Ltd (ASX: TNE)

Another ASX 200 share that analysts are tipping as a buy is enterprise software provider Technology One.

It has won a lot of admirers in recent times thanks to its ongoing transition to a software-as-a-service (SaaS) focused business. This transition has been very successful so far and management appear confident this positive trend will continue in the coming years.

So much so, the company is aiming to almost double its annual recurring revenue (ARR) to $500 million by FY 2026. This also bodes well for Technology One’s profit growth, given that it is higher margin revenue.

The team at Bell Potter is very positive on Technology One. It currently has an add rating and $14.25 price target on its shares. This compares favourably to the current Technology One share price of $12.05.

The post Analysts name 2 excellent ASX 200 shares to buy now appeared first on The Motley Fool Australia.

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More reading

• 4 ASX 200 shares trading ex-dividend next week
• Leading brokers name 3 ASX shares to buy today
• Analysts name 2 ASX 200 shares to buy and hold
• Why Brainchip, Calix, Fortescue, and ResMed shares are sinking
• Why is the ResMed share price sinking 6% on Friday?

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 ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. The Motley Fool Australia has recommended TechnologyOne Limited. 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 National Australia Bank Ltd (ASX: NAB) share price will be one to watch today.

This follows the release of the banking giant’s full year results this morning.

NAB share price on watch following FY 2022 results

• Cash earnings up 8.3% to $7,104 million
• Statutory net profit up 8.3% to $6,891 million
• CET1 ratio 11.51%
• Net interest margin (NIM) down 6 basis points to 1.65%
• Exit NIM of 1.72%
• Fully franked final dividend of 78 cents per share
• Full year dividend up 18.9% to 151 cents per share

What happened in FY 2022?

For the 12 months ended 30 September, NAB reported an 8.3% increase in cash earnings to $7,104 million.

A key driver of this growth was the strong performance of its Business & Private Banking business. It reported a 21.5% increase in cash earnings to $3,013 million. Management advised that this was driven by higher revenue reflecting strong volume growth and higher margins, combined with lower credit impairment charges. These results were partly offset by higher operating expenses including additional bankers and resources to support growth, the impact of the LanternPay acquisition and investment in technology capabilities.

Also performing positively was its Corporate & Institutional Banking business, which reported a 34.9% increase in cash earnings to $1,628 million. This reflects higher revenue mainly from strong volume growth and higher margins, combined with lower credit impairment charges.

The New Zealand Banking business was on form and delivered a 14.1% increase in cash earnings to NZ$1,403 million. Once again, higher revenue, volumes, and margins drove this growth. This was partly offset by higher credit impairment charges and operating expenses.

Finally, NAB’s Personal Banking business was a disappointment, reporting a 3.6% decline in cash earnings to $1,591 million. Management advised that this earnings decline primarily reflects the impact of home lending competition on margins.

In light of its overall earnings growth in FY 2022, the NAB board has declared a fully franked final dividend of 78 cents per share. This brought the bank’s full year dividend to 151 cents per share, which is an increase of 18.9% year over year.

How does this compare to expectations?

Unfortunately for the NAB share price, this result appears to have fallen a touch short of expectations.

For example, according to a note out of Goldman Sachs, its analysts were expecting NAB to report cash earnings of $7,215 million and a final dividend of 77 cents per share.

It has missed on earnings but beaten on its dividend.

Management commentary

NAB CEO, Ross McEwan, was pleased with the bank’s performance in FY 2022. He said:

Our FY22 results are pleasing. Compared with FY21, cash earnings rose 8.3% and all businesses contributed to underlying profit growth of 11.5%. This outcome reflects continued execution of our strategy including targeted volume growth and a disciplined approach to managing costs while investing for growth. After 11 years of interest rate reductions, earnings have also benefitted in FY22 from the rising interest rate environment.

McEwan also spoke positively about the bank’s future. He commented:

Our strategy is long term, and is not dependent on any particular operating environment or economic conditions. It is centred around an enduring ambition to improve the outcomes for our customers and colleagues. We have made good progress over the past two years which positions us well for a changing environment. However, there is more we can do. We will continue to remain focused on the disciplined execution of our strategy to support sustainable growth in earnings and shareholder returns over time.

Though, he did warn that higher interest rates and inflation could cause some bumps in the road.

Despite improved FY22 asset quality outcomes, the potential impact of higher interest rates and higher inflation on the outlook is uncertain, with a wide range of plausible outcomes. To reflect this, collective provisions remain prudently set at 1.31% of credit risk weighted assets.

The post NAB share price on watch following FY22 earnings miss appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Are ASX 200 bank shares a no-brainer buy in an inflationary environment?
• Are NAB shares a buy ahead of this week’s results?
• Brokers name 2 ASX 200 dividend shares to buy
• How much could I expect to make in a year if I bought $5,000 of NAB shares right now?

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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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Maple-Brown Abbott portfolio manager Phillip Hudak offers his opinion on a trio of ASX shares that have plummeted recently.

Cut or keep?

The Motley Fool: Let’s examine three ASX shares that have been devastated this year, and see if you think each of these fallen stars are now a bargain to pick up or if you’d stay away.

The first one is Whispir Ltd (ASX: WSP), an ASX growth stock which has plunged almost 80% year to date.

Phillip Hudak: It’s currently a challenging environment for Whispir. There is, I suppose, a unique difference between Whispir’s sort of SaaS model as compared to many other players out there. Transactional revenue, which is volume-based, represents about three-quarters of the revenue of the business as compared to platform and services, which makes up the remaining part. This makes the business highly volatile to movements in volumes and can materially impact Whispir’s revenues. 

You’ve seen that actually come through from the pandemic-related messaging volumes, which boosted volumes from state health departments in the first half of FY22, and those volumes are mean-reverting. Even when you strip out the temporary boost that came through, the underlying growth potentially is limited and coming through from there. 

While the company has cash on hand and they’re pretty confident on the business reaching positive EBITDA, we believe it’s actually going to be a challenging environment, at least in the short term for the company.

MF: Fair enough. Next one is retailer Dusk Group Ltd (ASX: DSK), which is 39% down since the start of the year. I believe they sell candles, don’t they?

PH: Yes, they do. Dusk is a really interesting company, and looking at the FY22 result, the training update that was provided was reasonably strong, although we acknowledge that they were cycling lockdowns in the PCP. 

The company noted that there’s been recent evidence of customers trading down, although remains reasonably confident going into the Christmas period. Interestingly, gross margins are holding up, which is pretty similar to the commentary received from other retailers with the exclusion of Baby Bunting Group Ltd (ASX: BBN). Unlike most retailers, Dusk has a better inventory balance compared to other retailers in the space.

The risk of having to aggressively discount in a potentially slowing market is maybe less of a risk compared to other retailers out there in the space. Thus market cap is underpinned by a net cash position, and it’s got a pretty healthy dividend coming through. 

There’s no question that the macro conditions are expected to weaken here in Australia, although in the short term, the market is very bearish [on] retailers, and companies like Dusk are probably better positioned than other companies in the sector. 

I suppose the key risks for the company include consumer confidence, the shift we are seeing from spending on products to services by consumers, and the potential risks around comping more challenging like-for-like sales going forward.

MF: The third one is a transport company, isn’t it? Kelsian Group Ltd (ASX: KLS).

PH: That’s correct, yes.

It’s been an interesting journey for the company. If you look at even going back to, I think, mid-2021, the stock was trading over $10 and the market factored in a number of NSW privatisation bus contract awards, which didn’t eventuate for the company. And the share price’s subsequently fallen materially there. 

The most recent results, the business has been impacted by labour issues and rising fuel costs, although the bus earnings are defensive with potential upside to come through with contract renewals and extensions. 

In addition to that is the medium-term growth that is expected to come through from the tourism recovery. And this is supported by positive commentary from recent peers providing positive trading updates. 

I suppose the key risk for the company is failure to renew bus contracts and further cost pressures coming through for the business.

MF: Great. And that one also gives out a bit of a dividend as well, doesn’t it?

PH: Yep.

The post 2 ‘interesting’ ASX dividend shares to buy and one growth stock to ignore: expert appeared first on The Motley Fool Australia.

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More reading

• These 10 predictions could help you profit from the stock market regardless of inflation, interest rates or even another bear market
• This ASX All Ordinaries tech share just crashed 19%. What’s doing?
• Here are the top 10 ASX 200 shares today
• 2 slaughtered ASX dividend shares now looking attractive: fund
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tony Yoo has positions in Dusk Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Whispir Ltd. The Motley Fool Australia has recommended Baby Bunting, Dusk Group Limited, and Whispir Ltd. 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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