Long-term owners of Fortescue Ltd (ASX: FMG) shares may have initially invested in the company for its mining operations, but this week, the Australian miner announced it’s now selling software to Jaguar Land Rover (JLR).

The tech addition began in January 2022 when Fortescue’s efforts to decarbonise its operations and diversify its earnings from iron ore mining led it to acquire high-performance battery business Williams Advanced Engineering (WAE). Today, the miner is now commercialising work and software that WAE has developed.

With this new software deal in the bag, perhaps we should now add ‘ASX tech stock‘ to Fortescue’s operating credentials.

Fortescue signs deal with Jaguar Land Rover

JLR has signed a multi-year deal to use Fortescue’s advanced battery intelligence software, Elysia, in its next generation of electric vehicles. It will start with the new Range Rover Electric, which will launch later this year.

The Elysia software will monitor all future JLR electric vehicles, giving clients a “better ownership experience with faster charging, improved reliability, and increased range”.

Fortescue explained that its software used “physics-informed digital twins and probabilistic artificial intelligence to identify and solve battery issues”.

Monitoring battery health throughout its life could also support sustainability by “making it easier to transition batteries from electric vehicles to second-life applications”, the company noted.

Fortescue described the contract with JLR as a “multi-year deal worth tens of millions of pounds”, according to the Australian Financial Review. That may not be hugely material to the Fortescue share price, but it adds further earnings to the miner’s green energy division.

Management comments

Fortescue Energy CEO Mark Hutchinson had this to say about the deal:

This collaboration showcases the very best of cutting-edge innovation and engineering. Through Fortescue’s breakthrough battery intelligence software, JLR will benefit from a new level of access to battery data and a revolutionary way to monitor its products in the real world, ensuring that every product lives up to the brand’s exceptionally high standards.

The lessons and innovations we have both learned from motorsport are now being applied to the management of battery systems on our roads, unlocking a leading future of EV performance for JLR’s customers.

Hutchinson also told the AFR the deal was important because it would “release the true potential” of WAE. He said the WAE business had grown its staff “fourfold” since March 2022 after being starved of capital under former owners.

Fortescue share price snapshot

Fortescue shares are up 7% over the last six months, as shown in the chart above. That compares to an 11% rise for the S&P/ASX 200 Index (ASX: XJO) in the past half-year period.

The post Own Fortescue shares? Here’s why you now own an ASX tech stock! appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Fortescue. 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.

S&P/ASX 200 Index (ASX: XJO) stock Eagers Automotive Ltd (ASX: APE) just crashed 19%.

Shares in the automotive retail group closed yesterday trading for $12.19, giving the company a market cap just shy of $3.2 billion.

In earlier trade, the ASX 200 stock crashed to $9.87 a share, down 19.0%. After some possible bargain hunting, shares are currently swapping hands for $10.42, down 14.5%.

For some context, the ASX 200 is up 0.2% today.

Here’s what’s happening.

ASX 200 stock crashes on reduced profit outlook

Shares in the ASX 200 stock are crashing to almost two-year lows following an FY 2024 year to date trading update.

Before revealing some medium-term subdued profit figures, Eagers Automotive CEO Keith Thornton tried to calm the waters, noting:

Eagers Automotive continues to be focused on what we can control rather than obsessing over external economic or market conditions. As a 110-year-old company we are acutely aware we will experience economic cycles, both good and challenging.

As you can guess by the crashing share price today, the current cycle ticks the challenging box.

Thornton added that, “We must not be distracted by near term conditions and continue to focus on the execution of operational excellence within our business and the implementation of our strategic priorities.”

The crashing share price tells us that ASX 200 investors are not following Thornton’s advice and are decidedly focusing on the near-term conditions.

Eager Automotive was said to be facing a number of macroeconomic headwinds.

Those include:

• Cost of living pressures impacting retail consumer spending
• Inflationary conditions increasing the cost of doing business
• Current expectation we are at top cycle interest rate conditions
• An increasingly competitive marketplace

Despite reporting revenue growth of 18.3% year to date April compared to the same period in 2023, the ASX 200 stock is crashing today after flagging a 15% decline in profit for the first half of 2024.

According to Thornton:

Given the current market and business dynamics, and with a cautious lens on consumer sentiment, we expect to achieve an underlying trading performance for the first half of 2024 that is approximately 85% of the underlying profit before tax for the first half of 2023.

On the positive front

Looking to what could boost the crashing ASX 200 stock, Thornton said, “The new car market remains on track for another record year as our order bank continues to be delivered supporting both revenue and margins.”

The Federal government’s extension to its Instant Asset Write Off in the 2024 budget and the rollout of Australia’s New Vehicle Emission Standard on 1 January 2025 were both flagged as potentially boosting sales and profits in the second half of 2024.

Thornton added:

We remain on track to exceed our revenue growth ambition in 2024 and will continue to be relentless in the execution of our business transformation strategy, while using discipline to review increasing opportunities for accretive M&A activities.

The post Why this $3.2 billion ASX 200 stock just crashed 19% 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 recommended Eagers Automotive Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

So, the Budget has been handed down. The Opposition Leader has delivered his Budget Reply.

And where does that leave us?

As investors, probably right where we were at the beginning of last week. Not only was there nothing in this Budget (or reply) that might move the needle for some companies in some circumstances, but there are very, very few Budgets that change how we should or would invest.

That’s because our companies’ long term futures are very rarely influenced to any great extent by these changes in government spending or taxation, and nor is the investing landscape itself.

Sometimes, there are changes that matter, including when the capital gains tax system was changed, or when Super rules are (almost inevitably) tweaked for the 243rd time – but these are relatively few and far between.

But, as I’ve written before, what investors should be mindful of is what each successive Budget does to the economy itself. Because over time, companies that are listed on the share market will generally benefit from favourable economic settings and circumstances, and be hurt by unfavourable ones.

So while watching (or reading about) the Budget will rarely change what we buy, or the price we pay, we should be hoping our elected officials to make changes that improve both our economy and the society it serves.

Which takes me to a few hot button issues that continue to swirl around, as a result of those announcements.

And strap in… they’re controversial.

I would ask (in vain in the broader community, but hopefully productively of our informed and thoughtful readership) that you put the political barracking and ideology aside for a few minutes here. Or, hate-read it if you must, but know that it probably isn’t helping (and you’ll love the things your political opponents hate, and vice versa, but that won’t get us anywhere).

Let’s start with ‘Future Made in Australia’. I’ve gotta say, this one is electoral gold. It seems that, somewhere deep in our DNA and/or in our rose-coloured-glasses-case, we just want to make stuff. We justify it on a lot of grounds: employment, national security, supply chains, keeping profits here. They’re all good things. But we seem to have trouble comparing that to the drawbacks. Probably because, as the boffins describe it, international trade has ‘large, but diffuse benefits’. In other words, we don’t easily see the aggregated national benefit of buying more cheaply from overseas buyers, or the costs of dragging workers from more productive pursuits into subsidised work.

I don’t know an economist (and certainly not an impartial one) who thinks this is good policy. It’ll likely lead to lower living standards, higher taxes or both. But it just sounds good. Which might just be why the pollies love it.

So, let me say clearly: it’s not. It’s less efficient, less productive and wastes money. Buying stuff from international trade partners, and selling them our stuff, is a far more prosperous endeavour.

And it only gets more controversial from here.

Can we talk about immigration? How’s that for a starting line. At the barest mention, people are already manning the barricades. On the ‘pro’ side are those who want more people so that companies can sell more stuff, the people who shout about ‘skills gaps’ (they’ve been doing that for decades), and those who see any mention of immigration as barely-disguised racism. On the other, the actual racists (the former group aren’t entirely wrong), those who worry about house prices, and those (like me) who’d point out that population growth is masking a decline in per-person GDP.

My take? I think we have a short-term question and a long-term challenge.

In the short term, household formation growth is exceeding dwelling completion growth. (‘Population’ isn’t the right number, because a family of 6 needs one house, just as a childless couple does. So it’s not the number of people, but the number of households that matters.) That’s a technical way of saying the growth in demand for housing is outstripping the growth in supply of housing. That’s… bad. It’s bad for housing affordability. It’s bad for economic activity (those who pay more for housing have to pay less for, or buy less of, other things), and it’s bad for really important, if uncounted-in-GDP, things like homelessness and mental health.

There are plenty who say the issue is supply. And it is. But – and this is important – supply is only an issue if we continue to have more people who need houses. A moderation in demand would mean a moderation in the required supply. But also, supply takes years to come on stream. Meanwhile? Meanwhile the growing number of households need somewhere to live. We need to meaningfully reduce demand, in the short- to medium-term, while supply catches up. And then, if it was up to me, I’d peg our population growth (births plus arrivals) at maintaining housing vacancy rates at something around 3% or so, ensuring that housing is both available and (more) affordable.

In the long term? Man, if you think the short term issues are above our politicians’ ability or willingness to grasp, try asking them to think 10, 20 or 50 years out. See, we have some really important conversations to have – on our own behalf and on behalf of our kids and their kids. And that is ‘How big do we want Australia to be, and what do we want to trade off?’

Think: infrastructure. Congestion. Density. Environmental impact. Quality of life. Access to open space. You get the idea.

I don’t have a solid view on this one. I’m not sure that many more people want to live in higher density, but instead are forced to by affordability. (Some do, of course. And we should build for that.) I don’t think we want more sprawl, at the expense of our farms and bushland. I’m not sure we have the water. I would suspect that best case (for economic and non-economic outcomes) is that our long term population is closer to the current level than to 100 million people. But more important than my guess is that we have a national conversation, informed by expertise and information.

(Oh, and if you think ‘but the economy would be bigger with more people’, you’d be dead right. But, remember, a larger economy can also come with a reduction in per-capita GDP. How do I know? Well, that’s precisely what we’re seeing now.)

By the way, both major parties are promising a reduction in immigration. It’s harder to do – and/or has more significant consequences – than the soundbites suggest. It’s not an easy thing to tackle.

And one last one on population/immigration: decent people can disagree for decent reasons. But there can be no excuse for this conversation to be a barely-there fig leaf covering racism and xenophobia. There is never, ever an excuse for racism, and our immigrants themselves aren’t the issue – our policy settings are what we should be discussing. The distinguished list of immigrants-done-good in Australia is extraordinary, and we are lucky to have them.

Speaking of housing: affordability and availability are probably the biggest short-term economic issues facing the country. Too many people are priced out (or just crowded out) of the housing market, as owner-occupiers and/or renters.

As I said above, a relatively swift and sizeable cut in population growth is the fastest way to get more people in houses, and reduce the upward pressure on rents and prices. But also, remember that economically, the more money that goes into housing, the less that is spent in the rest of the economy. Excessively high house prices are good for those who own them, but not good for our economy – or the long term prosperity of the country.

And, assuming we agree that the cost of housing is an issue, our politicians should grasp the nettle and make some additional significant and swift moves to reduce upward pressure on prices: namely moving capital gains taxation back to the previous model of indexation (replacing the 50% discount), stopping (but grandfathering) negative gearing on residential property, and stopping foreign purchases for a period of time. Frankly, I don’t think any of these will individually have a significant impact on prices. Even as a group, it’s probably not huge. But if we’re going to take action on affordability, every little bit helps.

The Opposition’s Super-for-housing policy, that Opposition Leader Peter Dutton recommitted to on Thursday night? I don’t have enough scorn for that policy, as I’ve written before. Yes, housing is more important than Super. But we shouldn’t make our young people choose between the two. In a wealthy, prosperous country, both housing and Super should be the non-negotiable starting point.

So they’re my thoughts on what was announced last week. But I want to finish with something that wasn’t covered: productivity.

The word simply means ‘more output per unit of input’. And it is almost solely what’s been behind the rise in living standards over the past 300 years. Population growth helps the pie get bigger (and can have some scale benefits, especially early on), but productivity is why we’re much, much better off than our forebears.

And so where was the conversation from the Government or Opposition? What are the specific steps being taken to improve our standard of living? What investments are being made and obstacles are being removed? It might not be as sexy as ‘Future Made in Australia’ or as arousing as ‘I’m putting Australians first’, but it’s far, far more impactful, done right.

I’m old enough to remember serious policy discussions in the 80s and 90s about national productivity, and the macroeconomic and microeconomic reforms that came as a result. We… haven’t had those conversations for a long, long time – much to our national detriment.

So there you go. Something for everyone (and something to annoy everyone). But also some considered responses to some of the soundbites and sloganeering we’ve heard, recently.

I’ve tried to make it thoughtful, and nuanced. And there are no perfect solutions. Everything is a trade-off and every good idea comes with downsides.

But I hope it adds a little to the national conversation. At the very least, it should be more grist for the mill. Let’s hope we get more nuance and substance from our sloganeers in future.

Fool on!

The post We need to fix the economy. Here’s how appeared first on The Motley Fool Australia.

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• Here’s what $10,000 invested in the Vanguard Australian Shares Index ETF (VAS) at the start of 2023 is worth now
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Motley Fool contributor Scott Phillips 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 market is swinging into action this morning, with one exception among stocks inside the S&P/ASX 200 Index (ASX: XJO).

You’d be forgiven for not noticing. The company isn’t in the same leagues as CSL Ltd (ASX: CSL) or Woolworths Group Ltd (ASX: WOW). However, at a market capitalisation of $3.2 billion, this arguably ‘under-the-radar’ company is hardly any small fry either.

If you haven’t already guessed, I’m talking about the insurance broker and underwriting agency AUB Group Ltd (ASX: AUB). Shares in the company are locked at $29.46 this morning after AUB requested a trading halt ahead of the morning bell.

It turns out that AUB Group has some big news to share.

Acquisition to fill the gaps

AUB Group is ready to take its next bite of the merger and acquisition pie.

A year and a half after engulfing Tysers, AUB is deploying capital again to continue its growth through acquisition strategy. This time, a Melbourne-based specialist underwriting agency is at the centre of attention.

Pacific Indemnity, founded in 2015 by Jun Acance, has only been in business for eight and a half years. However, the professional indemnity-focused business conducted $177 million in gross written premiums in FY23.

The ASX 200 stock is acquiring 70% of the equity in Pacific Indemnity for $105 million. The offer values the acquisition target at an enterprise value of $192 million, giving it an enterprise value to FY23 earnings before interest and taxes multiple of 13 times.

A further $35 million is on the table, depending on the performance of Pacific Indemnity post-acquisition.

The rationale behind the deal is that Pacific Indemnity will cover gaps in AUB Group’s existing capabilities. Furthermore, the company is said to be achieving high growth and margins, making it an attractive add-on for AUB.

Detailing the logic further, AUB Group CEO and managing director Mike Emmett states:

The acquisition of Pacific Indemnity will add scale, diversify our capabilities, and expand our expertise in financial lines. The acquisition also presents opportunities for mutual benefits across the business, through collaboration between Pacific Indemnity and the broader AUB Group.

Completion of the 70% stake is slated for 1 July 2024.

Tapping cash for this ASX 200 stock

AUB Group is also announcing an equity raising to fund the Pacific Indemnity deal.

The company will tap $200 million via an institutional placement, covering the total outlay for the 70% stake. In fact, $95 million of the placement is earmarked for ‘cash to support M&A pipeline and cost of equity raising’.

Additionally, AUB Group will contemplate offering a share purchase plan for up to $25 million worth of new shares.

The post Why this under-the-radar ASX 200 stock is in a trading halt appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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 CSL. The Motley Fool Australia has recommended Aub Group and CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Droneshield Ltd (ASX: DRO) share price is leaping higher today.

Again.

Shares in the All Ordinaries Index (ASX: XAO) drone defence company closed yesterday trading for 89 cents. In morning trade on Wednesday, shares are changing hands for 97 cents apiece, up 9.0%.

That sees the Droneshield share price up an eye-watering 246% since this time last year, when you could have bought shares for 28 cents.

For some context, the All Ords is up 0.2% today and up 8% over 12 months.

Here’s what’s got ASX investors excited about the drone defence stock today.

Droneshield share price soars on US government contract

The Droneshield share price is flying high today after the company reported it has received a $5.7 million repeat order from a United States government customer.

The order involves Droneshield’s Counter-UxS systems. This is a counter-drone system capable of targeting multi-domain aerial, ground and maritime surface drones.

Management expects the repeat US government order, which covers multiple Droneshield product lines, to be completed in several stages throughout the remainder of 2024.

Commenting on the new order sending the Droneshield share price soaring today, US CEO Matt McCrann said:

As the drone threat continues to evolve and proliferate across domains in modern conflicts, we are honoured to support the US Government and our allies as they look to meet the growing need for advanced Counter-UxS solutions.

We value our partnership and look forward to continuing to support our troops and partners wherever possible.

Tom Branstetter, Droneshield’s director of business development, added:

Our comprehensive product portfolio paired with high-level manufacturing affords us the ability to rapidly outfit U.S. and partner nations with lifesaving technology, while also addressing a wide range of operational requirements.

It’s a privilege to assist the US government and our allies in strengthening security both at home and abroad.

What’s been happening with the ASX tech stock?

The stellar performance of the Droneshield share price over the past year has been supported by some equally strong growth figures.

At its most recent quarterly results, released on 15 April, the company reported $16.4 million in revenue for the three months. That’s 900% more than the $1.6 million of revenue in the prior corresponding period.

And the company’s balance sheet is strong. As at 31 March, Droneshield held $56.4 million in a cash with no debt.

As for what could impact Droneshield moving forward, the company reported a $27 million contracted backlog along with an impressive sales pipeline of more than $519 million.

The post Up 246% in a year, here’s why the Droneshield share price is racing higher again today 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 DroneShield. 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.

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

This year is shaping up to be a record-breaking one for Nvidia (NVDA 0.64%) investors as shares of the semiconductor giant have already shot up more than 91%, and there is a good chance that the stock’s rally could get a nice shot in the arm once Nvidia reports its first-quarter fiscal 2025 earnings on Wednesday, May 22.

Nvidia is heading into its next quarterly report riding on favorable developments within the artificial intelligence (AI) semiconductor market, which can help it crush Wall Street’s expectations. KeyBanc analyst John Vinh predicts Nvidia will deliver $5.81 per share in Q1 earnings on revenue of $25.6 billion. That’s higher than the consensus expectations of $5.57 per share in earnings and $24.6 billion in revenue.

Vinh’s forecast also exceeds Nvidia’s revenue guidance of $24 billion, and it won’t be surprising to see the company match the KeyBanc analyst’s expectations considering its immense pricing power and dominant share in the AI chip market. Those are precisely the reasons why Vinh forecasts a serious acceleration in Nvidia’s growth in the current quarter and the second half of the year.

Nvidia’s new AI chips could push data center revenue to $200 billion by next year

While Vinh points out that the solid demand for the company’s current-generation Hopper AI chips will allow it to beat Wall Street’s fiscal first-quarter expectations and also deliver better-than-expected guidance, he also claims that the next-generation AI chips from Nvidia are set to drive some serious growth for the company.

Nvidia’s new Blackwell chips are expected to hit the market in the third quarter of 2024. Vinh estimates that the new B100 and B200 processors, which will replace Nvidia’s current top-of-the-line offerings, could command 40% higher average selling prices (ASPs) than their predecessors.

As Nvidia ramps up the production of its Blackwell chips in 2025 and starts shipping the GB200 Superchip — which combines two Nvidia B200 GPUs (graphics processing units) with its Grace server CPU (central processing unit) — the company could pull in a massive $200 billion in data center revenue in 2025 (which will coincide with its fiscal 2026).

That would be a huge jump from the $47.5 billion in revenue that Nvidia generated in fiscal 2024 and the $87 billion it is expected to generate from AI chip sales this year (fiscal 2025). The company’s terrific pricing power in AI chips could drive such massive acceleration in Nvidia’s data center sales. According to HSBC, the company is expected to price its entry-level B100 GPU between $30,000 and $35,000. However, the GB200 Superchip could command a price in the range of $60,000 to $70,000.

What’s more, Nvidia’s server systems equipped with multiple CPUs and GPUs are estimated to command prices between $1.8 million and $3 million on average. It is worth noting that Nvidia management pointed out on the company’s February earnings conference call that it expects its “next-generation products to be supply constrained as demand far exceeds supply.”

So, despite a potential increase in pricing, the demand for Nvidia’s new chips is likely to remain robust. That is a testament to the company’s solid pricing power, as well as its ability to continue maintaining a solid share of the AI chip market. TechInsights estimates that Nvidia’s market share of the AI GPU market increased to 97% in 2023 from 96% in 2022.

Therefore, the company seems set to benefit from a combination of higher AI chip sales and improved pricing over the next couple of years, which is probably the reason why analysts have been raising their growth expectations for the company.

Why it would be a good idea to buy the stock

A closer look at the chart below tells us that Nvidia’s earnings estimates have been heading higher of late.

NVDA EPS ESTIMATES FOR CURRENT FISCAL YEAR DATA BY YCHARTS

More specifically, the company’s bottom line could jump 52% in a couple of fiscal years from this year’s projected $25.27 per share to $38.30 per share in fiscal 2027. However, if Nvidia’s next-generation AI chips indeed hit gold, the company could end up delivering much stronger earnings growth.

The stock is currently trading at 38 times forward earnings, just below its five-year average. Investors, therefore, are getting a relatively good deal on Nvidia stock right now, and they should consider buying it since its red-hot rally seems here to stay thanks to the catalysts discussed above.

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

The post Here’s why Nvidia stock could sustain its stunning bull run after May 22 appeared first on The Motley Fool Australia.

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HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Harsh Chauhan 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 Nvidia. The Motley Fool recommends HSBC Holdings. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Global share markets have been on a tear lately. Bloomberg reported last week that 14 of the world’s largest stock markets were currently “at or near their peaks” — Australia included. In fact, the S&P/ASX 300 index (ASX: XKO) hit an all-time high in March and has climbed 10% since January last year.

The Vanguard Australian Shares Index ETF (ASX: VAS) tracks the performance of the 300 companies listed on the ASX 300. And Aussie investors have long been drawn to the VAS ETF as a low-fuss investment option for growing their wealth.

Winding back the clock, here’s a look at how a $10,000 investment in the VAS ETF at the start of January 2023 has fared up until the close on Monday.

The ASX VAS ETF at a glance

The Vanguard Australian Shares Index ETF is an exchange-traded fund (ETF) launched in 2009. It provides exposure to the top 300 companies listed on the ASX, offering a combination of long-term capital growth potential and regular income through dividends.

When you buy this fund, you are backing the long-term outlook of Australia.

At the latest count, the VAS ETF has $14.7 billion in funds under management – more than the market capitalisation of some ASX large-cap companies.

And what does it cost to own a piece of Australia’s largest 300 listed companies in one share? Well, the VAS ETF charges just 0.07% per annum on all funds invested. That’s more attractive than the performance fee charged by some active managers.

$10,000 investment in VAS ETF in 2023

If you had invested $10,000 in the VAS ETF at the start of 2023, you would have purchased units at $85.80 each on 3rd January. This investment would have secured you approximately 117 units of the ETF.

Fast-forward to today. With VAS trading at $97.92 apiece, your initial investment would now be worth $11,452. That’s a reasonable capital gain of about $1,450, or 14.5%, excluding dividends.

What about dividend income?

But the story doesn’t end with capital appreciation. VAS also provides regular income through dividends. Since January 2023, VAS has paid total dividends of $4.31 per share. Given the original unit price, this means you would have received a dividend yield of 5% to date when including all distributions paid.

This amounts to an additional $502.55 in dividend income for your 116.53 units. Combined with your capital gains, the total return on your $10,000 investment would be around $1,952.55, or 19.5%.

This return excludes the 74.97 cents per share dividend received on 8 January, as the ex-entitlement date fell on 3 January. Including this, total dividends are $5.07 per share.

Why consider the ASX VAS ETF?

VAS offers diversified exposure to the Australian market, featuring major players like BHP Group Ltd (ASX: BHP), National Australia Bank Ltd (ASX: NAB), CSL Limited (ASX: CSL), and ANZ Group Holdings Ltd (ASX: ANZ), just naming a select few.

In my opinion, this diversification can help mitigate risk while providing access to the growth potential of these top Australian companies.

Plus, as you saw earlier, the dividend income adds another source of return to consider. Who doesn’t like passive income?

Foolish takeaway

Investing in the ASX VAS ETF has proven rewarding over the past year, delivering both capital growth and steady income.

Whether you’re a seasoned investor or just starting out, the fund offers a balanced way to participate in the Australian share market.

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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 CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Webjet Ltd (ASX: WEB) share price is surging higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) travel stock closed yesterday trading for $8.44. In morning trade on Wednesday, shares are swapping hands for $9.58 apiece, up 13.5%.

For some context, the ASX 200 is up 0.2% at this same time.

This comes following the release of Webjet’s full-year results for the 12 months to 31 March (FY 2024), alongside a potential demerger announcement.

First, to the full-year results.

Webjet share price rockets on surging revenue

• Revenue of $472 million, up 29% year on year
• Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $188 million, up 40% from FY 2023
• Underlying net profit after tax (NPAT) of $128 million, up from $70 million in FY 2023
• 7 million bookings, up 21% year on year
• Total transaction volume of $5.6 billion, up 29% from last year

What else happened with Webjet during the year?

The Webjet share price also looks to be catching tailwinds with all the key financial metrics at its WebBeds hotel distribution solutions businesses well ahead of FY 2023. That includes TTV for the full year of $4.0 billion.

Booking volumes at WebBeds were up 26% year on year. That drove a 39% increase in EBITDA to $162 million, with an EBITDA margin of 49.5%.

And Webjet OTA, the company’s online travel agency, reported an ongoing material increase in international market share. That saw this segment deliver a 25% year on year increase in EBITDA of $54 million, with the EBITDA margin at a record 44.7%.

Across the businesses, Webjet generated $116 million of cash over the year. The company held $630 million in cash as at 31 March.

Passive income investors will need to wait a while yet for the return of the Webjet dividend.

No dividend was declared for FY 2024, with management saying dividends will be revisited following the five-year term of the company’s convertible note in April 2026

Webjet last declared a dividend in early 2020, shortly before the global pandemic brought the travel sector to a grinding halt.

What did management say?

Commenting on the results sending the Webjet share price rocketing today, managing director John Guscic said, “FY 2024 was a fantastic year for the Company with record earnings that were well ahead of last year.”

Gusic added:

In transforming WebBeds and increasing Webjet OTA’s market share we have delivered what we set out to do in the post pandemic recovery. We are confident that demand for travel will continue to grow and are excited for the opportunities ahead for both businesses.

What’s next for Webjet?

Looking at what could impact the Webjet share price in the year ahead, Gusic said:

Our key focus going forward is on delivering our $10 billion TTV target in FY30.

We have a strong track record of delivering organic growth and believe we can grow at least twice the underlying market by focusing on our three pillars of growth – growing our existing portfolio of travel buyers, hotel partners and suppliers; targeting new customers, securing new supply and entering new markets; and continuing to improve conversion rate in order to sell more of what we have to everyone.

What’s all this about a demerger?

Also likely impacting the Webjet share price today was the company’s announcement that it may separate its two travel divisions, WebBeds and Webjet B2C, which encompasses Webjet OTA as well as GoSee and its tech platform Trip Ninja.

Should the demerger go ahead, the company expects both new entities will be listed on the ASX.

Commenting on the potential demerger, Webjet chairman Roger Sharp said:

Having carefully weighed up the arguments for and against a demerger, the board sees significant value enhancement through a potential separation of our two industry leading businesses and brands.

Our B2C businesses will continue to deliver organic growth through the shift to online, while separation will support our WebBeds business in its relentless focus on achieving scale in all markets, in a post pandemic landscape characterised by a reduced number of smaller competitors.

Webjet share price snapshot

With today’s big boost factored in the Webjet share price is up 29% so far in 2024.

The post Webjet share price rockets 14% on record earnings and demerger announcement 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.