Category: Stock Market

The Pointerra Ltd (ASX: 3DP) share price is storming higher on Friday morning.

At the time of writing, the 3D geospatial data technology company’s shares are up 5% to 50 cents.

Why is the Pointerra share price storming higher?

Investors have been buying the company’s shares on Friday following the release of its quarterly update.

According to the release, Pointerra’s strong growth continued during the second quarter and into the third. As of 29 January, the company’s Annual Contract Value (ACV) stood at US$6.88 million.

This is an increase of US$1.06 million or 18% since its last update on 25 November. It is also up 262% since this time last year, albeit from a small base.

Management advised that this was driven partly by new customers in the US energy utilities and the US and Australian mapping sectors.

One of these new customers is Eversource Energy, a US$32 billion market capitalisation energy company servicing customers in Connecticut, Massachusetts, and New Hampshire. It is working with Eversource to determine the scope and scale of deployment of Pointerra’s platform to support its storm response and network integrity operations.

Management notes that, as part of its recent storm response efforts, Eversource has engaged Pointerra to provide an enterprise repository and analytics platform to extract actionable information from geospatial data allowing for better and informed decisions. This is expected to lead to faster response efforts and higher reliability for its customers.

Eversource is currently paying US$150,000 per month for a four-month deployment. However, management expects to agree a material ongoing subscription with the energy company upon expiry.

Also supporting its ACV growth was a further increase in demand from existing customers. Management notes that its existing customers were spending more thanks to a number of successful POC projects with utilities and their LiDAR and imagery capture mapping partners in the US.

Balance sheet

During the second quarter, Pointerra received $0.63 million in customer receipts.

However, thanks to its modest operating costs, the company only posted a net operating cash outflow of $0.231 million. This left it with a cash balance of $4.52 million at the end of December.

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• 2 more small cap ASX shares to watch in 2021

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointerra Limited. The Motley Fool Australia has recommended Pointerra 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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In morning trade on Friday, the Humm Group Ltd (ASX: HUM) share price is charging higher.

At the time of writing, the financial services company’s shares are up 7% to $1.23.

Why is the Humm share price charging higher?

Investors have been buying Humm shares following the release of a first half trading update.

According to the release, the company is expecting to report strong profit growth for the six months ending 31 December 2020.

The release explains that the company’s unaudited first half cash net profit after tax came in at $43.4 million. This will be a 25.8% increase on the $34.5 million it reported in the prior corresponding period.

Management advised that its cash profit growth has been driven largely by its continued focus on reducing underlying costs. It notes that its operating expenses for the half will be $87.2 million excluding loan impairment expense. This is down 11.1% from $98.1 million in the first half of FY 2020.

In addition to this, its loan impairment expense has reduced by 35.3% to $25 million as a result of lower actual losses and strong recoveries. Management advised that this reflects the benefit of continued investment in developing a superior credit decision platform and adopting a customer-centric approach to managing hardships and collections during the pandemic.

Also supporting its performance has been the success of its buy now pay later offering. The company now has a total of over 2.6 million customers, which is up 40.4% or 750,000 on the prior corresponding period.

Outlook

Management appears cautiously optimistic on the second half.

It commented: “While hummgroup’s credit performance remains robust, the Company continues to take a prudent approach by monitoring the potential impact on arrears and losses from changes to government stimulus, and remains well provisioned for the future.”

“In 2H21 hummgroup will be making new investments in marketing and people as it enters two international markets. As a result, the Company expects 2H21 Cash NPAT to be lower than 1H21,” it added.

Interestingly, Humm hasn’t provided any details in relation to its recently announced potential joint venture with the beleaguered Douugh Limited (ASX: DOU). However, some shareholders may be hoping the company finds another way to expand into the US market given the controversy surrounding the former neobank.

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Motley Fool contributor James Mickleboro 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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McMillan Shakespeare Limited (ASX: MMS) shares will be on watch today after the company announced a business update and preliminary result for its FY21 first-half trading period. At yesterday’s closing bell, the McMillian share price finished the day at $11.54.

Why will the McMillian share price be in focus?

It will be interesting to see where the McMillian share price heads today on the back of the company’s latest update.

According to this morning’s release, McMillian advised it is continuing to experience tailwinds within the salary packaging, novated leasing, and fleet & asset management market.

Despite the challenging operating environment from COVID-19, McMillian revealed that its business performance is rapidly recovering. In particular, novated lease sales are rebounding, remarketing values for used vehicles are seeing stronger returns, and its Plan Partners is on an upwards growth trajectory.

As a result, the company anticipates that underlying net profit after tax for the FY21 first-half period will be $42.7 million. McMillian said this includes a $7.3 million payment from the Australian Government’s JobKeeper scheme.

The company is scheduled to release its half-year results for the 2021 financial year on 24 February.

Management commentary

McMillian CEO and managing director Mr Mike Salisbury welcomed the favourable trading conditions, saying:

We are pleased with the underlying performance of the business in the first half. Our investments in digital technologies and our ability to flex our operating model has delivered a stronger performance and is reflected in the ongoing positive feedback we have received from our customers.

We have benefited from unusual trading conditions in the broader motor industry in the first half. These conditions are expected to normalise throughout the course of the second half of the 2021 financial year and as such, operating performance in the second half is expected to be similar to the first half, excluding the JobKeeper contribution.

Review of the McMillian share price

The McMillian share price has gone on a seesaw ride over the past 12 months. Its shares hit a 52-week high of $13.23 last February, before falling to a decade-low of $5.01 the month after.

Since then, the McMillian share price has gradually moved higher with a few bumps along the road.

In comparison to this time last year, McMillian shares are down 9.8%.

Based on the current McMillian share price, the company commands a market capitalisation of around $893 million.

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• Almost ready to retire? I’d buy cheap dividend shares for a passive income
• Why the Temple & Webster (ASX:TPW) share price hit new highs last year

Motley Fool contributor Aaron Teboneras 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 National Australia Bank Ltd (ASX: NAB) share price is on watch today as the bank pushes further into the growing neobank sector.

Why is the NAB share price on watch today?

This morning, NAB announced it has entered into a scheme implementation agreement to acquire 100% of 86 400 Holdings Ltd shares. That is the holding company of Aussie neobank 86 400, of which NAB currently owns an 18.3% stake.

86 400’s growth has been impressive since being granted its authorised deposit-taking institution (ADI) licence in July 2019. As at 15 January this year, 86 400 had more than 85,000 customers and $375 million of deposits. The Aussie neobank has $270 million in approved residential mortgages and 2,500 accredited brokers.

The NAB share price is one to watch following the announcement, which signals the company’s strategic push towards expanding its presence in the neobank sector. The big four bank currently owns UBank, another leading neobank with more than 600,000 customers.

NAB announced UBank as a strategic priority in April 2020 as the company looks outside of its traditional banking products. NAB plans to accelerate UBank’s growth via this latest acquisition and potential synergies. That includes combining UBank’s customer base, brand and colleagues with 86 400’s experience and technology platform.

NAB expects total transaction costs of approximately $220 million with 86 400’s independent directors voting unanimously in favour of the scheme.

The 86 400 acquisition comes after fellow neobank Xinja handed back its banking license and returned money to its customers. Xinja was arguably a market leader but faced difficulties with bringing lending products to market while paying high rates to customers.

What about other ASX bank shares?

It’s not just the NAB share price that will be on watch today. Bendigo and Adelaide Bank Ltd (ASX: BEN) also has a large interest in the Aussie neobank market via its digital banking arm, Up.

Today’s announcement sees NAB pushing ahead with plans to take a stranglehold on the neobank market which means the Bendigo share price is worth keeping an eye on as well.

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Motley Fool contributor Ken Hall 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.

Mastercard (NYSE: MA) was trading higher Thursday as the company posted earnings that beat analysts’ estimates in the fourth quarter.

Net income was down about 15% in the quarter year over year to $1.8 billion, or $1.78 per share. Analysts anticipated a steeper decline in income, but consumer spending was higher than expected.

Net revenue was down 7% in the quarter to $4.1 billion. Specifically, the drop was due to a sharp decrease in cross-border volume, which was down 29% from the previous year’s quarter. This is largely a result of the decline in travel spending during the pandemic.

However, gross dollar volume, the total amount of purchases made with Mastercard-branded cards, was up 1% year over year. Also, switched transactions fees, which cover clearing and settlement, were up 4%. These two numbers were higher than expected.

CEO Michael Miebach said: “During the quarter, we expanded key partnerships around the globe, and our acquisition of Finicity added to our Open Banking portfolio. We are encouraged by the availability of effective vaccines, and we remain focused on the innovations that will enrich the digital experience, strengthen security and trust, and enable choice through our multi-rail platform, all of which position us well for the future.” 

For the full year 2020, Mastercard reported that net income was down 21% to $6.4 billion compared to 2019, while revenue was down 9% to $15.3 billion. Operating expenses were flat for the year, while the operating margin was down 4.4 basis points but was still a robust 52.8%.

Despite the difficult environment, Mastercard stock returned 19% in 2020, beating the S&P 500. The credit card company should be in good position for a solid 2021 as the pandemic and recession recede.

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

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Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Mastercard. The Motley Fool Australia has recommended Mastercard. 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 the headline-making short squeeze of video game and electronics retailer GameStop Corp. (NYSE: GME) continues, one government official is calling for a month-long halt to trading of the company’s shares. Barron’s reports that Secretary of the Commonwealth of Massachusetts William Galvin wants a 30-day trading suspension, remarking, “small and unsophisticated investors are probably going to get hurt by this.”

Galvin says the New York Stock Exchange ought to “consider simply suspending it for a month and stop trading it,” and that there is “no rational basis for this run up.” He offers the opinion that GameStop’s current trading “needs some regulatory intervention” and an “example” needs to be made of GameStop to prevent similar occurrences.

Conversely, Barron’s also says many small, individual investors have profited immensely from the trading, greatly changing their financial fortunes. CNBC reports more than 3 million people now use the WallStreetBets Reddit chat room, which discusses potential short squeezes, such as fashion retailer Express Inc. (NYSE: EXPR). Some say the squeeze enables regular people to profit from a system they claim the short sellers exploit by building up excessive short positions that artificially drive down share value.

Galvin claims his 30-day trading halt would protect small investors out of their depth and hints that larger players could be covertly, even illegally, manipulating the situation for their advantage. Short positions were 140% to 144% of float before the current bull run, hinting that some of them might be “naked shorts” backed illegally by nonexistent shares. Galvin remarks the shorts appear “systemic” and some could be “nefarious,” and since “the little guys you describe are probably the ones most likely to get hurt” rather than the shorting hedge funds, his 30-day suspension proposal would protect small traders, not harm them.

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

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Rhian Hunt 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.

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Cheap dividend shares could offer a relatively high passive income over the next few years. In some cases, they have high yields versus their historic averages because they have yet to recover from the 2020 stock market crash. And, with other mainstream assets such as cash and bonds offering low returns due to low interest rates, dividend stocks may offer an attractive means of funding retirement.

Of course, they come with higher risks than other assets. As such, seeking to manage risks could be a prudent step in the long run.

High passive income returns from dividend shares

Dividend shares have been a popular means of obtaining a passive income in retirement for many years. They have generally offered a high return that has grown at a brisk pace. At the present time, some dividend stocks offer higher returns than their long-term averages. They may face challenging operating conditions that have the potential to improve as an economic recovery takes hold. This may allow them to deliver rising profits and higher dividends.

Clearly, an improvement in their financial prospects is not guaranteed. Risks are high across the world economy at the present time and could even cause a fall in dividends for some companies and sectors. However, the past performance of the world economy suggests that a return to growth, and stronger operating conditions for many industries, could be ahead in the coming years.

Relative income prospects

At the same time as dividend shares offer a relatively high passive income opportunity, other mainstream assets appear to have much more limited scope to provide an income in retirement. For example, low interest rates have caused bond prices to rise so that their yields are extremely low in many cases. Similarly, cash savings accounts now often offer returns that are below inflation.

As such, there may be fewer opportunities for investors to obtain a worthwhile income from their capital in retirement. This does not mean that dividend shares should be the sole means of obtaining an income, since diversification among asset classes could reduce risk. However, it could mean that the importance of dividend stocks has increased over recent years.

Managing risk

As well as diversifying among asset classes, holding a range of dividend shares can help to reduce risk and provide a more resilient passive income in retirement. This task has been made easier in recent years by lower share dealing charges that may make diversification more accessible to a wider range of investors.

Although diversifying will not eliminate risk, it can reduce an investor’s reliance on a small number of businesses from which they obtain their income. Should one or more of them experience difficult operating conditions that cause their dividends to fall, it may have a smaller impact on a diverse portfolio than a concentrated set of holdings.

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• Mastercard stock moves up on fourth-quarter earnings
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• ResMed (ASX:RMD) share price on watch after solid Q2 update

Motley Fool contributor Peter Stephens 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 online furniture retailer Temple & Webster Group Ltd (ASX: TPW) was one of the surprising success stories to emerge from 2020. Nationwide lockdowns meant people were spending more time in their homes than possibly ever before – and a lot of them decided to spruce up their furniture or set up home offices. And with most retailers forced to close their stores, the only place for people to satisfy their craving for new furniture was online.

This saw the Temple & Webster share price surge by more than 300% in 2020 and hit an all-time high of $14.05 in October last year.

What drove the Temple & Webster share price?

Temple & Webster had a breakout year in FY20. Revenues increased 74% year on year to $176.3 million, and active customers increased by 77% to almost 500,000. Net profit after tax jumped from under $4 million in FY19 to almost $14 million in FY20.

The company also has a healthy balance sheet. Temple & Webster was cash flow positive in FY20 and ended the year with a little over $38 million in cash on its balance sheet and no debt. The company has also raised an additional $40 million through an institutional placement at the beginning of FY21.

FY21 performance

As with many companies operating in the current environment, Temple & Webster seems reticent to provide specific full year earnings targets for FY21. However, it has already started the year strongly, keeping up much of the business momentum built up over the second half of FY20.

At the company’s October AGM, company CEO Mark Coulter gave a trading update for the period from 1 July 2020 to 19 October 2020. Year-to-date revenue was up 138% versus the same period in FY20, and first quarter earnings before interest, tax, depreciation and amortisation (EBITDA) had come in at $8.6 million – already greater than EBITDA for all of FY20.

However, some of the wind has gone out of the Temple & Webster share price more recently. After surging off its March 2020 low of just $1.52 to its all-time high of $14.05 by late October – a scarcely believable gain of over 800% in just 7 months – Temple & Webster shares have slid back down to $11.27 as at the time of writing.

Other retailers cashing in on digital sales

The Temple & Webster share price wasn’t the only ASX retail player to surge last year on the back of a spike in online shopping. Shares in Australian e-commerce company Kogan.com Ltd (ASX: KGN) soared to a new record high of $25.57 in October 2020.

Plus-size women’s clothing company City Chic Collective Ltd (ASX: CCX) also set a new record high share price of $4.24 earlier this week. It also boosted its digital presence last year, and recently expanded into the United Kingdom market through acquisition of the e-commerce and wholesale assets of popular high street brand Evans.

More reading

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Rhys Brock owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. 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’s been a rough few years for value investors.

Ever since the global financial crisis, growth stocks have easily outperformed value shares.

Many factors — such as low interest rates, technological change, and government support — have converged to form favourable conditions for growth shares.

Investors have been rewarding companies seen to be part of the future, and finding boredom in businesses that are already earning a profit.

Bank of America Corp (NYSE: BAC) even declared the death of value investing last August. 

And that’s meant many value funds and their highly paid managers have underperformed, much to their professional embarrassment.

For example, in a year when ASX-listed exchange-traded funds (ETFs) saw a record amount of new money pouring in, traditional value manager Schroders (LON: SDR) saw its ETF equity base shrink.

So how are value investors defending themselves in a world that’s against them?

Maple-Brown Abbott: We’re going to hold tough

Maple-Brown Abbott head of Australian equities Dougal Maple-Brown said his team has fielded some “very tough questions” from clients over the last 10 years about the failure of value investing.

“In Australia, yes, we have lost some clients,” he told a briefing this week.

“[But] people employ us to be a value manager. That’s what it says on the tin.”

Maple-Brown said the team would remain faithful to the strategy.

“We have generally held the course, which has been excellent. And they’ve been handsomely rewarded in the last quarter. But that’s just one quarter and there’s a lot more to go.”

The company’s managing director Sophia Rahmani admitted clients could get fatigued with repeated quarterly presentations espousing how the market valuation is at historic and dangerous highs.

But this repetition also showed her team was staying true.

“Our Australian and Asian investors know that they’re getting a disciplined values manager with that,” she said.

“We’re definitely going to hold tough to what we do, because we believe in it.”

Will Gray: Value will be back with a vengeance

Will Gray, director of ‘contrarian’ investment house Allan Gray Australia, admitted this month it’s been a hard life backing value shares.

“2020 was another such occasion, with many of our funds underperforming their respective benchmarks over the calendar year,” he wrote to his clients.

“We personally share these tough times with you, as substantial co-investors in the funds, through very low firm profitability/small losses due to our performance-based fee structures, and through lower individual remuneration – and that’s exactly how it should be.”

Gray reminded his clients that value investing had worked “spectacularly well” for many decades until the 1990s internet bubble.

“The approach came roaring back into fashion in the wake of the dotcom bust, yet now finds itself being similarly tested once again,” he said.

“We aren’t smart enough to predict the timing or duration of these changes, but we do know that they have been cyclical in the past.”

Buying cheap will never go out of fashion

Paying less than what a company is worth is “a timeless recipe for investment success”, according to Gray, even if it meant waiting a long time on the sidelines.

“Rather than relying on a ‘winner’s game’ consisting of spectacular streaks of brilliance, a better approach is to contain mistakes and invest with controlled conviction,” he said.

“While it may not be the most fun to play, it is a winning strategy for those who have the discipline, patience and humility to stick with it.”

Gray predicted the end of growth-over-everything era is now within sight.

“The improvement in our investment performance over the last two months of the year, coincident with news of several effective COVID-19 vaccines, is encouraging in that regard,” he said.

“Even so, the extent of that move barely registers as a blip on a longer-term chart. It is exciting to think what might be possible if current valuation gaps begin to close in earnest.”

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Motley Fool contributor Tony Yoo 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 ResMed Inc (ASX: RMD) share price will be on watch on Friday following the release of its second quarter update this morning.

How is ResMed performing?

ResMed continued its strong form during the second quarter and delivered further revenue and profit growth.

According to the release, for the three months ended 31 December, ResMed reported a 9% increase in revenue to US$800 million.

Also heading in the right direction was the company’s gross margin. It reported a non-GAAP gross margin of 59.9%, up 20 basis points on the prior corresponding period.

This underpinned a 17% increase in net profit to US$206.4 million and earnings per share to US$1.41.

What were the drivers of its growth?

ResMed’s CEO, Mick Farrell, revealed that the company’s growth was driven by a solid performance across the business.

He commented: “Our second-quarter results reflect continued solid performance and positive trends across our business resulting in top-line growth as well as double-digit improvement in operating income and earnings per share.”

“In our core markets of sleep apnea, COPD, and asthma, we are seeing continued sequential improvement in new patient volume and ongoing adoption of our mask and accessories resupply programs. Our global teams have managed SG&A investments judiciously as we navigate through the global pandemic.”

Mr Farrel revealed that its digital health business has been performing strongly thanks to the growing importance of out-of-hospital care.

He explained: “We have seen great adoption of digital health and an increase in the importance of out-of-hospital healthcare these last 12 months, and that will only expand throughout 2021 as vaccines become more widely available, and our communities open up worldwide.”

“We have continued to invest in focused R&D programs in digital health and core medtech innovation, to help accelerate our ResMed growth strategy: improving 250 million lives in out-of-hospital healthcare in 2025,” he concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. 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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