Category: Stock Market

It has been a great day to be a BHP Group Ltd (ASX: BHP) shareholder. This morning, the mining giant revealed that it will be rewarding its shareholders with a record interim dividend.

This follows the release of a better than expected half year result this morning.

What happened during the first half?

In case you missed it, thanks to higher sales prices across its major commodities and near record production at WAIO, BHP reported a 27% increase in revenue from continuing operations to US$30,527 million and a 57% jump in underlying profit to US$9,715 million.

This came in well-ahead of expectations. As did its net operating and free cash flow, which came in at US$13.3 billion and US$9.7 billion, respectively, including discontinued operations.

Goldman Sachs commented on its cash flows. It said: “Operating cash flow of US$13.3bn, above GSe at US$10.8bn, on the stronger result and lower than expected cash tax. Cash capex and exploration was US$3.7bn vs our US$4.1bn estimate. FCF totaled US$9.7bn compared to our US$6.6bn estimate.”

The BHP dividend

In light of this stronger than expected cash flow, the BHP interim dividend was increased to a level that smashed expectations.

BHP declared a record fully franked interim dividend of US$1.50 per share, which compares favourably to Goldman’s estimate of US$1.27 per share and the consensus estimate of US$1.31 per share.

This means that a total of US$7.6 billion will be returned to shareholders for the half, which represents a 78% payout ratio. It also means that total shareholder returns have now climbed to more than US$22 billion over the past 18 months. Maybe BHP should change its name to ATM?

When will this dividend be paid?

The interim BHP dividend will be paid to eligible shareholders next month on 28 March.

To be eligible, you’ll need to own the mining giant’s shares before they go ex-dividend on 24 February. This means you’ll need to be on its share registry by the close of play on 23 February.

Based on the current BHP share price of $47.99, this interim BHP dividend alone equates to a fully franked 4.4% yield.

The post BHP (ASX:BHP) declares record interim dividend: What you need to know appeared first on The Motley Fool Australia.

More reading

• Record exploration: Are ASX 200 shares gearing up for the next mining boom?
• ASX 200 (ASX:XJO) midday update: BHP and SEEK impress, Beach sinks
• BHP (ASX:BHP) share price storms higher following ‘better than expected result’
• 5 things to watch on the ASX 200 on Tuesday
• Strap yourself in: Why ASX 200 shares could continue their wild ride in 2022

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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How has the Vanguard Australian Shares High Yield ETF (ASX: VHY) done it?

As most of us would be aware, 2022 hasn’t exactly been the kindest start to a year that ASX shares have faced. Since the dawn of the new year, the S&P/ASX 200 Index (ASX: XJO) is still down by roughly 5.1%. That’s despite it gaining some ground since bottoming out on 27 January. Since then, the ASX 200 is up a solid 5.5%. But that’s still not enough to drag it into positive territory for the year.

If the ASX 200 is down 5% year to date, then it’s no surprise that index exchange-traded funds (ETFs) that track ASX shares are also down by similar amounts. The iShares Core S&P/ASX 200 ETF (ASX: IOZ) has lost 5.45% over 2022 so far. And the ASX’s most popular ETF, the Vanguard Australian Shares Index ETF (ASX: VAS), has shed 5.1%. Bear in mind that VAS is an ASX 300 ETF, and not an ASX 200 fund. 

But looking at the Vanguard Australian Shares High Yield ETF, we see something completely different. VHY units are actually in the green over 2022 to date. Yes, on current pricing, this ETF has recorded a gain of 1.35% for the year so far. That’s an outperformance of more than 5% from the ASX 200 and the other ASX ETFs mentioned above.

So how has VHY done it? Let’s dig in.

How has VHY beat out the ASX 200 and VAS in 2022 so far?

In order for VHY to get this vastly different outcome from other ASX ETFs, we have to look at its underlying constituents. As you might expect, VHY differs from an ASX 200 or ASX 300 ETF due to its preference for only selecting high-quality dividend shares. But perhaps the biggest difference is that VHY has a concentrated portfolio of 67 shares, far lower than the 200 or 300 shares you would find in an ASX 200 or ASX 300 ETF.

VAS, for example, had (as of 31 December) Commonwealth Bank of Australia (ASX: CBA) and CSL Limited (ASX: CSL) as its largest two holdings. Each company had a weighting of 7.84% and 6.33% respectively. Contrast that to VHY. Its largest holdings at the time were CBA and BHP Group Ltd (ASX: BHP). But the weightings for these holdings were 10.25% and 10.08% respectively.

VHY’s next largest holdings were Wesfarmers Ltd (ASX: WES), followed by National Australia Bank Ltd (ASX: NAB), and Telstra Corporation Ltd (ASX: TLS), which also differ from VAS in their weightings.

VHY also has almost no exposure to tech shares like Block Inc (ASX: SQ2), Zip Co Ltd (ASX: Z1P), or WiseTech Global Ltd (ASX: WTC). These companies have borne the brunt of the market’s weakness that we’ve seen in 2022 so far as investors turn away from growth shares in search of value. But since VHY didn’t have any exposure to these companies in the first place, it has missed out on this weakness.

So it’s likely that for these reasons VHY has been outperforming in 2022 so far. No doubt, income investors who hold this ETF would be very pleased with that outcome.

The Vanguard Australian Shares High Yield ETF charges a management fee of 0.25% per annum.

The post Why is the Vanguard Australian Shares High Yield ETF (ASX:VHY) outperforming in 2022? appeared first on The Motley Fool Australia.

More reading

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• Here are the top 10 ASX shares today
• The week ahead: Russia, Ukraine, inflation, interest rates and unemployment: Scott Phillips on Nine’s Late News

Motley Fool contributor Sebastian Bowen owns National Australia Bank Limited, Telstra Corporation Limited, and Vanguard Australian Shares High Yield Etf. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc., CSL Ltd., WiseTech Global, and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Telstra Corporation Limited, Wesfarmers Limited, and WiseTech Global. 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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Investors looking for S&P/ASX 200 Index (ASX: XJO) shares in the mining sector have plenty to choose from.

The Aussie market is unique in the prevalence of miners and big banks you’ll find among the ASX 200 shares – the biggest 200 listed companies in Australia.

Like Newcrest Mining Ltd (ASX: NCM), which is predominantly focused on gold.

Or BHP Group Ltd (ASX: BHP), which earns the bulk of its revenues from iron ore.

Or Oz Minerals Limited (ASX: OZL), with its strong focus on copper production and exploration.

The list of ASX 200 shares involved in mining goes on. And alongside the junior miners, the entire sector appears to be setting the stage for the next mining boom.

What’s next for ASX 200 mining shares?

The last big Aussie mining boom hit its crescendo in 2010, with companies spending big on exploration and bringing in fresh funds via capital raisings.

Now Australia’s resource companies look to be setting the stage for the next mining boom.

Warren Pearce, CEO of the Association of Mining and Exploration Companies, said (quoted by ABC News), “We’re going through a period that’s been as good as we’ve seen probably in 20 or 30 years. We’re at the sort of numbers that were at the height of the last mining boom back in 2010, 2012.”

Research agency Austex analysed the cashflow reports from 733 Australian resource companies, which included many explorers outside of ASX 200 shares.

Austex found that total exploration spending reached $974 million in the last quarter of 2021. That’s a new record and up almost 100% year-on-year.

The miners also raised a record $3.2 billion of capital in Q4, a 70% year-on-year increase.

And rising labour costs and pandemic-driven border closures haven’t slowed the rapid expansion in exploration activities.

According to Pearce (quoted by ABC News):

The last two years in the mineral exploration industry and the mining industry, they’ve been exceptionally positive in terms of the economic outputs, the production outputs, and indeed the profits and dividends to shareholders.

In terms of capital raising, we really haven’t seen much like this before … so we’ve done incredibly well.

And Western Australia’s reopening should add even more fuel to the fire.

“Once we’re able to see more people, more skilled workers come into the state to support both the mining industry and the exploration industry, you’ll see a further acceleration of that growth,” Pearce said.

How have these 3 ASX miners been tracking?

The 3 ASX 200 shares named above have put in divergent performances so far this year.

Oz Minerals trails the pack, down 10.3% year-to-date. That compares to a 2.8% loss posted by Newcrest and a 14% gain for BHP shares.

Over that same period, all the ASX 200 shares taken together are down 5.0%.

The post Record exploration: Are ASX 200 shares gearing up for the next mining boom? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: BHP and SEEK impress, Beach sinks
• BHP (ASX:BHP) share price storms higher following ‘better than expected result’
• 5 things to watch on the ASX 200 on Tuesday
• Strap yourself in: Why ASX 200 shares could continue their wild ride in 2022
• Why Bendigo and Adelaide Bank, Crown, JB Hi-Fi, and Newcrest are pushing higher

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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Investors have continued to drag the Goodman Group (ASX: GMG) share price lower since the beginning of the new year.

The real estate investment trust (REIT) hit an all-time high of $26.96 on 30 December, before sinking 15% in 2022.

At the time of writing, Goodman shares are hovering 0.79% lower to $22.64.

What happened to Goodman shares?

Despite keeping a quiet front for the past couple of months, Goodman shares have backtracked to September 2021 levels.

Listed as the ASX’s largest REIT, the property company specialises in the logistics and business space. This includes warehouses, large scale logistics facilities, business and office parks across 5 continents in 14 countries.

A catalyst for the recent downturn could be attributed to investors selling off high-valuation companies during 2022.

The S&P/ASX 200 Real Estate (ASX: XRE) has shed around 10.72% in 2022, impacted by an uptick in inflation.

Data from the Australian Bureau of Statistics showed that the consumer price index (CPI) rose 1.3% in Q4 2021. When looking at the last 12 months, this figure rose 3.5%, the fastest annual pace since 2014.

The report highlighted the rising cost of living, which is affecting spending habits along with downward pressure on city rents.

The Reserve Bank of Australia advised it will make at least two rate hikes in 2022. The government body noted that inflation was not yet a problem for Australia compared to levels recorded in the United States.

Is now the time to buy?

Late last month, JPMorgan weighed in on Goodman shares.

The broker raised its 12-month price target by 4.2% to $25 for the REIT. Its analysts believe that there is still more upside in Goodman shares regardless of its mixed performance recently.

Based on the current share price, this implies an upside of about 10.4% for investors.

Goodman share price review

Over the last 12 months, Goodman shares travelled higher until the end of 2021 before tumbling in the new year. Nonetheless, the company’s shares are up almost 27% since this time last year.

Based on today’s price, Goodman commands a market capitalisation of roughly $42.3 billion, with approximately 1.87 billion shares outstanding.

The post Is the Goodman Group (ASX:GMG) share price a bargain after tumbling 15% in 2022? 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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The Seek Limited (ASX: SEK) share price is surging today amid strong profit and record job ads reported in the company’s FY22 half-year results.

The online job advertising company’s share price is currently trading at $30.05, an 8.17% gain. It hit a high of $30.15 earlier in the session.

Let’s take a look at why the Seek share price is rising today.

Seek share price climbs amid half-yearly results

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

• Revenue surged 59% on previous corresponding period (PCP) of H1 FY21 to $517.2 million
• 83% increase in EBITDA to $250.6 million
• Net profit after tax (NPAT) on continuing operations surged 147% to $124 million, excluding significant items
• NPAT on discontinuing operations fell 47% from $16.5 million to $8.7 million
• NPAT on total operations surged 32% from $66.8 million to 88.1 million
• Earnings per share (EPS) on total operations soared by 32%
• Interim fully franked dividend of 23 cents a share

What else happened in the half?

Seek experienced record ad volumes in Australia and New Zealand. Unique hirers, on average, also surged 30% on the previous corresponding period.

Corporate job ad volumes rocketed 73% on PCP while small and medium enterprise volumes jumped 60%. Meanwhile, recruiters placed 26% more job ads than in the first half of the 2021 financial year.

The board declared an H122 interim fully-franked dividend of 23 cents per share. This will be paid on 7 April and recorded on 24 March.

Seek’s share of job advertising in Australia leapt around 30% over the PCP to 34.3%, a 15% gain.

In Asia, Seek experienced growth in paid job ads in all major markets including Malaysia, Singapore, Philippines, Indonesia, and Thailand.

The Seek Growth Fund portfolio value jumped by 17% to $1,738 million.

Management comment

Commenting on the results, CEO and managing director Ian Narev said:

Market conditions across our ANZ and Asia businesses were favourable for revenue growth. Businesses continued to rehire following COVID-related cuts, and in many cases restarted investment.

Whilst candidate activity on our sites remained high, application rates were weaker, which in turn drove greater depth adoption. Previous investments, in particular the flexibility of our new ANZ contract and pricing model, positioned us well to capture these opportunities.

Our key markets are experiencing, to varying degrees, a combination of ongoing economic recovery, relatively low unemployment rates and continued restrictions on labour mobility. Job ad volumes and depth adoption remain high. We have assumed these conditions continue for the remainder of this financial year, and have therefore upgraded our guidance.

What’s next

Seek sees “significant growth opportunities” in Australia/New Zealand and Asia with a chance to double revenue in the next five years if markets are stable and the company executes well.

Seek has updated its FY22 guidance, excluding significant items, for its continuing operations. It expects its EBITDA to be between $490 and $515 million based on revenue between $1.05 billion and $1.10 billion. Meanwhile, it predicts a NPAT for FY2022 of between $230 and $250 million.

This is based on a number of assumptions outlined in its results presentation, including low economic volatility from COVID-19.

Seek share price summary

The Seek share price has dropped 5% in the past year but has gained 7.5% in the past week.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned around 5% over the past year.

Seek has a market capitalisation of more than $10.5 billion based on today’s share price.

The post Seek Limited (ASX:SEK) share price leaps 8% as revenue soars appeared first on The Motley Fool Australia.

More reading

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At lunch on Tuesday, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of US markets and has dropped into the red. The benchmark index is currently down 0.4% to 7,217.4 points.

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

BHP half year results impress

The BHP Group Ltd (ASX: BHP) share price is pushing higher today after its half year results beat the market’s expectations. The mining giant reported a 27% increase in revenue to US$30,527 million and a 57% jump in underlying profit to US$9,715 million. Goldman Sachs commented: “Better than expected result with underlying EBITDA/NPAT (incl Petroleum) of US$21.4bn/US$10.7bn, +7%/+5% vs our US$20.0bn/US$10.1bn estimates (and vs. Visible Alpha consensus of US$19.9bn/US$9.6bn).”

SEEK delivers better than expected half year result

The SEEK Limited (ASX: SEK) share price is surging higher after its half year results impressed. The job listings company reported a 59% increase in revenue to $517.2 million and a 147% lift in reported net profit after tax (before significant items) to $124.2 million. Goldman notes that its revenue and net profit were 4% and 20% ahead of consensus estimates and even further ahead of its own forecasts. SEEK also upgraded its FY 2022 guidance to levels well-ahead of current estimates.

Ansell posts profit decline

As forewarned in a recent trading update, Ansell Limited (ASX: ANN) has posted a sharp decline in first half earnings. This morning the safety products company reported a 7.6% increase in sales to ~US$1 billion but a 27% decline in profits to US$77.6 million. Ansell’s earnings were impacted by weaker EBIT margins. This includes COVID manufacturing disruptions and higher freight costs.

Best and worst ASX 200 performers

The best performer on the ASX 200 today has been the Sims Ltd (ASX: SGM) share price with a gain of 17%. This follows the release of a very strong half year result this morning. The worst performer has been the Beach Energy Ltd (ASX: BPT) share price with a 9% decline. This morning analysts at Macquarie downgraded the company’s shares to a underperform rating with a $1.50 price target.

The post ASX 200 (ASX:XJO) midday update: BHP and SEEK impress, Beach sinks appeared first on The Motley Fool Australia.

More reading

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• 5 things to watch on the ASX 200 on Tuesday
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Motley Fool contributor James Mickleboro owns SEEK Limited. 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 Ansell Ltd. and SEEK 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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The Wesfarmers Ltd (ASX: WES) share price has moved into the green today despite a slow start to the day’s trading. At the time of writing, Wesfarmers shares are up 1.3% at $54.57 each, having earlier slipped to $53.48.

Possibly weighing on investors’ minds is Wesfarmers’ upcoming half-year earnings results. Yes, Wesfarmers is due to declare its earnings report this Thursday. As one of the largest and oldest blue-chip shares on the S&P/ASX 200 Index (ASX: XJO), Wesfarmers’ results are always well followed.

So what should investors watch out for from the conglomerate on Thursday?

Well, the first thing Wesfarmers’ shareholders might be anticipating is an update on the company’s plans to acquire the Priceline pharmacy operator Australian Pharmaceutical Industries Ltd (ASX: API).

Last week, Wesfarmers announced that the Australian Competition and Consumer Commission (ACCC) had confirmed it will not oppose the takeover offer of $1.55 a share for API.

Any updates on this process would probably be welcomed by shareholders on Thursday.

Wesfarmers to report half-year earnings this week

The last time Wesfarmers reported, it was for its FY2021 full-year results that were delivered last August. Back then, the company declared revenues of $33.94 billion. That was up 10% year on year. Net profit after tax was also up, by 16.2% to $2.42 billion.

But it was the 17.1% increase to Wesfarmers’ final dividend, as well as the $2.3 billion capital return for shareholders, that probably excited investors the most. Last year, Wesfarmers paid out an interim dividend of 88 cents per share on its FY21 half-year earnings. So no doubt investors have their fingers crossed that FY22 will bring with it an interim dividend pay raise.

But something else that could impact the Wesfarmers share price is how the businesses fared in the wake of the latest COVID wave. As we’d all be aware, the final months of 2021 were defined by the outbreak of the COVID Omicron variant.

While this wave did not see the kind of lockdowns or restrictions we have had in the past, it did result in a ‘shadow lockdown’ of sorts. Not to mention staffing issues. So no doubt shareholders will be anxious to see how Bunnings, Officeworks, and the other businesses Wesfarmers runs fared over this time.

What’s ahead for the Wesfarmers share price?

Earlier this month, broker Morgans seemed to be bullish on Wesfarmers ahead of its earnings. The broker rated Wesfarmers shares as a buy, with a 12-month share price target of $60.80.

Morgans noted that “COVID-related staff shortages are proving to be a challenge”. Even so, it has enormous confidence in Bunnings in particular. It sees the recent share price pullback as “a good entry point for longer-term investors”.

The Wesfarmers share price is down around 2% over the past 12 months and almost 9% year to date.

This ASX 200 blue chip has a market capitalisation of $61.06 billion.

The post Own Wesfarmers (ASX:WES) shares? Here’s what to watch when the company reports this week appeared first on The Motley Fool Australia.

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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 owns and has recommended Wesfarmers 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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One expert is bullish on the Audinate Group Ltd (ASX: AD8) share price, flagging a bright future for the stock.

The digital audio networking technology provider’s shares have fallen 15.3% year to date to trade at $7.30 at the time of writing.

That’s despite the release of the company’s seemingly strong first-half earnings yesterday. At least the Audinate share price isn’t alone in its tumble.

The S&P/ASX All Technology Index (ASX: XTX) has also slumped 19.9% since the start of 2022, likely dragging the All Ordinaries Index (ASX: XAO) audio tech stock down with it. For context, the All Ords has gained 4.9% in that time.

Fortunately, according to Shaw and Partners portfolio manager and Market Matters author and portfolio manager James Gerrish, the drop has left Audinate with a significant upside.

Here’s why this expert thinks its Audinate shares are a buy

The professional investor reportedly told Livewire he is content with the company’s results for the first half and believes it has room to grow.

Gerrish noted some of his managed portfolios include Audinate shares already, telling the publication, “we own it. If we didn’t own it, we’d be buying it”.

“[The company has] a clear competitive advantage in what they do … It’s got the ability now to leverage its position into other areas like video. It’s growing its top line strongly. And it’s handled a pretty challenging period over the past 12 to 18 months.” 

However, Gerrish believes the stock’s current dip is justified. He said tech sell-off aside, the business is facing supply chain issues that could restrict its future pace of growth.

The expert said the stock “probably deserves” to have fallen from around $11 – near its 52-week high ­– to around $7.60 – where it opened on Monday.

“If I look at the short term, [the stock’s tumble is] probably the right reaction because that whole area of the market has been sold down,” Gerrish told the publication. He continued:

But it’s the clear global leader in audio networking. It’s got 13 times the market adoption of its nearest competitor …

They’re doing all the things that you’d want them to be doing. They’re increasing headcount to go and capture growth.

They’ve got cash on their balance sheet of $60 million. So, they’re well capitalised, that’s more than 10% of their market cap …

However, the company’s projected headcount growth – expected to reach 185 over financial year 2022, representing a 35% increase – might have shocked the market yesterday.

It will likely lead to extra costs. Particularly, Gerrish says, given the current skills shortage.

“[But] if you take a medium-term view, so out over the next two to three years, I think this is a clear buying opportunity,” Gerrish summarised.

The expert also noted the stock is in its “value range”, with Shaw and Partners slapping Audinate shares with a $12 price target. That’s 62% higher than where the stock is currently trading.

Finally, speaking on Audinate’s results, Gerrish was quoted as saying:

Loss this half is $2.1 million. It is up more than 70% and it was bigger than what we expected. We expected them to be making a slight profit of about a million dollars …

However, you’re not holding this company because it’s losing $2 million or $1 million, or it’s making a million bucks. You want them to be scaling for future growth. You want them to be taking advantage of the market opportunity they’ve got, which is having such a dominant position in that audio networking space. And then leveraging that into other areas. 

The post This ASX All Ordinaries share has a 60% upside after the tech sell-off: expert 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. owns and has recommended AUDINATEGL FPO. The Motley Fool Australia owns and has recommended AUDINATEGL 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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The Zip Co Ltd (ASX: Z1P) share price hit a fresh 52-week low yesterday and almost broke that feat again today.

The company’s shares reached an all-time high of $14.53 a little less than 12 months ago but bottomed out to a 52-week low of $2.68 in Monday’s session.

The buy-now pay-later (BNPL) company’s shares have struggled to gain composure since the start of last year.

During early morning trade today, Zip shares touched $2.685 before rebounding slightly higher. Currently, Zip shares are fetching for $2.72, up 0.74%.

What dragging Zip shares down?

Investors have continued to sell off Zip shares following negative sentiment across the tech industry.

Geopolitical tensions between Ukraine and Russia have spooked world markets, particularly on the Nasdaq. In the past month, the heavily tech-focused index has lost around 7.5% in value, and 14% since the beginning of the year.

This has had an adverse effect on the S&P/ASX All Technology Index (ASX: XTX), down 10% in a month, and 20% for 2022.

In addition, inflationary issues have not helped the cause, with the United States experiencing the largest rise in inflation in 40 years.

Australia has been experiencing its own inflation problems. The cost of living has risen 3.5% in the last quarter of 2021 alone. This was being blamed on high levels of building construction activity combined with shortages of materials and labour, as well as record automotive fuel prices.

The Reserve Bank of Australia signalled two rate hikes for 2022 in an effort to slow down the rising price of goods.

What this means is that consumers are less likely to spend on discretionary items when interest rates are picking up. The cost of debt on items such as credit cards, as well as personal loans, will require extra payments, affecting consumer spending habits.

Unfortunately for Zip, in the BNPL sector, this is the heart of its business model.

Investors will be watching closely when Zip releases its financial results later this month.

Is this a buying opportunity?

After reporting its FY22 second-quarter results last month, a number of brokers rated the company with varying price points.

Analysts at Macquarie slashed its price target for Zip shares by 40% to $3.40 apiece.

Following suit, the team at Citi also reduced its outlook by 38% to $3.65.

Both of these brokers believe there is still a significant value for the company’s shares at current prices. This represents a potential upside of about 25% to 35% from where Zip trades today.

The latest broker note, however, came from Jefferies which also lowered its view by 39% to $2.73 per Zip share. It appears investors are more in line with the analysts’ thoughts for the BNPL company.

Zip share price summary

Over the past 12 months, the Zip share price is down almost 80%. When looking at year to date down, its shares are down more than 37%.

Based on the current Zip share price, the company has a market capitalisation of around $1.6 billion.

The post The Zip (ASX:Z1P) share price hit another 52-week low this week. Is now the time to buy? 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. owns and has recommended ZIPCOLTD FPO. 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 Sims Ltd (ASX: SGM) share price has shot into the green today and is now 16.44% higher at $17.45.

Investors are bidding up Sims shares following the release of the metal and electronics recycling company’s FY22 half-year results.

Sims share price jumps alongside revenue, EBIT

The company outlined several investment highlights for the period, including:

• Sales revenue of $4,265.0 million, up 73.9% from prior corresponding period
• Statutory earnings before interest and tax (EBIT) of $341.4 million, up 334.9% million from the same time last year
• Underlying EBIT of $361.7 million, up 541.3% million from this time in FY21
• Cash flow distribution of $135 million, up 458% from prior corresponding period
• Operating cash flow of $290.8 million, up 94.8% from the prior corresponding period
• Return on “Productive Assets” of 37.5%, up from 6.2% in the year prior

What else happened this half for Sims?

A key takeout is the company announcing an underlying EBIT of $361.7 million. This is more than 540% higher compared to the same time last year and seems to have pleased investors, judging by the soaring Sims share price.

Much of the growth waterfall that trickled down Sims’ profit and loss this half stemmed from an 80% growth in sales revenue to $4.26 billion.

Sims notes the high-octane growth was due to “higher sales volumes and higher material prices, combined with disciplined margin management”.

In fact, the group’s trading margin increased by 45% through this “disciplined management”, specifically, of “the buy/sell spread as selling prices increased”.

As a result, the company recognised a statutory net profit after tax (NPAT) of more than $253 million. That’s a substantial gain of 378% on the previous year, whereas underlying NPAT gained 622%.

Impressively, this half also marked the lowest number of injuries recorded year-on-year since 2019.

Management commentary

Speaking on the announcement fuelling the Sims share price today, Group CEO and managing director Alistair Field said:

We delivered an excellent performance in HY22 with earnings above guidance, driven by growth in trading margin, against a backdrop of volatile freight markets and inflationary pressures. We significantly improved our operating cash flow from 2H FY21, increased cash returns to shareholders, and maintained the strength of our balance sheet. Intake volumes grew strongly and were close to pre-COVID levels, highlighting the continued strength of our metal businesses.

What’s next for Sims?

The release notes that intake volumes are solid into 2H FY22 both in the metal business and its joint venture, SA Recycling.

The momentum is strong as non-ferrous commodity prices race higher than HY22 averages and ferrous prices remain elevated.

Sims also explains that SA Recycling’s acquisition of PSC Metals will commence full contribution in 2H FY22.

Sims share price snapshot

In the last 12 months, the Sims share price has gained around 36% and is up 8% this year to date. In the past month, it has climbed 11% and is soaring more than 13% over the past five days of trading.

The post ‘Excellent performance’: Sims (ASX:SGM) share price rockets 16% on stellar earnings 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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