Category: Stock Market

The Qantas Airways Limited (ASX: QAN) share price is back in focus today after its latest big announcement. Australia’s largest airline is set to become even larger as it looks to fully acquire Alliance Aviation Services Ltd (ASX: AQZ).

Qantas shares are swapping hands at $5.58 in early morning trade, a fall of 1.59%. The airline operator’s shares have been making a resurgence since the new year ticked over. Notably, the share price is up by around 9%, while the broader market is still in the red year-to-date.

Meanwhile, the Alliance Aviation share price is soaring this morning, up 26.5% to $4.44 at the time of writing.

Let’s take a look at what this deal entails.

Big deal for competition in the air

Investors will be attempting to revalue the Qantas share price today as the airline makes a play at gobbling up air charter services operator, Alliance.

According to the release, the two companies have entered into a scheme implementation deed for Qantas to acquire the remaining 80% or so shares on issue.

The agreed-upon consideration is one Qantas share at $4.75 per Alliance share. This represents a 35% premium to the $3.51 Alliance share price at yesterday’s close. Additionally, it values the fly-in, fly-out operator at an enterprise value of $919.2 million.

Under the terms of the deal, Alliance will be permitted to pay out one or more cash dividends before the scheme becomes effective. However, any dividends paid out to shareholders will reduce the total consideration appropriately.

Importantly, the deal will need to get the all-clear from the Australian Competition and Consumer Commission — an objective that might be difficult considering the fuss generated when Qantas took a 19.9% stake in Alliance back in 2019.

The Qantas share price is essentially flat since it acquired its initial interest in Alliance.

What is management saying?

The smaller airline operator is keen on making the deal happen. Indicating this, Alliance chair Steve Padgett said:

Our three core principles of safety, operational excellence (reflected in market leading on-time performance) and profitability have underpinned our success. Qantas is Australia’s national carrier and has been operating for more than 100 years. It has a consistent approach to business and would be a quality ongoing owner of our business.

Meanwhile, Qantas CEO Alan Joyce highlighted that the acquisition would mean an improved QantasLink, better positioned to compete in a highly competitive market.

What’s next for the Qantas share price?

From here, the acquisition will be subject to competition clearance, an independent review on behalf of shareholders, Court approval, and shareholder approval.

Furthermore, Alliance said an update with more details will be provided in time. In the meantime, the deal carries a $7.6 million break fee to Qantas if Alliance walks away.

Qantas boasts a market capitalisation of $10.69 billion based on the current Qantas share price.

The post Qantas share price stalls amid Alliance Aviation acquisition appeared first on The Motley Fool Australia.

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• Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor Mitchell Lawler 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 Alliance Aviation Services Ltd. The Motley Fool Australia has positions in and has recommended Alliance Aviation Services 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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The BWX Ltd (ASX: BWX) share price has come under pressure on Thursday.

In morning trade, the personal care products company’s shares are down 22% to a multi-year low of $1.45.

Why is the BWX share price being hammered?

Investors have been selling down the BWX share price today after the company’s FY 2022 guidance fell well-short of the market’s expectations.

When BWX released its half-results in February, it told the market it expected to deliver strong underlying revenue and EBITDA growth in FY 2022. However, it expected this growth to be weighted to the second half.

While this is always a bit of a red flag, the market appeared confident BWX would deliver on its guidance and was forecasting strong full year earnings and revenue growth.

However, as you might have guessed from the BWX share price performance today, the company’s second half has not gone to plan.

What did BWX say?

BWX advised that it expects FY 2022 underlying revenue to be in the range of $240 million to $250 million for FY 2022. This will be up 24% to 29% year on year, driven by positive performance from Sukin and Mineral Fusion but impacted by the underperformance of its digital businesses.

As for earnings, the strong growth that was promised in FY 2022 is non-existent after its earnings went backwards in the second half.

BWX now expects to report underlying EBITDA in the range of $34 million to $37 million. This represents a decline of 1.5% to growth of 7% on FY 2021’s EBITDA of $34.5 million.

Management advised that this reflects the impacts of a higher operating cost base, and recent acquisition investments not yet meeting growth expectations. In addition, the company notes that freight and supply chain costs are substantially higher than the prior corresponding period due to COVID impacts.

Refreshingly, the company isn’t hiding from its underperformance like many companies do. For example, it has provided the market with analyst consensus estimates to compare its performance against.

It notes that analysts were expecting revenue of $261 million (up 34%) and ETBIDA of $45.1 million (up 31%). As a comparison, the top end of BWX’s guidance range is revenue of $250 million and EBITDA of $37 million.

Management commentary

BWX’s new CEO, Rory Gration, was disappointed with the half. He also revealed plans to reduce the company’s cost base to a more sustainable level. Mr Gration said:

“BWX’s instore revenue performance has accelerated from 1H22 and the business is supported by strong brands and an ability to scale distribution in key markets and sales channels. Initiatives for reducing our cost base are a key priority, supported by improved visibility and cost controls to ensure sustainable revenue growth.

“With less distractions across the business, the team is focused on streamlining and simplifying our operating model to ensure BWX can continue to grow in a sustainable and profitable way – we look forward to sharing more details at our upcoming Investor Day.”

The post Here’s why the BWX share price is crashing 22% to a multi-year low today appeared first on The Motley Fool Australia.

More reading

• Brokers: 2 beaten-up ASX shares to buy next month

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 BWX 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 BHP Group Ltd (ASX: BHP) share price has kicked off May 2022 in the red. What is the outlook for the company for the rest of the month and beyond?

Without a crystal ball, it’s impossible to know what a company’s share price is going to do on any day, week, month or even year.

Over the last month, BHP shares have fallen more than 9%, and since the beginning of May, have drifted lower by more than 1%.

What do analysts think of the BHP share price?

One of the latest ratings comes from UBS. It is ‘neutral’ on BHP with a price target of $43. That implies a potential decline of another 9%.

UBS notes BHP’s reduction in production and the prospect of elevated costs. While commodity prices have been strong recently, the broker is expecting prices to fall.

However, some brokers remain positive about the business. For example, Morgans rates the business as a buy, with a price target of $54.30. It thinks that strong prices for BHP’s resources are a stronger positive than the headwinds that BHP is facing.

Citi also rates BHP as a buy, with a price target of $56. The broker is attracted to BHP’s high level of profit and cash flow thanks to elevated commodity prices.

What happened in the latest quarter?

BHP reported a drop in production by its key iron ore division.

The three months to 31 March 2022 showed a 10% decline in production to 59.7mt, compared to the same period to 31 December 2021. BHP blamed the lower volume at its Western Australian iron ore operations on temporary labour constraints due to COVID-19, train driver shortages and planned maintenance activities.

Copper production volume was 1% up quarter on quarter, but down 10% in the year-to-date.

Nickel production volume was down 13% both quarter-on-quarter and year-on-year.

Production guidance for FY22 remained unchanged for iron ore, metallurgical coal and energy coal.

However, full-year total copper production guidance has been lowered to between 1,570kt to 1,620kt, reflecting lowered production guidance for Escondida.

The full-year nickel production guidance has been lowered to between 80kt to 85kt due to COVID-19 related labour constraints.

What next for the BHP share price?

Commodity prices are almost impossible to predict.

BHP has just divested its interest in BHP Mitsui Coal to Stanmore Resources Ltd (ASX: SMR). Stanmore paid a US$1.1 billion cash consideration at completion, plus a preliminary completion adjustment of approximately US$200 million for working capital.

US$100 million cash remains payable to BHP in six months with the potential for an additional amount of up to US$150 million in a price-linked earnout payable to BHP in the 2024 calendar year.

Completion of the proposed merger of BHP’s oil and gas portfolio to Woodside Petroleum Limited (ASX: WPL) is targeted for 1 June 2022.

BHP valuation

BHP is valued at under 8x FY22’s estimated earnings, using UBS numbers.

Morgans thinks that BHP is valued at around 9x FY22’s estimated earnings.

On Citi’s numbers, the BHP share price is valued at 7x FY22’s estimated earnings.

The post What’s the outlook for the BHP share price in May? appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 inflation-beating ASX dividend shares to buy
• ASX 200 mining shares slump, dragging index into the red
• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• The BHP share price has lost 10% in 2 weeks. Here’s why this expert is tipping a recovery
• What’s the outlook for ASX 200 mining shares in May?

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 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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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

Shares of electric car manufacturer Tesla (NASDAQ: TSLA) dipped 2.2% in late morning trading Wednesday, down 2.2% as of 11:30 a.m. ET.

The dip erased Tesla’s gains from Tuesday, which came as investors digested some positive production news from Tesla’s China gigafactory.

So what

The most likely culprit for Tesla’s decline today is simply volatility. The whole stock market is pretty much in the red today, and the tech-heavy Nasdaq in particular (many investors consider Tesla more of a tech stock than an automotive stock) is down 1.4%. It makes sense that if investors are nervous about tech, they’d also be nervous about Tesla stock, which at a recent valuation of 122.5 times earnings is quite pricey.

That being said, there’s also some substantive news today that may be unnerving investors.

Tesla, as is well known, wants to grow its car production numbers from just under 1 million units last year to as many as 1.5 million units this year. To do that, it’s opened two new gigafactories already just this year, one in Texas and another in Germany. But as electrek.com reports today, an environmental group in Germany called “the Green League” has filed a complaint with a German court, demanding that Tesla’s operating license in Germany be revoked based on a reported paint leak at its factory.

Now what

With Gigafactory Berlin expected to eventually produce 500,000 cars per year, this is a monkey wrench that Tesla’s production plans did not need — but a close review of the complaint reveals that it probably won’t be a huge problem.

As electrek notes, out of “15,000 liters of a paint mixture” that were “pumped out by a disposal company” from Tesla’s factory, “two to three liters” of the “slightly hazardous to water” paint mixture leaked onto an access road, and then … “the paint did not get into the sewage system or groundwater” (emphasis added).

So Exxon Valdez this is not. While the Green League is insisting Tesla should be required to pave areas around its paint shop to ensure any future leaks can’t get into the ground water, this sounds like an easy fix. I seriously doubt it’s going to have any lasting impact on Tesla’s German production…or Tesla’s stock price, either. 

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

The post Why Tesla stock dropped this morning appeared first on The Motley Fool Australia.

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Rich Smith 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 Tesla. 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.

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

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There are some compelling ASX shares that are now much cheaper than they were a few months ago. May 2022 may be a good time to look at these possibilities.

Some businesses are exposed to large addressable markets and are seeking to grow revenue strongly.

Revenue growth can help the compounding potential of these businesses over time.

Here are two compelling ASX shares to consider:

Temple & Webster Group Ltd (ASX: TPW)

This is a business that wants to become a very large Australian retailer of homewares, furniture and home improvement products.

The business valuation has fallen significantly in recent months. Since the start of 2022, Temple & Webster shares have dropped over 50%.

In the second half of FY22, it “continues to trade well” according to management. There has been year on year revenue growth of 23% for the period of 1 January to 30 April compared to the same period in 2020. It was up 116% compared to 2020.

Despite all of the global COVID-19 impacts, the company said its diversified supply chain, including both private label and drop shipping, continues to “hold up well” and underpin growth. It said it’s in a “strong” stock position in the fourth quarter of FY22.

The ASX share continues to invest in areas that help build “key strategic moats” around the business (like data, logistics, augmented reality and AI). It’s going to keep investing in organic growth opportunities like the private label offering while leaving room for potential acquisitions.

It just launched ‘The Build’ website, which targets the $16 billion home improvement market. An initial investment of around $10 million will be made across FY22 and FY23. The Build is expected to make a material revenue contribution and be earnings before interest, tax, depreciation and amortisation (EBITDA) positive in FY26.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

This exchange-traded fund (ETF) helps investors get exposure to the global video gaming and e-sports sector.

For readers that know about gaming businesses, here are some of the largest names in the ASX share’s portfolio: Nvidia, Tencent, Advanced Micro Devices, Activision Blizzard, Nintendo, Netease, Sea, Unity Software, Electronic Arts and Nexon.

VanEck notes that there are more than 2.7 billion active gamers worldwide. Since 2015, video gaming has achieved 12% average annual growth since 2015 and e-sports revenue has increased by an average of 28% per annum.

The competitive video gaming audience is expected to reach 646 million people globally in 2023, driven partly by the rising population of digital natives, according to the Newzoo Global Esports Market Report.

E-sports has created new potential revenue streams for the video gaming businesses including game publisher fees, media rights, merchandise, ticket sales and advertising.

It has an annual management fee of 0.55%.

The post Are these 2 compelling ASX shares buys in May 2022? 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 Activision Blizzard, Advanced Micro Devices, Nvidia, and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Electronic Arts and NetEase. The Motley Fool Australia has recommended Activision Blizzard, Nvidia, Temple & Webster Group Ltd, and VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. 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 Fortescue Metals Group Limited (ASX: FMG) share price has fallen on difficult times recently.

The world’s fourth largest iron ore miner’s shares have come under pressure amid the plunging price for the steel-making ingredient.

At Wednesday’s market close, Fortescue shares ended the day 2.38% lower to $20.12. This means that its shares are now down 8% for the past three trading days.

What’s going on with iron ore prices?

The drop of iron ore prices over the past week is providing a strong resistance to the resources industry.

As COVID-19 continues to spread throughout China, there are fears that the government may enforce a wider lockdown.

Iron ore prices have sunk almost 5% since this time last Wednesday to trade at US$144.08 per tonne.

It is expected that there will be a reduction in demand from Chinese steel mills in the next few months. This is because the construction sector has been heavily affected by the government’s strict zero-COVID policy.

The property and infrastructure industry makes up roughly 60% of China’s steel needs.

What does this mean for Fortescue?

The sharp decrease will no doubt have an impact on Fortescue’s bottom line; however, profits are still expected to be churned out.

In its March quarterly trading update, Fortescue reported record year to date iron ore shipments of 46.5 million tonnes. Coupled with its industry-leading C1 costs of US$15.78 per wet metric tonne, this still translates to bumper profits.

The company is forecasting an upgraded shipments guidance of 185 million tonnes to 188 million tonnes for FY22.

C1 costs are expected to slightly rise between US$15.75 and US$16 per wet metric tonne due to inflationary costs.

Only time will tell if Fortescue can achieve the above guidance, despite its strong dependence on the Chinese market. If it does miss the mark however, then its shares could tumble significantly further.

What do the brokers think?

Following the trading update, a couple of brokers rated the company’s shares with varying price points.

The team at UBS raised its 12-month price target by 9.4% to $18.70 for Fortescue shares.

However, Goldman Sachs had a more bearish tone, slashing its rating by 2% to $14.90 apiece. Based on the current share price, this implies a potential downside of almost 26% for investors.

Fortescue share price summary

It has been a rollercoaster ride for Fortescue investors, with its shares reaching all-time highs before sinking near 52-week lows.

Over the last 12 months, the company’s share price is down 11%, with year to date up almost 5%.

Fortescue has a market capitalisation of around $61.95 billion and approximately 3.08 billion shares on its books.

The post The Fortescue share price is down 8% in May. Is now the time to buy? appeared first on The Motley Fool Australia.

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• How did the Fortescue share price stack up in April?

Motley Fool contributor Aaron Teboneras 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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Despite falling on hard times recently, the Lynas Rare Earths Ltd (ASX: LYC) share price has been a star performer over the medium-term.

Arguably, investing your money in companies that are new to market or emerging can reap some serious rewards. Of course, there is an inherent risk, particularly given that newcomer ASX growth shares, including this rare earths producer, traditionally lie outside the S&P/ASX 200 Index (ASX: XJO).

Below, we calculate how much you would have made if you’d bought $5,000 worth of Lynas shares five years ago.

How much would your initial investment be worth now?

If you’d invested $5,000 into Lynas shares in 2017, you would have picked them up for approximately 83 cents apiece. This equates to about 6,024 shares without topping up along the way during the retracement periods.

Fast-forward to today, Lynas shares closed at $8.95 on Wednesday. This means that those 6,024 shares would be worth a staggering $53,914.80.

When looking at percentage terms, this implies a gain of 980% or an average yearly return of 60.90%.

In comparison, investing the same amount in an ASX 200 index-tracking fund would have given back 24.30% over five years. This equates to an average of 4.45% per year.

If you are wondering about Lynas’ dividends, the company has chosen not to pay a percentage of its profits to date. Instead, it has decided to invest in its business and keep the balance sheet healthy in times of commodity downturns.

Lynas share price summary

Over the past 12 months, the Lynas share price has travelled more than 57% higher but is down 12% year to date.

The company’s shares hit a 52-week high of $11.59 cents in early April before treading lower in the following weeks.

Lynas presides a market capitalisation of roughly $8.2 billion and has more than 902.41 million shares on its registry.

The post If you’d bought $5,000 of Lynas shares 5 years ago, guess how much you’d have now appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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 National Australia Bank Ltd (ASX: NAB) share price will be in focus this morning.

This follows the release of the banking giant’s half-year results.

NAB share price on watch after earnings miss

• Revenue up 4.6% over the prior corresponding period to $9,071 million
• Cash earnings up 4.1% to $3,480 million
• Net interest margin (NIM) down 11 basis points to 1.63%
• CET1 ratio of 12.48%
• Fully franked interim dividend per share up 22% to 73 cents

What happened during the half?

For the six months ended 31 March, NAB delivered a 4.6% increase in revenue to $9,071 million. This reflects strong growth in lending and deposits which were up 10% and 12%, respectively, versus the prior corresponding period.

It was a similar story on the bottom line, with cash earnings growth of 4.1% to $3,480 million. A key driver of this growth was the bank’s business banking operations.

The Business & Private Banking segment reported a 17.5% increase in cash earnings to $1,429 million. This reflects increased revenue from strong growth in lending and deposit volumes, broadly stable margins and a rise in fee income. Credit impairment charges were also lower. This was partially offset by higher operating expenses, including additional resources to support growth and investment in technology.

Also performing positively was the Corporate & Institutional Banking segment. It delivered a 3.1% increase in cash earnings to $806 million. This was driven by increased revenue, with strong growth in lending and deposit volumes combined with higher markets and fee income. This was partially offset by lower credit impairment write-backs and higher operating expenses.

In New Zealand, NAB reported an 8.4% lift in cash earnings to NZ$668 million. This reflects growth in lending and improved margins, which was partly offset by higher operating expenses and a rise in credit impairment charges.

Finally, the Personal Banking segment was out of form and reported an 8.3% decline in cash earnings to $788 million. Management advised that this was driven by lower credit impairment write-backs, combined with reduced revenue given competitive pressures and mix shift in the housing lending portfolio.

How does this compare to expectations?

While this result appears solid on paper, it 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 first half cash earnings of $3,545 million.

Though, positively, NAB’s interim dividend of 73 cents per share came in ahead of Goldman’s forecast by one cent.

Management commentary

NAB’s CEO, Ross McEwan, was pleased with the bank’s performance during the half. He said:

“The execution of our strategy is delivering good results for our customers, colleagues and shareholders. We are producing better and faster experiences and getting the basics right more consistently. This has been achieved during a period of increased customer activity across all divisions of the bank, including the fastest growth in business lending since the GFC. 1H22 cash earnings increased 4% compared with 1H21. Revenue rose 4.6%, benefitting from pricing discipline and strong growth in lending and deposits which were up 10% and 12% respectively versus March 2021.”

However, one comment that could weigh on the NAB share price today relates to its cost growth targets, which have been reset higher.

He commented:

“Focused investment has been key to delivering strong momentum across our businesses. The recent shift to a higher growth outlook provides greater scope to keep investing while continuing to deliver productivity benefits. This, along with inflationary pressures has prompted a reset of our FY22 cost growth target to approximately 2-3%, to ensure we drive shareholder returns while balancing cost disciplines and growth opportunities. This target includes costs associated with the essential work underway to deliver the requirements of our Enforceable Undertaking (EU) with AUSTRAC.”

Nevertheless, Mr McEwan revealed that he is confident in the region’s medium term economic outlook and the strength of its balance sheet despite recent share buybacks. He said:

“Our results this period were achieved while maintaining strong balance sheet settings. This is key to delivering sustainable growth and keeping the bank safe. Our capital levels remain above our targets despite completing a $2.5 billion buy-back, with a further $2.5 billion buy-back commencing in May 2022. Our FY22 term funding is also well advanced. The lift in our 2022 interim dividend reflects progress of our strategy, confidence in the sustainability of our performance and our continued optimism in the medium term outlook for the Australian and New Zealand economies.”

The post NAB share price on watch amid $3,480 million half-year cash profit appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why ASX 200 bank shares are in the spotlight
• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• Own NAB shares? Here’s what to expect with the bank’s half-year result
• The ASX 200 shares that fund managers are buying and dumping

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 Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price could be close to being fully valued.

That’s the view of analysts at Goldman Sachs following the banking giant’s half-year results.

How did ANZ perform compared to expectations?

According to the note, ANZ delivered cash earnings ahead of the broker’s expectations thanks to lower bad debts. However, things weren’t quite as positive for its operating profit, which fell short of forecasts due to higher costs.

Goldman explained:

“ANZ’s 1H22 cash earnings grew by 4% on pcp, 5% ahead of GSe. In contrast, 1H22 PPOP came in -3% lower than GSe, as a stronger NIM performance was more than offset by higher operating expenses and weaker non-interest income. The proposed interim DPS of A72¢ implies a payout ratio of 65% (non discounted DRP), while the 1H22 CET1 ratio of 11.5% (18.0% globally-harmonised) was 26 bp lower than GSe, largely driven by the RWA impact of higher rates.”

What did Goldman say about the ANZ share price?

The note reveals that Goldman no longer sees sufficient value in the ANZ share price.

It has downgraded the bank’s shares to a neutral rating and cut the price target on them to $29.84. And while this still implies potential upside of 9%, Goldman sees better opportunities elsewhere in the financial sector.

Particularly given how ANZ has now effectively abandoned its FY 2023 $8 billion cost base target, which offered valuation support, and a couple of specific issues putting pressure on the bank’s performance.

Goldman commented:

“Today’s result highlighted a significant shift in ANZ’s cost aspirations, and our analysis suggests this is not just due to inflationary pressures, but also ANZ specific issues, including higher than previously anticipated investment spend requirements (that will also be expensed quicker), and lower than previously expected levels of productivity.

With our revised TP now implying only 9% upside, in the middle of our A&NZ Financials’ coverage, we downgrade to Neutral. For the sector, beyond the cost issues, we saw ANZ’s NIM result and rate leverage as more constructive than we had previously expected, and asset quality — and therefore provisioning — trends as benign.”

The post ANZ shares downgraded after cost cutting plan abandoned appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
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• Why ASX 200 bank shares are in the spotlight

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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If you’re looking to beat inflation with some dividend shares, then the two listed below could be worth considering.

Analysts have recently named these ASX dividend shares as buys. Here’s what you need to know about them:

Adairs Ltd (ASX: ADH)

The first ASX dividend share for investors to look at is leading furniture and homewares retailer, Adairs.

While trading conditions have been tough this year, Adairs has been tipped to bounce back strongly in FY 2023. Particularly given its new national distribution centre and the recent acquisition of Focus on Furniture.

Morgans expects this to be the case and has put an add rating and $3.50 price target on its shares.

As for dividends, the broker is forecasting fully franked dividends of 19 cents per share in FY 2022 and 26 cents per share in FY 2023. Based on the current Adairs share price of $2.76, this will mean yields of 6.9% and 9.4%, respectively, over the next couple of years.

BHP Group Ltd (ASX: BHP)

Another ASX dividend share that is rated as a buy is BHP. It is of course one of the world’s largest miners with a collection of world class operations across a range of commodities and geographies.

Thanks to strong commodity prices, BHP has been generating bumper free cash flows again in FY 2022. This has analysts tipping the Big Australian to pay some big dividends in the near term.

Morgans, for example, is forecasting fully franked dividends per share of ~$3.93 in FY 2022 and then ~$2.95 in FY 2023. Based on the current BHP share price of $47.40, this implies yields of 8.3% and 6.2%, respectively.

The broker also sees value in the miner’s shares with its add rating and $54.30 price target.

The post Analysts name 2 inflation-beating ASX dividend shares to buy appeared first on The Motley Fool Australia.

More reading

• ASX 200 mining shares slump, dragging index into the red
• Here’s how some of the biggest ASX 200 shares are responding to the RBA’s rate rise
• The BHP share price has lost 10% in 2 weeks. Here’s why this expert is tipping a recovery
• What’s the outlook for ASX 200 mining shares in May?
• April hasn’t been kind to the BHP share price. Here’s what went down

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 ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. 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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