Category: Stock Market

The Megaport Ltd (ASX: MP1) share price is climbing into the green today after the company reported its H1FY22 financial results.

The ASX 200 technology share is currently trading at $13.45, a gain of 1.51%. It marks a recovery after the company’s share price dropped as low as $12.87 in early morning trade.

For perspective, the S&P ASX All Technology Index (ASX: XTX) is up 2.52% so far today.

Let’s take a look at what today’s financial results reveal.

Megaport share price climbs amid half-yearly results

The highlights of Megaport’s half-year (H1FY22) results include:

• Revenue increased 42% on the previous corresponding period (PCP) ending 31 December 2020, to $51.2 million
• Monthly recurring revenue of $9.2 million, a 46% improvement on December 2021
• Profit after direct costs of $30.9 million, a 69% leap on the PCP
• Net loss of $20.2 million, down from a $38.4 million loss in the PCP
• Net assets of $174.3 million, down 3% on the previous half
• Cash balance of $104.6 million, down 23% on the previous half

What else happened in the half?

Megaport is a leading global provider of elastic interconnection services using software-defined networking. In December 2021, the company hit a milestone of 768 data centres in 138 cities. 420 are in North America, 140 in the Asia-Pacific, and 208 in Europe.

Another highlight outlined in Megaport’s results today was the company’s Megaport Virtual Edge product going live on the Cisco Systems (NASDAQ: CSCO) global price list.

In August, Megaport acquired 100% of artificial intelligence (AI) cloud technology company InnovoEdge.

Overall, the company gained three new software-defined wide area network (SD-WAN) partners. Megaport also launched the PartnerVantage programme, enabling its partners to sell Megaport services.

Megaport has expanded its network footprint to 411 locations where installation has taken place and 768 locations where the network is enabled.

Management comment

Commenting on the results, Megaport chief executive officer Vincent English said:

In addition to strong service uptake across the board, the team drove Megaport Cloud Router (MCR)sales to surpass 600 installed MCRs globally.

With the increased adoption of multicloud architectures, Megaport customers use MCR to enable cloud-to-cloud connections with ease and bill nearly double for Megaport services compared to port-only customers.

We have aligned our business, through innovation, network footprint, product positioning, and partner-building to be The Edge. The team will stay focused for the remainder of the fiscal year on executing our plan and achieving our revenue and EBITDA targets

What’s next for Megaport?

Megaport is continuing to integrate InnovoEdge services with its own platform. This will allow more automation and greater control of its network and IT resources.

The company will establish a presence in Mexico, taking the total platform to 24 countries and 139 cities around the world.

Megaport share price recap

The Megaport share price has gained less than 1% in the past year but is down more than 28% year to date.

In the past month, the company’s shares have fallen almost 25%.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned almost 6% over the past year, losing more than 3% over the last month.

Megaport has a market capitalisation of about $2.1 billion based on today’s share price.

The post What’s got ASX 200 tech share Megaport (ASX:MP1) marching higher today? appeared first on The Motley Fool Australia.

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• Why has ASX tech share Megaport (ASX:MP1) tumbled 31% in a month?
• Why did ASX 200 tech shares get annihilated today?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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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Shares in Nick Scali Limited (ASX: NCK) are trading 3.5% higher today at $13.92 apiece.

The furniture retailer’s shares started the day well, before reversing course. They bottomed hard at $13.37, then spiked back up to current levels.

Investors are reacting well to a company announcement quelling rumours that the founding family is set to sell some shares. Let’s take a quick look.

What did Nick Scali announce today?

The company has strenuously denied rumours in yesterday’s The Australian referring to a potential share sale by the Scali family.

Another report in today’s The Australian notes that “brokers were said to be shopping a stake in furniture retailer Nick Scali on Monday held by the Scali family, but the deal stalled as the share price fell”.

In a brief statement today, the company said:

Nick Scali Limited refers to recent press speculation in The Australian on 8 February 2022 relating to a potential sale of shares in the Company by the Scali family.

The Board has been informed by the Scali family and Scali Consolidated Pty Ltd that this speculation is unfounded and the entity does not have any intention to sell shares in the Company at the current time”.

News of the Scali family holding their stake was received well today, with the Nick Scali share price firmly up.

Prior to today’s gains, the Nick Scali share price has been struggling. It has whipsawed down from a 52-week high of $16.30 in November to near 3-month lows today. See the chart below (RHS).

Nick Scali share price summary

In the past 12 months, the Nick Scali share price has gained almost 21%.

However, in 2022 the shares have faltered by 10% — twice as much as the S&P/ASX 200 Index (ASX: XJO).

The post No deal: Nick Scali (ASX:NCK) share price lifts as latest rumours quashed appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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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Some of the leading exchange-traded funds (ETFs) have seen declines since the start of the year.

ETF prices simply reflect the movement of the underlying share prices of businesses. So, a cheaper ETF price means the underlying businesses have dropped in price too.

It’s up to each investor to decide which investments they want to choose. But these two are known for being higher-quality:

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

This ETF is set-up to look at businesses with strong positions in their respective sectors.

The ‘wide moat’ part of the name refers to the size of the economic moat of a company. Economic moats can also be called a competitive advantage.

There are many different ways that Morningstar analysts judge whether a business has a competitive edge. A business may have a cost advantage compared to rivals, perhaps due to to economies of scale. Patents and brands can be another form of advantage. Network effects or switching costs can also be factors for an economic moat.

But for this ETF, the length of time that the competitive moat is expected to endure is a key factor. ‘Wide moat’ businesses are ones that excess normalised returns must, with near certainty, be positive 10 years from now. In addition, excess normalised returns must, more likely than not, be positive 20 years from now.

After deciding on that high-quality list, businesses only get added to the portfolio if they’re trading at attractive prices compared to Morningstar’s estimate of fair value.

Some of the positions in the portfolio have been held for a long time, whilst others come and go. These are the current positions that have a weighting of at least 2.75%: Cheniere Energy, Wells Fargo, Lockheed Martin, Berkshire Hathaway, Bristol-Myers Squibb, Corteva, Philip Morris, Altria Group and Dominion Energy.

Past performance is not a guarantee of future results. However, the VanEck Morningstar Wide Moat ETF has returned an average of 18.9% per annum over the last five years.

Betashares Nasdaq 100 ETF (ASX: NDQ)

Much has been made about the decline of technology shares in 2022. The NDQ ETF has fallen around 10% since the start of the 2022 calendar year. This means that investors can get access to some of the strongest global tech businesses, for a cheaper price.

This offering from BetaShares owns many highly-recognised names including: Apple, Microsoft, Amazon.com, Tesla, Alphabet, Nvidia, Meta Platforms (Facebook), Adobe, Netflix and PayPal. In total, it has 100 positions from the NASDAQ.

Many of the above businesses are growing revenue at a fast rate, leading to strong compounding growth over the years.

However, the Betashares Nasdaq 100 ETF isn’t just about tech names. In the portfolio are leading businesses like PepsiCo, Costco, Starbucks, Mondelez International and Moderna.

More than half of the portfolio is classified as IT. Amazon and Tesla are classified as consumer discretionary. Alphabet and Meta count as communication services. So, the unofficial tech weighting of the portfolio is even higher.

Many of the businesses involved are among the national or global leaders at what they do.

Past performance is not a reliable indicator of future performance, but since inception in May 2015 the NDQ ETF has returned an average return per annum of almost 22%. That’s after the annual management fee of 0.48%.

The post 2 excellent ETFs for potential long-term returns appeared first on The Motley Fool Australia.

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• Are these 2 leading ETFs good buys in February 2022?
• Is the Betashares Nasdaq 100 ETF (ASX:NDQ) an opportunity in this market correction?

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. owns and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia owns and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF. 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 S&P/ASX 200 Index (ASX: XJO) has given back much of its earlier gains today but remains up 0.24% at the time of writing.

The ASX 200 bank shares, meanwhile, are all outpacing the index.

Commonwealth Bank of Australia (ASX: CBA) shares are leading the charge, up 5.12% to $99.13 per share.

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is up 1.3%, while the National Australia Bank Ltd (ASX: NAB) share price trails the pack with a gain of 1.12%.

Meanwhile, Westpac Banking Corp (ASX: WBC) shares are climbing 2.56% today.

Why are the big banks outpacing most ASX 200 shares?

The big banks have been getting increased investor attention as central banks the world over begin to institute rate rises. Over in the United States, the US Federal Reserve could be looking at raising rates on a monthly basis to keep rising inflation in check.

While the Reserve Bank of Australia (RBA) is holding back, for now, analysts widely expect the Aussie cash rate to lift far sooner than had been forecast just last year.

With higher interest rates leading to larger margins for the banks, ASX 200 bank shares could be in for more tailwinds.

Then there’s CBA’s expectation-beating half-year results, released this morning.

The bank delivered a cash net profit after tax (NPAT) of $4.746 billion, up 23% from the prior corresponding half year. Topping that off, CBA said it is undertaking a new $2 billion on-market share buyback. This follows its earlier $6 billion buyback last year.

With the CBA share price up 5.12%, investors are clearly pleased.

And the other three ASX 200 banks shares look to be benefitting from the old investor adage, “A rising tide lifts all boats.”

How have the banks been tracking?

With the exception of Westpac, up nearly 5% year to date, the ASX 200 bank shares remain in the red so far in 2022.

CBA shares are down 1.85% year to date, NAB shares are down 2.84%, and ANZ shares are down 0.73%.

By comparison, the ASX 200 has slipped 3.25% so far this year.

The post Rising tide? Here’s why ASX 200 bank shares are having such a good run today appeared first on The Motley Fool Australia.

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• Everything you need to know about the CBA (ASX:CBA) interim dividend
• ASX 200 (ASX:XJO) midday update: CBA impresses, Mineral Resources delivers a shocker
• Analysts forced to eat humble pie as CBA (ASX:CBA) share price soars 5%
• The ASX 200 just hit 3-week highs. What’s next?
• CBA (ASX:CBA) share price on watch after smashing first half estimates

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 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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The Syrah Resources Ltd (ASX: SYR) share price has returned to trading following a company announcement.

At the time of writing, the graphite producer’s shares are swapping hands for $1.46, down a sizeable 11.52%. This means the company’s shares have fallen almost 20% in the past month alone.

What’s causing the sell-off?

It’s been a disappointing day for the Syrah share price, with investors heading for the hills following the company’s capital raise.

According to its release, Syrah advised it has successfully completed its fully underwritten institutional placement and the accelerated institutional component. The latter is comprised of a 1 for 5.9 pro rata accelerated non-renounceable entitlement offer.

Both existing shareholders and new investors supported the company’s accelerated institutional component, with 76% of entitlements taken up.

Under the placement, 84 million shares are expected to be issued on 17 February. In regards to the institutional entitlement offer, 45 million new shares will be allocated on the same date.

The price set to eligible investors across the capital raise stood at $1.48 per new share. This represented a 10.3% discount to Syrah’s last closing price of $1.65 per share on 4 February.

In total, the placement raised approximately $125 million, and the institutional entitlement offer raised around $67 million.

In addition, Syrah launched a $58 million retail entitlement offer which is scheduled to open on 14 February.

Eligible retail shareholders will have the opportunity to apply for 1 new share for every 5.9 existing Syrah shares owned.

The closing date for the retail offer is 28 February.

Proceeds of the equity raising, combined with Syrah’s existing cash balance, will be used to:

• Fully fund the remaining US$165 million (A$230.92 million) of estimated installed capital costs of the Vidalia initial expansion;
• Fund estimated Vidalia operating costs, expansion studies and product development for 2022;
• Transaction costs of the offer; and
• Fund Balama tailings storage facility expansion and sustaining capital costs.

About the Syrah share price

Over the past 12 months, the Syrah share price has gained 25% but is down almost 20% year to date. The company’s shares reached a 52-week high of $2.56 earlier this year, before being heavily sold off.

Based on today’s price, Syrah commands a market capitalisation of around $735.63 million, with approximately 498.73 million shares outstanding.

The post Syrah Resources (ASX:SYR) share price sinks 11%. Here’s why 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 Bruce Jackson.

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As most investors would be aware by now, much of the talk of the financial town over this year so far has revolved around inflation and interest rates. We’ve seen some pretty unusual (by modern standards) inflation figures come out of both the Australian economy and around the world over the past few months.

Just last week, our own Reserve Bank of Australia (RBA) told the public that CPI inflation was running at 3.5%. The RBA also stated that it is expecting wage growth to hit a multi-year high of 3% next year in 2023.

Much was made of the current monetary policy and what it meant for ASX bank shares like Commonwealth Bank of Australia (ASX: CBA). So what would higher interest rates mean for the ASX banks? Let’s dig in.

The record low cash rate of 0.1% that we’ve been living with ever since the onset of the coronavirus pandemic has resulted in a squeezing of most ASX bank shares’ margin spread. That’s the difference between the interest a bank pays on deposits and the interest they charge on loans. It’s harder for a bank to attract new capital when it is only paying a pittance in interest. Many investors would probably rather have their money in the property or share markets than in a bank account earning an interest rate of say 0.2% per annum.

How are ASX bank shares affected by higher interest rates?

So it’s arguably a good thing for ASX banks if inflation picks up and the RBA raises interest rates. A higher cash rate means that the banks can start lifting the interest they pay on their deposits. It also means that they can raise their loan and mortgage rates, probably by more than the RBA’s cash rate increases over time. In this scenario, this will help restore the banks’ squeezed margin spreads over time, and help boost profitability.

In this way, many investors are expecting ASX banks to whether a high inflation/high interest rate environment with relative ease.

That all sounds fine. However, there is one other factor to consider. Rising interest rates means that anyone who already has a non-fixed mortgage will have to pay higher interest on their mortgage. According to a recent report from the ABC, there are more than a million homeowners who have never experienced an interest rate rise on their loans. That’s because the last time the RBA raised rates was back in November 2010. And a lot of mortgages (more than a million) have been written since then.

Don’t forget about mortgages

What’s also happened since then is that the average mortgage has almost doubled in size. According to the report, the average mortgage back in 2011 was around $363,421. Today, it’s at $602,035. Thus, if interest rates were to rise back to the levels we saw 11 years ago, investors would be paying almost twice as much interest as they were back in 2011 when the cash rate was around 5%.

If interest rates do go up, even if not back to 5%, it would mean a massive increase in the mortgage bills of millions of mortgage holders. Now even if most of those investors can meet their new, higher repayments, there’s a chance that some won’t be able to manage. And that would be very bad news for the banks. Customers defaulting on mortgages is the last thing a bank wants. That’s because it could result in written-off loans, which badly damage a bank’s balance sheet.

So higher rates might not be as good for ASX bank shares as one might initially think.

Either way, the new era of rising interest rates that we seem poised to enter could bring a lot of uncertainty to the Australian economy, and to ASX bank shares. A Brave New World indeed.

The post Are interest rate rises really good for ASX 200 bank shares? appeared first on The Motley Fool Australia.

More reading

• Everything you need to know about the CBA (ASX:CBA) interim dividend
• Own Suncorp (ASX:SUN) shares? Here’s what analysts are saying about the company’s latest results
• Both have had a bumper start to the year. But which is the better buy, AGL (ASX:AGL) or Origin (ASX:ORG) shares?
• ASX 200 (ASX:XJO) midday update: CBA impresses, Mineral Resources delivers a shocker
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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It has been an excellent day for the Commonwealth Bank of Australia (ASX: CBA) share price. In afternoon trade, the banking giant’s shares are racing higher after it delivered strong earnings and dividend growth during the first half of FY 2022.

At the time of writing, the CBA share price is up 4.5% to $98.37.

What’s the go on the CBA dividend?

The good news for shareholders, is that as well as seeing their shares increase in value today, they will soon be receiving a dividend that is up materially on the same period last year.

In case you missed it, this morning Australia’s largest bank reported a cash net profit after tax of $4,746 million. This was up 23% over the prior corresponding period and well-ahead of consensus estimates.

As a comparison, Goldman Sachs was forecasting cash earnings of $4,295 million, Morgans expected $4,320 million, and the consensus estimate stood at ~$4,500 million.

This allowed the CBA board to declare a $1.75 per share fully franked interim dividend. And while this is a touch short of the consensus estimate of ~$1.80 per share, it is still a sizeable increase of 17% over last year’s interim CBA dividend.

This slight miss appears to have been driven by the bank’s decision to payout 62% of cash earnings instead of its target range of 70% to 80% of earnings. Though, management highlights that this dividend represents a payout ratio of 70% after adjusting for long run loan loss rates.

Looking ahead, the board advised that the CBA dividend will continue to be 70% to 80% of cash earnings where possible.

It explained: “The Bank will continue to target a full year payout ratio of 70-80% of cash NPAT and an interim payout ratio of ~70% of cash NPAT. In considering the sustainability of dividends, the Board will continue to take into account a number of factors, including long term average loss rates.”

When is payday?

This latest CBA dividend will be paid to eligible shareholders next month on 30 March.

To be eligible, you’ll need to own CBA’s shares at the close of play the day before the ex-dividend date of 16 February. This means you have until next Tuesday to buy shares if you want to receive it.

As for shareholders, the bank is offering a dividend reinvestment plan (DRP). However, on this occasion there will be no discount applied to the shares allocated under the plan.

The post Everything you need to know about the CBA (ASX:CBA) interim dividend appeared first on The Motley Fool Australia.

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• The ASX 200 just hit 3-week highs. What’s next?
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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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Shares in banking giant Suncorp Group Ltd (ASX: SUN) are rangebound today after stumbling lower from the open. At the time of writing, the Suncorp share price is edging less than 1% higher at $12.09.

Following the bank’s earnings update yesterday, analysts have chimed in with their outlook on the stock and most of the sentiment appears to be positive. Let’s take a closer look.

What are analysts saying about the Suncorp share price?

The team at Jarden were first to chime in with their analysis, noting that Suncorp’s 1H FY22 cash profit was a positive surprise and was 26% ahead of consensus estimates.

The results were underpinned by lower catastrophe costs and a larger than expected one-off net Covid claim benefit.

Not only that, but gross written premium (GWP) was almost 7% and well ahead of Jarden’s internal forecasts, leaving the broker bullish and holding its price target of $12.40.

Macquarie also chimed in and noted that Suncorp’s results were filled with pockets of goodness, especially the lower hazards costs and better than expected GWP.

It was also happy with the bank’s dividend payout ratio, which rests near the top end versus the other banking majors.

However, the broker also pointed out Suncorp’s net interest margin (NIM) contracted by around 197 basis points throughout the half. But this was expected and in line with expectations for the banking sector.

It retained an overweight rating today and values its fellow ASX banking fellow at $14.40 per share.

Meanwhile, analysts at Morgan Stanley reckon Suncorp has handled recent challenges thrown its way better than expected.

The investment bank notes that “Suncorp delivered stronger margins and top-line growth in the insurer, and investment yields are rising, making the path to more than 10% margins more visible”.

It isn’t as rosy as its broker peers, however, noting that Suncorp still has a number of headwinds on the horizon. These are namely catastrophe costs and other earnings pressures – especially with the bank’s NIM compression.

It remains equal weight on the stock even after raising its price target by 3% to $12.25 per share. Each of Morgans, UBS and Citi also raised their valuations on Suncorp as well to $13.19, $14 and $13.60 per share respectively.

Suncorp share price summary

In the last 12 months, the Suncorp share price has climbed 13% and is up 9% for the year to date.

Over the previous month, it has climbed 4% into the green and investors are showing support these last few days as shares have jumped another 8%.

The post Own Suncorp (ASX:SUN) shares? Here’s what analysts are saying about the company’s latest results appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Zach Bristow 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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ASX 200 shares have had a jittery start to the year as a number of macroeconomic crosscurrents begin to meet in 2022. The benchmark S&P/ASX 200 Index (ASX: XJO) has fallen more than 3% since January 1 and some sectors have been hit worse than others.

Not the energy sector, however. ASX energy shares are still partying in 2022, yet to feel any sort of hangover.

The S&P/ASX 200 Energy index (XEJ) has climbed 12% this year to date, holding gains of roughly 6% over the previous 12 months.

That’s a much better result than the high-beta technology sector has recorded. The S&P/ASX All Technology Index (XTX) has now plunged more than 16% for the year.

With this outsized performance, we check in with two ASX energy giants in AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG) to see how they are faring in 2022 so far.

Both are well into the green since trading began this year – AGL is up 20%, whereas Origin has spiked just over 15% since January 4.

But which is the better choice for investors right now, or into the future? Here’s what the team at JP Morgan had to say in its outlook on the Australian utilities sector.

Origin or AGL – what to do, who to choose?

JP Morgan is neutral on Origin even though its December 2021 quarterly production update “outperformed expectations”, according to a recent note.

The broker notes that the global rally in energy commodity prices continued throughout 2021, “driving a 30% increase in Origin’s realised [liquified natural gas] LNG prices to A$11.80/mmBtu”.

However, analysts at the firm also pointed out that Origin’s realised LNG prices were “noticeably below peers”. It believes the variance stems from a lower level of cargoes sold on the spot, versus the company’s competitors.

Not only that, but energy markets continue to face a shake-up amid more competition from renewables. As well, an unusual summer cold streak has meant spot energy prices had fallen 15% since late last year to $58/MWh at the time of the broker’s release.

Electricity demand also remains 4% below pre-COVID times, “weighing on electricity prices which have been the cause of earnings downgrades for the company”, according to the broker.

Even still, JP Morgan had thought increased commodity prices would be a positive catalyst for Origin’s share price. But Origin’s management guidance “implies Energy Markets’ contribution will be the lowest in FY2022 in more than a decade”, striking a downbeat tone to Origin’s outlook.

“With no discernable catalysts for price improvement and with the stock close to our revised valuation, we remain Neutral,” the broker says, valuing the company at $6.05 per share in the process.

What about AGL?

With AGL on the other hand, JP Morgan is overweight and sees the company in a new light following its assessment of its proposed demerged businesses.

The broker makes several observations in a recent note, urging clients to consider buying AGL in the process.

Analysts noted that “AGL no longer trades at less than the value of the retail business alone, which may mean the opportunity for corporate appeal ahead of the demerger has passed”.

It also points out that the newly formed Accel Energy is now a “far more palatable entity” with an estimated net present value (NPV) of A$2.2 billion. That’s not too far off AGL’s current market capitalisation of $4.8 billion.

The broker also sees the opportunity for energy spot prices to jump further, which could lead to guidance upgrades from management.

“Notwithstanding reduced corporate appeal, we remain positive on AGL given much better electricity prices and compelling value,” analyst Mark Busuttil remarked, smacking an $8.70 price target on the energy giant.

“While we remain concerned over the proposed demerger, [AGL’s] stock price is now below our estimated value for the retail business.”

Head to head though, what’s the picture?

When it comes to estimates, JP Morgan reckons Origin will post earnings 8% below consensus whereas it tips AGL to beat consensus by 2%.

AGL’s main drag is “corporate appeal with interest in energy retailing companies in Australia”, according to the broker. However, it expects “increasing Brent and LNG spot prices to support higher free cash flow generation and strong cash distributions from APLNG” in Origin’s case.

Not only that, but the broker values AGL at the deepest discount to the consensus price target versus its ASX energy peers. It values AGL 13% below the consensus price target provided by Bloomberg Intelligence, but notes this “is skewed due to two outliers”.

Origin on the other hand is valued on par with the consensus price target by the broker, in line with its neutral view.

Hence, from this rudimentary analysis, it’s clear that JP Morgan prefers AGL over Origin right now and is particularly bullish on the former.

However, if you’re wondering what JP Morgan’s favourite pick in the entire space is, it is Santos Ltd (ASX: STO) in the large cap space and Cooper Energy Ltd (ASX: COE) followed by Beach Energy Ltd (ASX: BPT) and Carnarvon Energy Ltd (ASX: CVN) respectively.

The post Both have had a bumper start to the year. But which is the better buy, AGL (ASX:AGL) or Origin (ASX:ORG) shares? appeared first on The Motley Fool Australia.

More reading

• These 3 ASX energy shares just hit 52-week highs
• Could AGL (ASX:AGL) be gearing up for a major capital raise?
• Own AGL (ASX:AGL) shares? Here’s what to look for when the company reports next week
• Origin (ASX:ORG) share price hits 52-week high before slumping. What’s going on?
• AGL (ASX:AGL) share price withstands healthcare pressure to exit coal ASAP

Motley Fool contributor Zach Bristow 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 lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) is fighting hard to stay in positive territory after giving back most of its early gains. The benchmark index is currently up 0.2% to 7,201.5 points.

Here’s what is happening on the ASX 200 today:

CBA’s half year result smashes expectations

The Commonwealth Bank of Australia (ASX: CBA) share price is charging higher today after smashing the market’s expectations with its half year results. Australia’s largest bank reported a 23% increase in cash earnings to $4,746 million. This compares to Morgans’ estimate of $4,320 million and the market consensus estimate of $4,500 million. CBA also declared a $1.75 per share interim dividend and announced a $2 billion on-market share buyback.

Computershare jumps on guidance upgrade

The Computershare Limited (ASX: CPU) share price is surging higher today after its first half update impressed the market. For the six months ended 31 December, Computershare reported a 4.6% increase in management revenue to US$1.2 billion and a 4.5% lift in management earnings per share to 22.76 US cents. But best of all, management is upgrading its full year earnings per share guidance from 2% growth to 9%.

Mineral Resources predictably disappoints

The Mineral Resources Limited (ASX: MIN) share price is sinking today after its half year results unsurprisingly fell short of expectations. As mentioned here earlier this week, Mineral Resources had been tipped as a potential candidate for a negative earnings surprise by Goldman Sachs. This turned out to be the case, with the mining and mining services company’s underlying net loss after tax of $36 million missing the consensus estimate of a $105 million profit by a whopping 134%.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the Computershare share price with a 9.5% gain following its first half results and guidance upgrade. The worst performer has been the Mineral Resources share price with a 7% decline following its half year shocker.

The post ASX 200 (ASX:XJO) midday update: CBA impresses, Mineral Resources delivers a shocker appeared first on The Motley Fool Australia.

More reading

• Mineral Resources (ASX:MIN) share price slides as lower iron ore prices bite
• Analysts forced to eat humble pie as CBA (ASX:CBA) share price soars 5%
• Computershare (ASX:CPU) share price jumps 12% after strong half and guidance upgrade
• 3 ASX tech shares to pounce on NOW while they’re cheap
• The ASX 200 just hit 3-week highs. What’s next?

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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