Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) is off to a rough start, down 0.9% in morning trade, having earlier posted losses of more than 1%.

This comes following hefty selloffs in US and European markets yesterday (overnight Aussie time).

As with overseas markets, the ASX 200 is under pressure as investors fret over the possible outbreak of a shooting war between Russia and Ukraine.

Russian officials firmly deny any plans to invade neighbouring Ukraine. However, United States authorities continue to sound the alarm, saying Russian forces might concoct a pretext to invade any day now.

Peter Essele is head of portfolio management at Commonwealth Financial Network. Commenting on the broader market selloff, Essele said (quoted by Bloomberg):

Investors, wary of any bad news, have been unable to maintain positive momentum in equity markets across the globe as geopolitical risks dominate headlines. A further escalation of tensions in the near term could roil markets due to the potential impact on a tenuous global supply chain, particularly as the Fed prepares for its first-rate hike in years. A perfect storm may be on the horizon if calmer heads don’t prevail.

While ASX 200 investors are clearly jittery today, some shares are shining brightly amid the turmoil.

Yep, we’re talking about gold shares.

ASX 200 gold shares shining brightly

With rising global uncertainty, investors are turning to gold as a classic haven asset.

Witness the 3.1% gain in the S&P/ASX All Ordinaries Gold Index (ASX: XGD) today.

Now that index includes a number of gold miners not included in the ASX 200.

So how are ASX 200 gold shares performing?

Well, the Newcrest Mining Ltd (ASX: NCM) share price is up 3.2%.

Evolution Mining Ltd (ASX: EVN) shares are up 3.7%.

And the Northern Star Resources Ltd (ASX: NST) share price is up 4.8%.

What’s driving the rally?

As risk assets selloff, investors are increasingly looking to gold as a store of value during a time of increasing geopolitical uncertainty.

Gold is currently trading for US$1,900 per troy ounce. That’s the highest price since June.

As recently as 28 January that same ounce was worth US$1,791, meaning a 6% lift in the price of bullion in just 6 weeks.

And when gold lifts off, the ASX 200 gold shares that dig the yellow metal from the earth tend to follow it higher.

The post Here’s why ASX 200 gold shares are leaping higher today appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Wednesday

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 Bruce Jackson.

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The Humm Group Ltd (ASX: HUM) share price is shooting higher today.

In morning trade, the financial services company’s shares are up 7.5% to 92.5 cents.

Why is the Humm share price shooting higher?

The catalyst for the rise in the Humm share price on Friday is news that a deal has finally been struck between it and Latitude Group Holdings Ltd (ASX: LFS) for its buy now pay later (BNPL), instalment, and credit card operations.

According to the release, the two parties have executed a binding agreement that will see Latitude take control of these consumer businesses for a total consideration of $335 million. This represents cash of $35 million and 150 million Latitude shares.

There were concerns that recent weakness in BNPL shares could scupper the deal or lead to the consideration being reduced, but that has proven not to be the case. These terms are the same as those announced on 4 January when Latitude first tabled its offer.

Why acquire these operations?

Latitude believes it will generate $55 million of annual synergies from duplicate costs, technology rationalisation, and funding benefits by the end of 2023 following full integration.

In addition, the release notes that Humm Consumer is expected to generate $35 million of pre-tax cash earnings for the full year 2023. As a result, the combination is expected to deliver incremental pre-tax cash earnings of $90 million on a run-rate basis by the end of FY 2023, excluding $10 million of revenue synergies.

Ultimately, the transaction is expected to deliver double digit cash earnings per share accretion assuming full run rate synergies. This is despite the issue of 150 million new shares to Humm shareholders.

Management commentary

Latitude’s Managing Director and CEO Ahmed Fahour said: “The acquisition of Humm’s consumer business is a great outcome for both Latitude and Humm shareholders. The Transaction will deliver significant synergies and shareholder value, cementing our position as the leading instalments and consumer lending business in Australia and New Zealand and accelerate our international expansion.”

“Humm’s consumer business is a great fit for Latitude given Humm’s capability in big and small ticket BNPL and its merchant base, providing additional scale to Latitude at minimal marginal cost.”

Mr Fahour also revealed that Latitude is inviting Humm’s CEO to lead the BNPL business.

He said: “Upon completion, it is proposed that Humm Group CEO Rebecca James will be invited by Latitude to lead the combined group’s BNPL business. Latitude also intends to invite two Humm independent directors to join the Latitude Board.”

The Humm share price is down 27% over the last 12 months.

The post Humm (ASX:HUM) share price shoots higher on $335m Latitude BNPL deal appeared first on The Motley Fool Australia.

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• Yet another billionaire buys Rivian stock: Should you too?
• ‘Robust financial position’: Magellan share price surges 13% on half-year earnings
• Medibank (ASX:MPL) share price lifts despite rumours of failed hospital bid
• Inghams (ASX:ING) share price slumps 5% amid continued COVID impacts
• As markets fall, these 2 Nasdaq stocks are surging higher

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 Humm Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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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.

Barely days ago, the stock of Rivian Automotive (NASDAQ: RIVN) caught the market’s attention when billionaire George Soros’ investment fund revealed a stake in the electric vehicle (EV) start-up. Turns out, Soros isn’t the only billionaire that eyed Rivian.

In its latest 13F filing with the Securities and Exchange Commission, activist investor and billionaire Dan Loeb’s hedge fund, Third Point, revealed  ownership of 4,046,572 shares of Rivian for the quarter ended Dec. 31, 2021. As of that date, Third Point’s Rivian stake was valued at roughly $408.3 million. 

Notably, Third Point didn’t own any shares in Rivian until the third quarter, which means something about the EV pickup truck manufacturer must have caught Loeb’s attention in the following months. Rivian stock surged Thursday morning on the news, encouraging some to bet on Rivian stock ahead of the company’s quarterly earnings release on March 10. Should you jump in, too? 

But while institutional buying in stocks is seen as a stamp of approval, you must also remember that such financial institutions do not disclose their stock moves in real time, and a lot may change by the time you find out what they bought and sold.

So for example, the latest filings from Loeb’s and Soros’ funds reveal their portfolios as of the end of 2021, and there’s no knowing yet whether they still own, have bought more, or sold off Rivian shares since. 

In fact, if Loeb and Soros saw an opportunity in the sharp dip in Rivian’s stock price in the end of 2021, they must be disappointed given how far the EV stock has fallen further since — it’s down a whopping 37% year to date, as of this writing. 

The point being, if you want your money’s worth, you might want to pay less attention to billionaire moves on a stock and stay laser-focused on the company’s underlying fundamentals and growth opportunities. 

Rivian was an early mover in the red-hot EV industry, and its R1T pickup truck even won the 2022 MotorTrend Truck of the Year award. However, Rivian failed to meet its production target last year even as its net loss mounted to $2.2 billion against revenue of only $1 million during the nine months ended Sept. 30, 2021. 

Yet the demand for the R1T pickup has been strong so far, and Rivian is reportedly ramping up production rapidly now to nearly 200 units per week, according to Bloomberg. Meanwhile, Rivian is working on its R1S SUV as well as its commercial vans, for which it has already secured an order for 100,000 units from e-commerce giant Amazon (NASDAQ: AMZN).   

Rivian, though, must show the numbers to gain investors’ faith, which is why its upcoming earnings report is so important. Has it really scaled up production and deliveries? Has it delivered its first electric delivery vehicle (EDV) to Amazon as planned? Is it on track to start key projects like the construction of its second factory in Georgia this year? 

These are just some of the important questions investors in Rivian should seek answers to on March 10, as only answers in the affirmative can help the stock rebound and sustain momentum given that it’s still commanding a steep market capitalization of $58 billion despite the recent plunge. 

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

The post Yet another billionaire buys Rivian stock: Should you too? appeared first on The Motley Fool Australia.

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• Humm (ASX:HUM) share price shoots higher on $335m Latitude BNPL deal
• ‘Robust financial position’: Magellan share price surges 13% on half-year earnings
• Medibank (ASX:MPL) share price lifts despite rumours of failed hospital bid
• Inghams (ASX:ING) share price slumps 5% amid continued COVID impacts
• As markets fall, these 2 Nasdaq stocks are surging higher

Neha Chamaria has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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The Magellan Financial Group Ltd (ASX: MFG) share price is surging today after the wealth manager released its half-year results.

At the time of writing, Magellan shares are swapping hands at $20.75 apiece, a 13.26% gain. In comparison, the S&P/ASX 200 Index (ASX: XJO) is falling 0.97%.

Let’s take a look at what the funds manager reported today.

Magellan share price soaring

Highlights of the company’s half-year (H1 FY22) results include:

• Net profit after tax (NPAT) of $251.6 million, 24% more than the previous corresponding period (PCP) of H1 FY21
• Adjusted NPAT surged 16% to $248.1 million
• Adjusted revenue and other income up 15% to $384.1 million
• Adjusted diluted earnings per share up 15% to 134.4 cents per share
• Average funds under management up 12% to $112.7 billion.

What else happened in the half?

The company reported a 13% boost in its net tangible assets to $992.8 million. Its cash, financial, assets, and investments also increased 13% to $1,016.7 million. The company has no debt.

Magellan declared an interim dividend of 110.1 cents per share, a 13% increase on PCP. Magellan said its strong cash flows mean it can pay out 90-95% of its funds management profits. The dividend will be paid on 8 March.

Magellan believes it has “significant headroom” to continue to invest in the business. The company predicts its funds management expenses for FY22 will be between $125 to $130 million.

Management commentary

Speaking on the results boosting the Magellan share price today, interim CEO Kirsten Morton said:

Magellan has faced a number of challenges over recent months, however the group remains in a robust financial position and has delivered strong financial results for the period.

Magellan has a robust balance sheet with no debt and net tangible assets of $992.8 million, strong margins and operating cash flows which will enable us to continue to support and invest in the business.

We are focused on our core funds management business and delivering upon our investment objectives for our clients.

What’s next for Magellan?

Magellan will offer a 1 for 8 bonus issue of options to shareholders as part of a ‘significant’ capital management plan revealed today. These options will have an exercise price of $35 each with a five-year term. A prospectus will be lodged likely in March.

Further, Magellan intends to issue $10 million unlisted options to its staff. These options will also have a $35 exercise price and a five-year term.

Magellan is also considering implementing an on-market share buyback subject to market conditions. The company is suspending its dividend reinvestment plan and has no intention to invest further via Magellan Capital Partners.

Commenting on this initiative, Magellan chairman Hamish McLennan said:

We believe the capital management initiatives announced today will be attractive to shareholders and reflect our focus on our core funds management business.

These initiatives and proposals are in line with our aim to deliver capital efficiency, solid dividends and attractive returns for shareholders.

Magellan share price summary

The Magellan share price has dived 54% in the past year. In 2022, it has fallen 2.5%.

For perspective, the benchmark ASX 200 index has returned 4.8% in the past year.

Magellan has a market capitalisation of about $3.4 billion based on today’s share price.

The post ‘Robust financial position’: Magellan share price surges 13% on half-year earnings appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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The Medibank Private Ltd (ASX: MPL) share price is in the green today despite talk its bid for day hospital operator Cura Group, has fallen through.

Previously, it was reported the private health insurer might have been gearing up to release news of the acquisition in time for its half year results – set to drop next Friday.

At the time of writing, the Medibank share price is $3.23, 0.78% higher than its previous close.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has slipped 0.8% this morning.

Let’s take a look at the latest rumours surrounding Medibank.

Medibank‘s rumoured acquisition falls through

The Medibank share price appears unfazed by rumours its acquisition of private day hospital asset Cura has failed.

The private insurer was previously reported to have agreed to buy a stake in the business for an undetermined amount.

However, The Australian today reported the deal has been abandoned prior to settling.

Cura owns day hospitals in every Australian state and in the Australian Capital Territory (ACT).

Its crown jewels include Barton Private Hospital, Sydney Day Surgery Prince Alfred, and Somerset Private Hospital.

According to the publication, while the proposed acquisition’s cost was unknown, when Fresenius Medical Care purchased its majority holding in Cura – reported to be 70% – in 2017, it valued the hospital operator at $400 million.

While the publication didn’t confirm how big of a stake in Cura that Medibank was rumoured to be purchasing, Fresenius Medical Care hit back at initial reports it was offloading any of its stake. The company said:

Fresenius Medical Care is strongly committed to long-term ownership and continues to be deeply invested in growing the Cura Day Hospitals business. There is no plan to change this approach in the foreseeable future.

Medibank share price snapshot

While it’s gaining today, this year so far has been rough on the Medibank share price.

It has fallen 5% since the start of 2022.

Though, it’s currently 14% higher than it was this time last year.

The post Medibank (ASX:MPL) share price lifts despite rumours of failed hospital bid appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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 Bruce Jackson.

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The Inghams Group Ltd (ASX: ING) share price is sinking in early trade today, down 4.96%.

Inghams shares closed yesterday at $3.53 and are currently trading for $3.36.

Below we look at the highlights from Australia’s biggest integrated poultry producer’s financial results for the half-year ending 31 December (1H FY22).

Inghams share price slides on results

• Statutory earnings before interest, taxes, depreciation and amortisation (EBITDA) of $220.4 million, up 2.2% from 1H FY21; underlying EBITDA up 1.7%
• Statutory net profit after tax (NPAT) increased 8.8% year-on-year to $38.4 million; underlying NPAT was up 5.9%
• Net debt as at December 2021 of $264.6 million, with leverage of 1.3 times down from 1.7 times in December 2020
• Interim dividend of 6.5 cents per share (cps), fully franked, down from 7.5 cps in the prior corresponding period

What else happened during the half-year?

Inghams reported its group core poultry sales volume was up 5.6% from 1H FY21, powered by 6.5% growth in Australia. Its New Zealand core poultry sales volumes were flat, with the reintroduction of strict pandemic lockdowns impacting the market.

While operational efficiency programs continued, the company said COVID-19 had led to cost spikes in transport, heightened health and safety procedures, and increased overtime for its workforce, among others.

Total capital expenditure during the half-year came in at $24.0 million. Capex was down from the prior corresponding half year with some projects disrupted due to COVID and Inghams having completed its hatchery projects.

What did management say?

Commenting on the results pulling down the Inghams share price today, CEO Andrew Reeves said:

The first half of FY22 has been defined by the challenging operating environment that the business has had to navigate, which has been characterised by extended lockdowns and significant operational disruptions caused by ongoing pandemic conditions, with the most recent Omicron-related disruption to be reflected in 2H outcomes.

However, we remain optimistic about the future, especially as the impacts of Omicron recede. The first-half results are a testament to our ability to respond to external challenges and our ability to recover and adapt quickly.

What’s next?

The virus continues to cloud the short-term market outlook.

The Inghams share price could be under some pressure after management said it’s not possible to forecast how long the new variant’s impact will last. However, it said its “business is capable of recovering relatively quickly”.

The company also forecasts higher feed costs in the second half of the year. It’s holding 3-9 months of forward purchase cover on key feed ingredients.

Inghams share price snapshot

Over the past 12 months, the Inghams share price is down almost 7%. That compares to a gain of 5% posted by the S&P/ASX 200 Index (ASX: XJO).

It has also lost 7.4% year to date, compared to the benchmark’s 4.6% fall.

The post Inghams (ASX:ING) share price slumps 5% amid continued COVID impacts appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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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.

After a terrible January, investors had hoped that stock markets would be able to recover in February. Yet volatility has continued to rule the day, and persistent fears about interest rates and inflation have been particularly hard on the Nasdaq Composite (NASDAQINDEX: ^IXIC). As of 2:45 p.m. ET, the Nasdaq was down almost 2.5% Thursday afternoon.

Yet some companies have been able to keep generating good financial results and keep their businesses moving in the right direction. Today, some of the best performers include Nasdaq stocks Outset Medical (NASDAQ: OM) and Global-e Online (NASDAQ: GLBE). Below, we’ll look more closely at these stocks to see why people are excited about their future prospects.

Outset looks healthy

Shares of Outset Medical moved higher by 16% on Thursday afternoon. The medical technology company reported fourth-quarter financial results that made investors excited about its future.

Outset Medical’s growth was strong. Revenue of $28.2 million rose 63% from year-ago levels, completing a full year in which sales more than doubled from 2020. Product revenue was especially favorable, posting quarterly growth of nearly 80% year over year as demand for its portable dialysis equipment remained robust.

Moreover, Outset was upbeat about its future prospects. Guidance for 2022 included revenue projections of $142 million to $150 million, which would be 38% to 46% higher than 2021’s final sales tally of $102.6 million.

Outset is still a long way from being profitable, with its fourth-quarter losses widening to $0.77 per share for the quarter. Adjusted net losses almost doubled in 2021 from 2020 levels on an absolute basis. However, investors are pleased just to see the medical equipment maker gain traction and help more patients, and that’s helping the healthcare stock regain some of the ground it had lost in the past few months.

Global-e gets a boost

Elsewhere, shares of Global-e Online rose 15%. The international e-commerce facilitator rose on favorable results from its fourth-quarter report.

Global-e’s numbers looked great. Fourth-quarter revenue climbed 54% on a 66% rise in gross merchandise value. The company posted a net loss, but that came primarily due to warrant-related expense tied to Global-e’s strategic partnership with Shopify. Global-e’s full-year 2021 results were also encouraging, with gross merchandise value soaring 87% to $1.45 billion and full-year revenue rising 80% year over year to $245 million. When you exclude the impact of the Shopify warrants, Global-e posted profits for both periods.

Global-e has gained traction quickly. Retention rates of more than 98% show that merchants tend to stick with the company once they come on board, and net dollar retention rates of 152% show that those customers expand their business over time. Global-e has been especially successful in providing its services to U.S. merchants looking for help in selling their goods and services internationally, as its U.S. outbound revenue more than doubled in 2021.

Best of all, Global-e expects another strong year in 2022. Gross merchandise value projections of $2.445 billion to $2.495 billion would represent growth of about 70% from 2021 levels. Revenue of $411 million to $421 million would be up in the same neighborhood year over year, and the company is looking for positive adjusted pre-tax operating earnings of between $38 million and $42 million for the year.

Growth stocks have to deliver the goods in today’s stock market environment. When they do, though, shareholders can still see the gains that Global-e and Outset Medical produced Thursday. 

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

The post As markets fall, these 2 Nasdaq stocks are surging higher appeared first on The Motley Fool Australia.

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Dan Caplinger owns Shopify. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Outset Medical, Inc. and Shopify. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. 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 Bruce Jackson.

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

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The APA Group (ASX: APA) share price could soon get a boost by the company’s entrance into a brand-new market in New South Wales.

The S&P/ASX 50 Index (ASX: XFL) energy infrastructure business has reportedly put itself forward to help build the state’s proposed renewable energy network.

At the time of writing, the APA share price is flat today at $10.02.

Let’s take a closer look at what’s rumoured to be in store for the energy giant.

Is APA planning its break into large-scale renewable energy?

Owners of APA shares could soon hold some of NSW’s critical renewable energy infrastructure.

The company is vying to get involved in the state’s government’s plan to build renewable energy zones, according to the Australian Financial Review.

The zones will each see a single location generating renewable energy through natural assets such as wind and solar. The locations will also house energy storage systems like batteries.

As APA investors likely know, the company owns a 7,500-kilometre network of gas pipelines on Australia’s east coast and major pipelines in Western Australia and the Northern Territory.  

But the company has recently shown interest in branching into electricity infrastructure. It made an unsuccessful bid for formerly-listed $9.9 billion electricity supplier AusNet in September.

Now, according to today’s reporting, APA has put itself forward as a candidate to design, build, and control NSW’s first renewable energy zone.

Transgrid has also reportedly flagged its interest in the project.

The zone will be located in the state’s Central-West Orana region, encompassing Dubbo and Wellington.

The zone is predicted to produce 3 gigawatts of new network capacity. It’s also expected to bring up to $5.2 billion in private investment to the region by 2030. However, the news appears to have had little effect on the APA share price today.

The company’s rumoured bid comes just days after federal energy minister Angus Taylor slammed Origin Energy Ltd (ASX: ORG) for bringing forward the closure date of Australia’s largest coal-fired power station.

The Eraring power station – located in NSW’s Macquarie region – will now face its D-day in 2025.

Taylor said Origin’s decision was “bitterly disappointing” and the plant’s closure will leave a “considerable gap in reliable generation in the National Electricity Market”.

However, The Australian quoted NSW energy minister Matt Kean as responding to Taylor’s comments, saying:

He knows full well that we’ll be unlocking existing supply – it’s not a battery replacing a power station.

APA share price snapshot

It’s been a rocky start to 2022 for the APA share price. It has slipped 1.5% since the year began.

However, it is still 8.4% higher than it was this time last year.

The post Powering up: is the APA (ASX:APA) share price about to be electrified? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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 owns and has recommended APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The QBE Insurance Group Ltd (ASX: QBE) share price is falling on Friday following the release of its full year results.

At the time of writing, the insurance giant’s shares are down 9% to $11.51.

QBE share price sinks after earnings miss

• Gross written premiums (GWP) up 25.7% (21% in constant currency) to US$18,453 million
• GWP ex Crop up 18% year on year
• Underwriting profit up 316% year on year to US$695 million
• Combined operating ratio of 93.7%
• Statutory net profit after tax of US$750 million, compared to loss of US$1.5 billion
• Adjusted net cash profit after tax of US$805 million
• Final dividend of 19 Australian cents per share, bringing the FY 2021 dividend to 30 Australian cents per share

What happened in FY 2021?

For the 12 months ended 31 December, QBE delivered a 25.7% increase in GWP (or 21% in constant currency) to US$18,453 million. This reflects the strong premium rate environment as well as improved customer retention and new business growth across all regions. Management also notes that growth in Crop was especially strong at 51%. This was due to the significant increase in corn and soybean prices, coupled with targeted organic growth.

Positively, premium rate increases are ongoing with company-wide renewal rate increases averaging 9.7% during the year. This is consistent with the first half and 9.8% in FY 2020. And while premium rate momentum moderated slightly in International across the year, momentum accelerated in North America and Australia Pacific during the second half.

As for its profits, QBE reported a statutory FY 2021 combined operating ratio of 93.7%. This compares favourably with 104.2% in the prior year, which was significantly impacted by COVID-19 claims and adverse prior accident year claims development. Anything below 100% is profitable and vice versa if the ratio is above 100%.

This ultimately led to the company reporting a statutory net profit after tax of US$750 million, up from a loss of US$1.5 billion a year earlier. And on an adjusted net cash basis, its profit after tax came in at US$805 million.

While this looks strong on paper, it is below the market consensus estimate of US$870 million. This may explain the weakness in the QBE share price today.

Outlook

QBE’s new CEO, Andrew Horton, was pleased with the year and appears cautiously optimistic on the future.

He said: “Following another year of elevated natural catastrophe claims costs alongside rising inflationary signals and continued low interest rates, the industry operating environment remains highly uncertain. Because of this, the premium pricing environment is likely to remain positive in 2022.”

“In light of this, we expect gross written premium growth to be in the high single digits in 2022. Moreover, delivery against our strategic priorities should result in an improved and more consistent return profile over time such that the Group is capable of consistently delivering a low to mid-90’s combined operating ratio. “In FY22, we expect the business will achieve further steady improvement on the FY21 ‘exit’ combined operating ratio of ~94%.”

The post QBE (ASX:QBE) share price sinks 9% on FY21 earnings miss 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 Bruce Jackson.

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At today’s Commonwealth Bank of Australia (ASX: CBA) share price, is the big four ASX bank expected to offer an attractive FY22 dividend yield?

Commonwealth Bank is one of the largest banks in Australia, along with National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ). Macquarie Group Ltd (ASX: MQG) is also one of the biggest financial institutions now.

Big banks like CBA are well known for their income credentials. They have relatively low price/earnings ratio (p/e ratio) multiples. Banks usually have quite high dividend payout ratios. That combination can lead to an attractive dividend yield.

But sometimes a dividend yield can take a big hit if a company decides to reduce the dividend, like what happened during 2020 when COVID-19 struck. Bank debt provisions went up, profit went down and financial companies were told to reduce their dividend payout ratios by the financial regulator.

But those COVID effects are now unwinding and the CBA half-year profit reflected this. Expectations of higher profits can be a driver of the CBA share price.

FY22 half-year profit grows

CBA reported that for the six months to 31 December 2021, statutory net profit after tax (NPAT) went up 26% to $4.74 billion, whilst cash net profit grew 23% to $4.75 billion.

The bank explained that NPAT was supported by strong business outcomes, reduced remediation costs and lower loan loss provisions due to an improved economic outlook but impacted by lower margins.

Australia’s biggest bank revealed a high level of lending volume growth. Home lending increased by 8.5% (or $40.4 billion), whilst business lending went up by 12.5% (or $13.2 billion).

It maintained a high level of surplus capital with a common equity tier 1 (CET1) capital ratio of 11.8%. Lending volume growth offset a reduction of the net interest margin (NIM). The NIM dropped 14 basis points year on year due to lower-yielding liquid assets, increased switching to lower margin fixed home loans and continued pressure with home loan competition.

The half-year dividend was grown by 17% to $1.75 per share.

Annual dividend expectations

Analysts are expecting more dividend growth in the FY22 annual result. There are lots of different estimates out there.

The Commsec estimate, which comes from an independent third party, puts the FY22 dividend yield at 5.6% at the current CBA share price with a potential annual payment of $3.84 per share.

Citi thinks that CBA will pay a grossed-up dividend yield of 5.6%. Morgan Stanley reckons CBA will have a grossed-up dividend yield of 5.5%. Both of these brokers have a ‘sell’ rating on the bank.

One of the most pessimistic brokers on the bank, Morgans, reckons that CBA is a sell (with a price target of $77) and the FY22 grossed-up dividend yield will be just 5.1%.

CBA share price snapshot

Since the start of the year, the CBA share price has dropped 3.6%.

The post At today’s CBA (ASX:CBA) share price, how big will the FY22 dividend yield be? 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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