Telstra Group Ltd (ASX: TLS) shares have suffered some pain in the last year, with a 22% decline, as shown on the chart below. Could a rise in profit lead to a resurgence for the ASX telco share?

Recently, some investors may have lost confidence in the company’s outlook because of its enterprise business. The telco is best known for its mobile division, but other divisions also contribute.

Telstra has been reviewing the enterprise segment and has decided on a number of actions to rectify it. It’s going to reduce the number of net applications and services (NAS) products, simplify the customer sales and service model, and reduce its cost base. Up to 2,800 roles will be removed, with one-off restructuring costs of between $200 million and $250 million across FY24 and FY25.

In that same announcement, Telstra said it planned to remove the CPI inflation-linked annual price review for its postpaid mobile plans.

After considering Telstra’s announced changes, let’s examine what the broker UBS projects Telstra’s profit will be for the next couple of years.

FY24

UBS believes that Telstra can continue to raise its mobile prices despite the removal of the CPI indexation. That confidence comes from Telstra’s “network differentiation,” competitors raising prices in March, and consumers’ being “somewhat a bit more conditioned on an annual price rise rhythm for mobile contracts.”

UBS noted Telstra’s commentary suggests “strong subscriber growth momentum has continued”, which gives the broker “comfort the likely willingness of consumers to continue to pay higher prices for network differentiation over the medium-term”.

The broker has forecast Telstra’s net profit after tax (NPAT) could reach $$2.05 billion in the 2024 financial year and it may pay an annual dividend per share of 18 cents.

FY25

The broker thinks there is a “likelihood” of further cost reductions beyond FY25 and that the ASX telco share could see 2% growth of its blended mobile average revenue per user (ARPU) in FY25, with 3% growth in postpaid and 4% with prepaid, according to UBS.

Telstra has guided its underlying FY25 earnings before interest, tax, depreciation and amortisation (EBITDA) could be between $8.4 billion and $8.7 billion.

UBS suggests Telstra’s FY25 profit could be virtually flat, with NPAT forecast at $2.04 billion. The ASX telco share is forecast to pay a dividend per share of 19 cents in FY25, according to the broker.

FY26

After the job cuts and adjustments in mobile prices, UBS has predicted Telstra’s net profit can jump 24% in FY26 to $2.53 billion after a 2.5% rise in revenue. In other words, the broker is expecting Telstra’s net profit margin to significantly improve in the 2026 financial year.

Telstra’s dividend is forecast to increase by 2 cents per share in FY26 to 21 cents per share. The broker is projecting the ASX telco share to generate 22 cents of earnings per share (EPS) in FY26, meaning its dividend payout ratio would be below 100%, which is sustainable and allows for profit reinvestment.

Overall, I think the projected direction of Telstra profit looks promising and could help support the Telstra share price in the next couple of years.

The post Here is the earnings forecast through to 2026 for Telstra shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

AGL Energy Ltd (ASX: AGL) shares have been on a rollercoaster over the past year, trading 8.5% higher in 12 months despite the ups and downs. Since the start of 2024, the ASX energy share has risen 6%.

ASX investors now have some fairly obvious options for gaining exposure to artificial intelligence (AI), such as data centre operator NextDC Ltd (ASX: NXT). But could there be potential for the AI theme to indirectly boost AGL?

I believe a range of other businesses may benefit in the future from the growth of AI usage. Here’s why I think AGL is one of the ASX stocks that could ride the wave.

Energy demand to grow significantly

The significant growth of AI is likely to mean more energy-intensive data centres.

For example, Nextdc advised that in the 12 months to 31 December 2023, its contracted utilisation increased 64.8MW (or 77%) to 149MW. The company added that it had a record forward order book of 68.8MW, which it projects will convert into billings across FY25 to FY29.

Meanwhile, Yukio Kani, CEO of JERA, Japan’s largest power provider, recently described data centres as “very hungry caterpillars”, as reported in the Wall Street Journal.

And, according to reporting by the Australian Financial Review, data centres already use 5% of Australia’s electricity. Data centre capacity is expected to more than double in the rest of the decade, from 1,050MW to 2,500MW by 2030, translating to 13% growth per year.   

As AGL is one of Australia’s largest energy retailers and generators, I believe the ASX energy share is primed to benefit from the AI theme. Australia faces the challenge of decarbonising (and removing coal power generation), but at the same time, it could face sizeable increases in overall energy demand.

Australia’s growing population and a shift to electric vehicles may also increase the demand for energy. This could be another potential tailwind for AGL shares.

Why AGL looks like a cheap ASX stock

AGL has a development pipeline of 5.8GW, with plans for long-duration storage. Broker UBS has forecast AGL’s earnings per share (EPS) could be $1.24 in FY27. That suggests the AGL share price is currently trading at 8x FY27’s estimated earnings.

For a business that provides an essential service and can generate resilient earnings, I believe its forward price/earnings (P/E) ratio is low, particularly if data centre demand increases energy prices.

UBS predicts AGL EPS could rise another 6% to $1.32 in FY28, suggesting a promising long-term outlook for earnings growth.

The post An overlooked cheap ASX stock to tap into the year’s hottest theme? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Well, it’s been another day, and another big drop for the S&P/ASX 200 Index (ASX: XJO) and the Australian share market this Thursday. 

After suffering a 1.3% drop yesterday, the ASX 200 is again under pressure today. At the time of writing, the index has fallen another 0.48% and is back down to under 7,630 points.

Today’s latest drop caps off what has been a horrid two weeks for ASX shares. Exactly a fortnight ago, the ASX 200 was riding high, touching 7,880 points and seemingly pushing towards its all-time high of 7,910.5 points.

But it has been down and down for the markets ever since. Today’s drop puts the ASX 200 at a new four-week low.

Check that out for yourself below:

So, how did we get here? What has caused investors to lose so much of the optimism we saw just two short weeks ago?

Why are investors tanking the ASX 200?

Well, let’s start at the beginning. Two weeks ago, investors were on a high following good inflation news out of the United States, as well as the latest Australian unemployment figures out of the Australian Bureau of Statistics (ABS).

With US inflation falling, and Australian unemployment ticking up, it seemed the stage was set for a round of global interest rate cuts. And interest rate cuts are, as we’ve learned over the past few years, what stock market investors desperately want to see.

The first ‘canary in the coal mine’ for these interest rate assumptions was the revelation on 21 May that the Reserve Bank of Australia (RBA) nearly hiked interest rates earlier this month. As we noted at the time, the RBA pointed out that “Inflation in Australia had declined more slowly than anticipated” over the past few months.

This was enough to put a dent in ASX 200 investors’ optimism at the time.

Inflation dashes rate cut hopes

However, the latest Australian inflation figures that were released yesterday confirmed ASX 200 investors’ fears and poured cold water on the notion that the next move from the RBA will be a 2024 cut.

As we covered during Wednesday’s session, Australian inflation came in at a higher-than-expected 3.6% for the 12 months to 30 April 2024. Most experts were expecting a drop from the previous month’s 3.5% down to 3.4%. So to see inflation actually uptick to 3.6% highlighted why the RBA nearly hiked rates earlier this month.

As such, it certainly seems as though the RBA’s next move might indeed be a hike, and not a cut.

Upon the release of these inflation numbers yesterday, the ASX 200 tanked. The selling pressure continues today.

So, it’s probable that the ASX 200 has hit a new four-week low today due to these inflationary fears, combined with the fading optimism that interest rates will fall in 2024. Let’s see what happens next.

The post Why did the ASX 200 just hit a 4-week low? appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today

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 Scott Phillips.

The Novonix Ltd (ASX: NVX) share price is having a poor session on Thursday.

At the time of writing, the battery materials and technology company’s shares are down over 4% to 69 cents.

Why is the Novonix share price falling?

Investors have been selling the company’s shares today after broad weakness in the battery materials industry overshadowed an announcement.

In respect to the former, the likes of Core Lithium Ltd (ASX: CXO) and Sayona Mining Ltd (ASX: SYA) are tumbling into the red following a poor night of trade for lithium stocks on Wall Street.

What did Novonix announce?

This morning, Novonix announced that an independent assessment of the company’s Riverside production facility in the United States has been completed by Hatch. It is a global engineering and consulting firm.

According to the release, the assessment considered various topics including the evaluation of operations, project execution, and financial model assumptions as well as the graphite market, production technology, environmental considerations, feedstock, and supply agreements.

With the independent engineering review completed, Noxonix notes that it remains on track for its initial 3,000 tonnes per annum (tpa) of commercial production capacity at the Riverside facility by the end of 2024. Importantly, all primary production equipment is either in place or ordered.

Novonix has also updated it project economics following the review and in response to recent government funding initiatives.

It revealed that when the Riverside facility reaches its targeted capacity of 20,000 tpa, it expects to be achieving operating margins in the range of 23% to 30%. This will be with an operating cost range of US$6 to US$8 per kg and an anticipated selling price of US$7 to US$10 per kg.

Though, it is worth highlighting that these estimated operating margins do not reflect the potential benefit of Section 301 tariffs or the potential impact of compliance with the Foreign Entity of Concern requirements of the Section 30D Clean Vehicle Credit under the Inflation Reduction Act. So, Novonix’s margins could be better than these estimates if all goes to plan.

Novonix’s CEO, Dr. Chris Burns, commented:

The completion of the independent engineering review provides us with a high degree of confidence as we advance our overarching plans towards production and deliveries from Riverside. The completion of this review represents a significant milestone that reinforces our progress and underscores our position as pioneers in localizing lower-emissions synthetic graphite supply in North America.

The Novonix share price is down 25% over the last 12 months.

The post Why is the Novonix share price sinking like a stone today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The All Ordinaries Index (ASX: XAO) is down 0.5% in late morning trade on Thursday, but that’s not holding back these three high-flying ASX All Ords shares.

Shaking off any concerns over sticky inflation and extended high interest rates, investors are sending these stocks soaring to multi-year highs today.

Which companies are we talking about?

I’m glad you asked!

ASX All Ords shares flying higher

The first ASX All Ords stock hitting a new multi-year high today is Genex Power Ltd (ASX: GNX).

The Genex share price is up 1.9% today at 27 cents a share, the highest levels since 2018. That sees the Genex share price up an impressive 50% over the past 12 months, with most of those gains delivered since the end of February.

With no new price sensitive information from the company since it announced a funding extension on 13 May, investors may be buying the stock for exposure to its portfolio of sustainable energy assets.

The second ASX All Ords share smashing new multi-year highs today is Clarity Pharmaceuticals Ltd (ASX: CU6).

The Clarity Pharmaceuticals share price is up 5.1% at $4.84 a share. That sees the stock up a whopping 549% over the past 12 months. And, if the gains are maintained, it will mark a new all-time closing high.

Investor enthusiasm was stoked again today after the clinical-stage radiopharmaceutical company announced it had entered into a supply agreement with SpectronRx for the production of diagnostic copper-64 (Cu-64).

The agreement assures a seamless supply of CU-64 for Clarity’s products, which are currently progressing through clinical trials.

Clarity executive chairman Alan Taylor said:

We are very excited to bring an additional Cu-64 manufacturer to our extensive and reliable network of copper radioisotope suppliers. SpectronRx will be the first private supplier of Cu-64 to join our network in the US.

Cu-64, with an ideal 12.7-hour half-life, is able to overcome the overwhelming supply restraints of other diagnostic isotopes, specifically Ga-68 with a half-life of ~1 hour and F-18 with a half-life of ~2 hours

Which brings us to the third ASX All Ords share smashing multi-year highs today, Catapult Group International Ltd (ASX: CAT).

Shares in the global sports data and analytics company are rocketing 13.6% today, currently trading for $1.76 apiece. That sees the Catapult share price up 62% over 12 months and trading at its highest levels since October 2021.

The ASX All Ords share is surging after releasing its full FY 2024 results this morning.

Highlights include a 20% year on year increase in revenue (in constant currency) to $152 million.

And the Catapult’s profit margin improved by 125% from the prior year, which resulted in $7 million of free cash flow.

The post 3 ASX All Ords shares smashing new multi-year highs while the market sinks appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Catapult Group International. The Motley Fool Australia has recommended Catapult Group International. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX tech stock Catapult Group International Ltd (ASX: CAT) captured the spotlight in early trading on Thursday following its financial results for the year ending 31 March 2024.

At the time of writing, Catapult shares are trading 11.6% higher at $1.73 apiece after touching a 52-week high of $1.80 just after market open. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has slipped 0.6% into the red.

Let’s delve into the key highlights from FY 2024 that have investors buying this ASX tech stock today.

Catapult: ASX tech stock with high revenue growth

Investors are optimistic about this ASX tech stock’s outlook following the company’s annual results. Here are some of the highlights:

• Annualised contract value (ACV), a key indicator of future revenue, grew by 20% in constant currency year over year.
• The company’s revenue hit a milestone of US$100 million, reflecting the strength of its software as a service (SaaS) strategy.
• Earnings before interest, tax, depreciation and amortisation (EBITDA) of US$9.3 million, up from a loss of US$11 million last year.
• Net loss after tax of US$16.7 million, an improvement from the $31.6 million net loss in the prior corresponding period.

Revenue growth was driven by new customers and increased ACV per team, boosted by the ASX tech stock’s new video solutions.

Catapult’s core SaaS metrics showed ACV retention improving to 96.5%, up 30 basis points year-on-year. Customer lifetime duration increased by 15.9% to seven years, and the number of pro team customers rose by 9.4% to 3,317 teams.

The company also hit its free cash flow targets of US$4.6 million, a US$26 million improvement year over year. This is after paying down US$4.7 million of debt during the quarter.

What did management say?

Catapult CEO Will Lopes was pleased with the company’s numbers, saying:

FY24 was a historic year for Catapult. Our SaaS strategy delivered great ACV growth, driven by new customers but also buoyed by increases in ACV per team as cross-selling accelerated with our New Video Solutions.

This highlights the company’s ability to leverage its technology to attract and retain clients, ensuring steady revenue growth.

Catapult’s EBITDA margin improved by 125% year-on-year, resulting in US$4.6 million of free cash flow.

This marks a significant inflection point in the ASX tech stock’s journey towards profitability and establishing a world-class SaaS business.

Lopes added, “FY24 was a major inflection point in our journey towards profitability and building a world-class SaaS business. We saw strong growth in our profit margin, accelerating us to improved levels on the Rule of 40.”

The Rule of 40 is a key valuation metric for SaaS companies, indicating that the combined revenue growth rate and profit margin should exceed 40%. Catapult achieved a 43% rate.

What’s next for this ASX tech stock?

For FY25, management aims to maintain strong ACV growth and high retention rates. The company plans to balance growth and profitability, aligning with the Rule of 40 to ensure cost margins move towards long-term targets.

Said Lopes: “In FY25, our objective is to deliver on our strategic priorities with a focus on profitable growth. Profitable growth is also anticipated to deliver higher free cash flow in FY25 as our business scales.”

Catapult share price

The Catapult share price is up around 74% in the last 12 months of trade.

The post Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high 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 positions in and has recommended Catapult Group International. The Motley Fool Australia has recommended Catapult Group International. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Woodside Energy Group Ltd (ASX: WDS) share price has been on a downward trend now for almost a year.

On 15 September, shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock closed the day trading for $38.39.

In intraday trading today, shares are down 1.2% at $27.13 apiece.

That’s underperforming the 0.7% losses posted by the ASX 200 at this same time. Though it’s right in line with the 1.2% decline of the S&P/ASX 200 Energy Index (ASX: XEJ).

Still, with today’s losses factored in, the Woodside share price is now down a painful 29.5% since 15 September.

That lengthy and sharp decline is in sharp contrast to the ASX 200 energy stock’s very strong performance over the previous three years.

How strong?

Well, brave investors who bought Woodside stock on 20 March 2020 would have been sitting on gains of 140.0% by 15 September 2023. And that’s not including the very juicy, fully franked dividends paid out during this period.

So, the question before us now is, are Woodside shares still a ‘falling knife’? Or is it time to wade in and buy the dip?

Is the Woodside share price good value now?

According to Christopher Watt, an investment advisor at Bell Potter Securities (courtesy of The Bull), the big recent fall in the Woodside share price offers an appealing opportunity.

“The recent share price pullback in this energy giant presents an attractive entry point for investors, in our view,” Watt said.

Bell Potter has a buy rating on the ASX 200 energy stock.

Watt noted:

The shares have fallen from $30.59 on April 11 to trade at $27.45 on May 23. Although first quarter 2024 production fell by 7 per cent on the fourth quarter of fiscal year 2023, the company retained full year 2024 guidance of between 185 million and 195 million barrels of oil equivalent.

Woodside remains Australia’s premier oil and gas exposure.

At its quarterly results, Woodside also reported its three top growth projects were progressing well.

CEO Meg O’Neill noted:

Significant progress was made in the period on our three major growth projects. Commissioning activities are now underway at the Sangomar project in Senegal, on track for first oil in the middle of this year.

Atop the potential for a rebound in the share price, Woodside also remains a top ASX 200 dividend stock.

Over the past 12 months, the company has paid out $2.16 a share in fully franked dividends.

At the current Woodside share price, that sees the stock trading on a fully franked trailing yield of 8.0%.

The post Buy the dip: Woodside share price now at ‘attractive entry point’ appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.