The Wesfarmers Ltd (ASX: WES) share price has been on quite a pleasing run of late. In 2023 so far, Wesfarmers shares have risen by a healthy 7.4%. Over the past 12 months, the gains have been more muted, with Wesfarmers rising by just 2.3%.

But since the company reached its most recent 52-week low of just over $40 in June last year, Wesfarmers shares have appreciated by a significant 22%.

Long-term investors have done especially well out of Wesfarmers shares. Over the past five years, the Wesfarmers share price has risen by more than 65%. And since Wesfarmers’ spin-off of Coles Group Ltd (ASX: COL) in November 2018, the company is up by around 55%:

Back in 2018, Wesfarmers announced that Coles would be flying the nest and listing on the ASX 200 in its own right. At the time, Wesfarmers investors received one share of Coles for every share of Wesfarmers share they owned.

This has proven to be a lucrative move for investors. Not only have Wesfarmers shares shot up in value since Coles left the building, but the Coles share price has also rocketed by more than 40% since the spin-off too:

That means investors who held on to both their Coles and Wesfarmers shares since then have done exceptionally well.

Not only have they enjoyed bumper capital gains on both companies, but Wesfarmers and Coles have also both upped their dividends substantially since the divorce.

At the time of the Coles spin-off, Wesfarmers actually retained around 15% of the company, listing the other 85% on the ASX. But over the last few years, Wesfarmers has pared back this stake.

Today, the company only retains a fraction of this original 15%, holding a stake that is worth roughly 2.8% of the entire market capitalisation of Coles.

Is Wesfarmers about to firesale its last Coles shares?

So could Wesfarmers offload this remaining stake in Coles and give its balance sheet a cash injection? Some investors might want the company to go down this path. Wesfarmers could use the funds for a new acquisition, or else bankroll a special dividend or share buyback program, after all.

Well, it’s certainly a possibility. But one that won’t be happening anytime soon, if new reporting is to be believed.

According to a report in the Australian Financial Review (AFR) this week, investment bankers regard the sale of this last remaining Coles stake as a done deal. It’s just a matter of “when, not if, [the] former parent Wesfarmers will exit the supermarkets giant” completely, they say.

According to the report:

A couple of brokers were sniffing around the stake on Tuesday night, post Coles’ interim result, to no avail. They reckon Wesfarmers doesn’t need the cash, and is happy to sit and collect its Coles dividends until it finds a use of sale proceeds.

So it doesn’t look like Wesfarmers is ready to part with its Coles shares just yet. But watch this space because there are apparently quite a few experts who think it’s a done deal. Just not yet.

The post Is Wesfarmers looking to sell off its remaining Coles shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. 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 Coles Group and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Star Entertainment Group Ltd (ASX: SGR) share price is back in business today, rising amid the completion of a large chunk of the company’s $800 million capital raise.

The stock was put into a trading halt on Wednesday. Today, it returned to trade as the successful completion of $595 million of that raise was announced.

But the Star Entertainment share price isn’t responding positively. It’s falling 1.32% at the time of writing to trade at $1.50.

It’s also worth noting today marks the first time the market can respond to the company’s $1.3 billion first-half loss, also revealed yesterday.

Let’s take a closer look at what’s going on with the embattled S&P/ASX 200 Index (ASX: XJO) casino operator.

Star completes institutional raise, gears up for retail offer

The Star Entertainment share price returned to trade on Friday, quickly falling into the red after completing the institutional component of its capital raise.

That comprised a $115 million institutional placement and the institutional element of a $685 million entitlement offer, each offering new shares for $1.20 apiece. The latter allowed existing investors to buy three new shares for every five already owned.

It saw strong support from both existing and new investors, with a take up rate of around 94%. That included $80 million of binding pre-commitments from strategic partners Chow Tai Fook Enterprises and Far East Consortium International.

Star Entertainment CEO Robbie Cooke commented on today’s news, saying:

The capital structure initiatives announced yesterday, including the placement and entitlement offer, will provide The Star with a strengthened balance sheet to deliver on its key strategic priorities and to meet the capital requirements provisioned for.

The company plans to use the raised capital to repay debt and increase its liquidity. It boasts $754 million of pro forma liquidity and $341 million of net debt as of the end of December.

And retail investors wanting to bolster their position in Star Entertainment shares for $1.20 apiece won’t have to wait long to do so.

The retail component of the company’s entitlement offer – expected to be worth $205 million – will open on Thursday and run until 13 March.

Star Entertainment share price snapshot

The Star Entertainment share price has taken a major tumble in recent months. It’s currently down 17% year-to-date as challenging trading conditions weighed on its earnings.

Looking further back, the stock has tumbled 54% over the last 12 months amid a massive fine and the suspension of its Sydney casino license.

For comparison, the ASX 200 is 5% higher year to date and over the last 12 months.

The post Star Entertainment shares return to trade after raising $595 million. What’s next? appeared first on The Motley Fool Australia.

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• Star Entertainment share price treads water as losses blowout to $1.3 billion
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• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Star Entertainment share price rebounds 8% on Wednesday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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A number of results have hit the All Ords today. Some have gone down well with investors, other have had them hitting the sell button.

Three results that are in the latter category are summarised below. Here’s why investors are selling these ASX All Ords shares:

CogState Limited (ASX: CGS)

The CogState share price is down 20% to $1.30. This morning, this ASX All Ords neuroscience technology company revealed that it expects to report a 12% decline in first-half clinical trials revenue to $17.1 million and breakeven profit before tax.

Management advised that its revenue and profit were impacted by a slower than expected enrolment of patients by pharmaceutical companies in a small number of their large Alzheimer’s trials. More of the same is expected in the second-half, with management guiding to a full-year revenue decline of 6% to 9%.

Fineos Corporation Holdings PLC (ASX: FCL)

The Fineos share price has crashed 16% to $1.65. Investors have been selling the shares of this leading provider of core systems for employee benefits and life, accident and health insurance after its first-half loss widened.

Fineos posted an 18.4% increase in subscription revenue to 29.9 million euros and a 14.7% lift in annual recurring revenue (ARR). However, overall revenue was down 6% on the prior corresponding period.

On the bottom line, the ASX All Ords company posted a loss after tax of 14.6 million euros, up from a loss of 4.6 million euros a year earlier.

Resimac Group Ltd (ASX: RMC)

The Resimac share price is down 9% to $1.06. This morning, this residential mortgage lender released its half-year results and reported a 30% decline in normalised net profit after tax to $37.5 million.

This was driven by a sharp reduction in home loan settlements compared to the prior corresponding period due to the impact of inflation and rising interest rates on household cost-of-living.

Management warned that there are no signs of relief in rising interest rates and inflationary pressures this year, which is likely to mean a tough second half. However, it remains positive on the medium term outlook.

The post 3 ASX All Ord shares being hammered on earnings 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 positions in and has recommended Cogstate. The Motley Fool Australia has positions in and has recommended Cogstate. The Motley Fool Australia has recommended FINEOS Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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S&P/ASX 200 Index (ASX: XJO) lithium shares have offered investors some very strong returns amid soaring prices for the battery-critical metal.

Yet while longer-term investors should be sitting on some healthy gains, not all of the blue-chip lithium stocks pay a dividend.

In fact, if you’d asked me yesterday, I would have said that only two of the five ASX 200 lithium shares currently offer investors a dividend payout.

But that figure jumped to three out of the five this morning, when Pilbara Minerals Ltd (ASX: PLS) reported stellar half-year results and announced its maiden dividend.

As of now, neither Core Lithium Ltd (ASX: CXO) or Allkem Ltd (ASX: AKE) shares offer dividend yields.

Which brings us to…

Which ASX 200 lithium share pays the highest dividend yield?

IGO Ltd (ASX: IGO) reported its half-year results on 31 January.

The ASX 200 lithium share reported record half-year net profit after tax (NPAT) of $591 million, up 550% from the $91 million reported in H1 FY22.

This saw the IGO board declare a record interim dividend of 14 cents per share, fully franked.

That brings IGO’s full-year dividend payouts to 19 cents per share for a trailing yield of 1.4%.

Next up we have Mineral Resources Ltd (ASX: MIN).

Mineral Resources reported its half-year results this morning.

With the six-month NPAT up 1,890% year on year to $390 million, the Mineral Resources board offered up a boosted, fully franked interim dividend of $1.20 per share.

That brings the Mineral Resources full-year dividend payout to $2.20 per share for a trailing yield of 2.6%.

Finally, we have Pilbara Minerals.

As mentioned up top, Pilbara Minerals’ board declared the first-ever dividend payout for the ASX 200 lithium share.

With NPAT for the six months soaring to $1.24 billion, up 989% from H1 FY22, Pilbara Minerals will pay an 11 cents per share, fully franked interim dividend.

At the current share price, that represents a trailing yield of 2.4%.

So the winner is…

With a 2.6% trailing dividend yield, Mineral Resources edges out Pilbara Minerals as the ASX 200 lithium share with the highest current yield.

Mineral Resources also leads the pack in share price gains, with its shares up 92% since this time last year.

The post Which ASX 200 lithium share takes the crown for dividend yield right now? appeared first on The Motley Fool Australia.

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• Silver lining: Mineral Resources shares to pay interim dividend
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• Allkem share price in the green as ASX 200 lithium stock posts record revenue
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• Pilbara Minerals share price on watch amid 989% profit surge

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.

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The EML Payments Ltd (ASX: EML) share price has come under significant pressure again on Friday.

In morning trade, the embattled payments company’s shares dropped 15% to 49 cents.

This means the EML share price is now down 80% over the last 12 months, as you can see below.

Why is the EML share price crashing today?

Investors have been selling down the EML share price on Friday after the company released an update on its European operations.

These operations, which are overseen by its PFS Card Services Ireland business, have come under fire from regulators over the last 18 months amid concerns over its anti-money laundering and counter-terrorism financing (AML/CFT) compliance.

According to the latest update, PFS Card Services Ireland has received further damning correspondence from the Central Bank of Ireland.

The central bank has stated that it considers that PFS Card Services Ireland has made limited remediation progress to date with significant and ongoing deficiencies remaining in its AML/CFT control framework. The bank also advised that it is not satisfied with PCSIL’s remediation plan and timetable for completion.

In light of this, EML now believes there is a risk that its remediation program and third-party assessment may not be completed as planned by the end of 2023.

Potential penalties

As a result of its lack of progress, the Central Bank of Ireland has informed PFS Card Services Ireland that it is “minded to issue a direction” that growth in total payment volumes for the period 31 March 2023 to 30 March 2024 be restricted to 0% above annualised baseline volumes in the year January to December 2022.

This would be a change from the previous 10% growth restriction imposed until 8 December 2023.

Though, it is worth noting that the central bank has not yet made this direction and has provided PFS Card Services Ireland with an opportunity to provide it with submissions by 10 March 2023 for its consideration. Management advised that work has already commenced in that regard.

The company estimates that the proposed growth restrictions would reduce its EBITDA by $2 million in FY 2023.

Strategic review

EML has revealed that it disappointed with the news and is now looking at a strategic review of the PFS Card Services Ireland business. It commented:

The Board is disappointed with this development. The reconstituted Board is taking the concerns of the CBI very seriously. It is committed to remediating the issues that are of concern to the CBI and engaging constructively with the CBI in relation to the remediation. In that context, the Board has established a new dedicated subcommittee (chaired by new non-executive director, Peter Lang) charged with oversight of the remediation program. The Board has also resolved to immediately commence a strategic review of the business with the assistance of global investment banking advisors. The Board will provide an update on the strategic review in due course.

The post EML share price tumbles 15% as the walls close in even further appeared first on The Motley Fool Australia.

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• EML share price crashes 18% on half-year results but quickly rebounds

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

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The Block Inc (ASX: SQ2) share price is shooting higher on Friday.

In morning trade, the payments company’s shares are up 7% to $116.73.

Investors have been buying the Afterpay owner’s shares following the release of its fourth quarter update.

Block share price jumps on strong quarter

• Net revenue up 14% to US$4.65 billion
• Net revenue (excluding crypto) up 33% to US$2.82 billion
• Gross profit up 40% to US$1.66 billion
• Adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) up 53% to US$281 million
• Net loss widened to US$114 million
• Adjusted net earnings per share of 22 US cents

What happened during the quarter?

For the three months ended 31 December, Block reported a 40% increase in gross profit to US$1.66 billion. This was driven by a 22% increase in Square gross profit and a 64% jump in cash app gross profit.

Block also revealed that excluding its buy now pay later (BNPL) platform, gross profit was US$1.46 billion. This appears to indicate that Afterpay contributed US$200 million of gross profit during the quarter.

But the real star of the show was the Cash App business, which delivered gross profit of $848 million, an increase of 64% year over year. This reflects a 16% year over year increase in monthly active users to 51 million, with two out of three transacting each week on average.

How does this compare to expectations?

According to data from Bloomberg, the market was expecting revenue of US$4.57 billion, gross profit of US$1.63 billion, and adjusted earnings per share of 28 US cents.

This means that Block has beaten on the top line and with its gross profit but has fallen short of expectations with its earnings per share.

Outlook

Management revealed that it has started FY 2023 positively.

It estimates that it will deliver Block gross profit growth of 33% and combined company gross profit growth of 25% in January and February based on current trends.

Management believes the latter is more representative of underlying growth trends. That’s because the Afterpay business was acquired at the end of January 2022 and the latter numbers assume the acquisition completed on 1 January and contributed $51 million gross profit in the prior corresponding period.

The post Block share price jumps 7% on Q4 profit beat 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 positions in and has recommended Block. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Qantas Airways Limited (ASX: QAN) share price suffered a 7% sell-off in reaction to the airline’s FY23 half-year result. Is this a good time to buy shares?

While the airline has seen a rough initial response to its numbers, it’s important to remember that it has risen substantially over the last six months.

Investors can get more and more optimistic about the business, but then become too positive in the short term.

That may have happened here, even though Qantas revealed a very strong set of numbers considering what has happened over the last three years.

Earnings recap

The airline revealed that it achieved underlying profit before tax of $1.43 billion and statutory net profit after tax (NPAT) of $1 billion. In statutory earnings per share (EPS) terms, the amount made was 53.9 cents.

After such a strong recovery of earnings, Qantas saw its net debt reduce to $2.4 billion.

With the balance sheet in such rapidly-improving shape, the company decided to launch a $500 million share buyback.

It outlined a “material improvement” in operational performance and customer satisfaction, while also pointing to ongoing investment in lounges, technology and customer experience.

Qantas also said that it has an updated fleet plan, including turning nine purchase right options into firm orders for Airbus A220s.

How is the outlook shaping up?

The Qantas boss Alan Joyce said:

Fares have risen because of higher fuel costs, but also because supply chain and resourcing issues meant capacity hasn’t kept up with demand. Now those challenges are starting to unwind, we can add more capacity and that will put downward pressure on fares.

In terms of overheads, we expect the costs we’re carrying from the extra operational buffer will start unwinding from this half and into next financial year.

Returning to profit means we can get back to reinvesting for our customers, which is clear from the network, fleet and lounge announcements we’ve made, and from the Project Sunrise cabins we’re previewing. Importantly for our investors, this also sets us up to deliver long term shareholder value.

That investment includes $100 million spent on expanding domestic and international lounges over three years.

The average fare price is around 20% higher than in 2021. The Qantas share price is benefiting from the strength of the revenue that it’s generating from each flight.

But, the business is expecting travel demand to remain strong over the current financial year and into FY24.

Qantas’ domestic capacity is expected to increase from 94% to 103% through the second half of FY23. Meanwhile, international capacity is expected to increase from 60% to 81% through the second half of FY23.

It stated in its outlook guidance that fares are expected to moderate as capacity increases, but will remain “significantly above FY19 levels.” The fuel cost for FY23 is “expected to be $4.8 billion” with hedging in place.

My views on the Qantas share price

It was unfortunate for shareholders that the market didn’t like what the airline reported.

However, I thought there were a number of positives including a return to making major profit, net debt reduction and launching another share buyback, which theoretically improves the value of each remaining share.

With capacity still returning, I think that’s a good sign for Qantas’ earnings in the second half of FY23 and at least for the start of FY24.

I don’t think Qantas will deliver massive outperformance from here in the shorter term, but I like what the airline is doing and I think that it can keep making good profits now that the pandemic effects are wearing off.

With the bigger profits, Qantas can keep paying shareholder returns, like share buybacks and possibly dividends in the future. I think Qantas is a long-term buy.

The post Should I buy the dip on Qantas 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 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.

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The Mineral Resources Ltd (ASX: MIN) share price is falling on Friday.

At the time of writing, the mining and mining services company’s shares are down 4% to $81.61.

This follows the release of the company’s half-year results.

Mineral Resources share price falls despite incredible earnings growth

• Revenue up 74% to $2,350 million
• Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 503% to $939 million
• Net profit after tax up 1,890% to $390 million
• Operating cash flow up 333% to $281 million
• Interim dividend of 120 cents per share

What happened during the half?

For the six months ended 31 December, Mineral Resources reported a 74% increase in revenue to $2,350 million.

The was driven largely by a huge increase in lithium revenue, which was supported by modest increases in iron ore and mining services revenue. Mineral Resources’ lithium revenue came in at $997.2 million, up from $143 million a year earlier.

It was a similar story for the company’s EBITDA, which came in 503% higher at $939 million. Management notes that this reflects record lithium earnings from the conversion of both Mt Marion and Wodgina spodumene concentrate into lithium battery chemicals. It was also supported by consistent mining services earnings and an improved contribution from iron ore business on the back of higher achieved prices.

However, as strong as this earnings growth was, it has fallen short of expectations. The consensus estimate was for EBITDA of $1.06 billion. This may explain the weakness in the Mineral Resources share price today.

Nevertheless, this ultimately allowed the company to bring back its interim dividend. It declared a fully franked interim dividend of $1.20 per share, which represents a $233 million return.

Management commentary

Mineral Resources’ Managing Director, Chris Ellison, commented:

MinRes had a strong and stable first half, with solid earnings set to deliver shareholders a $1.20 fully franked interim dividend. We are well set-up for an excellent year, with our balance sheet and performance across all areas in a great position.

Our first half was headlined by record lithium earnings from conversion of Mt Marion and Wodgina spodumene concentrate into lithium battery chemicals. This was underpinned by consistent mining services earnings and a return to positive iron ore earnings due to improved product discounts.

Over the past 12 months, the business has been restructured for growth in each of our four business pillars. We have locked in substantial growth in each of these business divisions for the next five years and built the foundations that will set up MinRes for the next 50 years. This half has seen us take the business from a mining services contractor and upstream miner to a leading downstream supplier of lithium to global auto manufacturers.

Outlook

Looking ahead, Mineral Resources’ guidance for FY 2023 is unchanged. It has also provided guidance on its lithium operations. It expects:

• 7 to 7.3Mt iron ore at Yilgarn
• 5Mt to 11.5Mt iron ore at Utah Point
• 160k to 180k dmt of spodumene from Mt Marion
• 19kt to 21.3kt lithium battery chemicals from Mt Marion
• 150k to 170k dmt of spodumene from Wodgina
• 5kt to 12.5kt of lithium battery chemicals from Wodgina
• Mining services volumes of 270Mt to 280Mt

The post Mineral Resources share price drops despite incredible earnings growth 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.

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The Rio Tinto Limited (ASX: RIO) share price has seen plenty of volatility over the past year. But the dividend has just gone completely south.

Rio Tinto is one of the biggest miners in the world. Last year, it paid one of the largest dividends on the ASX. But this year, it’s paying a much smaller dividend.

But, this year, the S&P/ASX 200 Index (ASX: XJO) mining share decided to cut its final dividend by 46% to US$2.25 per share.

This brought Rio Tinto’s total dividend for the year to US$4.92 per share. That represented a 53% cut compared to 2021, though last year included a special dividend. The total ordinary dividend per share was cut by 38%.

Why was the Rio Tinto dividend cut by so much?

The key reason for the dividend cut was that the ASX 200 mining share’s profit sank.

Revenue dropped by 13% to US$55.6 billion. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 30% to US$26.3 billion. Operating cash flow jumped by 36% to US$16.1 billion. Underlying earnings per share (EPS) declined 38% to US$8.20 while free cash flow sank 49% to US$9 billion.

Rio Tinto said it saw significant movement in pricing for its commodities due to “growing recession fears and a decline in consumer confidence”.

Those movements in commodity prices caused a US$8.1 billion decline in underlying EBITDA compared to 2021. That was “primarily from lower iron ore prices” to the tune of US$9.2 billion. It also suffered from lower copper prices and a negative provisional pricing impact.

A key iron ore price index was 25% lower on average in 2022 compared to 2021.

Is this a disaster?

Resource prices change all the time. Positive changes to the resource price can really boost profit, while negative movements are detrimental to short-term profitability. That’s why the Rio Tinto share price moves so much.

Compared to 2020, the 2022 operating cash flow was up 2%, underlying EBITDA was up 10%, and underlying EPS was up 6%. The dividend was 6% higher in 2022 than in 2020.

So, it was hard to beat that incredible 2021 year. But that doesn’t mean 2022 was a bad year. It would be a mistake to think that 2021 levels of profit were going to continue every year.

Bear in mind too, the Rio Tinto share price is close to its 2021 highs.

Is the Rio Tinto share price a buy?

I like Rio Tinto’s moves to own more of the Oyu Tolgoi copper mine in Mongolia. I also like its move into lithium, starting with the Rincon project in Argentina.

The ASX 200 mining share has a very long-term future. However, I just don’t think it can achieve a lot of capital growth considering the nature of changing commodity prices and given how mines run out of resources at some point. But a rise in the iron ore price could help boost sentiment this year.

If I were trying to achieve market-beating returns, I’d wait for a lower Rio Tinto share price because of the cyclical nature of markets. But, it could continue to pay good enough dividends, so shareholders may wish to hang on if they bought at a lower price.

The post Should I buy Rio Tinto shares given the ASX 200 miner just slashed its dividend by 46% appeared first on The Motley Fool Australia.

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More reading

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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.

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The Accent Group Ltd (ASX: AX1) share price has raced to a 52-week high on Friday.

In morning trade, the youth fashion and footwear retailer’s shares are up 10% to $2.36.

This follows the release of a strong half-year result from Accent.

Accent share price jumps on strong earnings growth

• Total sales up 39% to $825 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) up 70.9% to $170.2 million
• Net profit after tax up 290% to $58.3 million
• Fully franked interim dividend up 380% to 12 cents per share
• Net debt down 30% to $63.6 million

What happened during the half?

For the six months ended 31 December, Accent reported a 39% increase in sales to $825 million.

This reflects strong in-store sales, softer online sales, the opening of 53 new stores, significant store closures in the prior corresponding period, and one extra trading week.

On the bottom line, Accent posted a 290% increase in net profit after tax to $58.3 million. Management advised that this was driven by stronger gross margins, lower costs, and improved earnings from its online business. Although the latter posted a decline in sales, its earnings were stronger year over year.

This ultimately allowed the Accent board to increase its interim dividend by 380% to a fully franked 12 cents per share.

Management commentary

Accent’s CEO, Daniel Agostinelli, was very pleased with the half. He said:

I am delighted with the results achieved in H1 FY23. The continued focus on customers, new product, full margin sales and return on investment has delivered a terrific H1 result. What is most pleasing is the strength and consistency of performance across our large core banners, including Skechers, Platypus, Hype DC, The Athlete’s Foot (TAF), Vans and Dr Martens, along with the progress that we have made in our new banners now that trading conditions have normalised.

One of the key initiatives for H1 was driving the profitability of the Accent Group digital business. Overall online sales have grown 160% to $134 million compared to FY20. Whilst sales were down on last year due to the lockdowns in 2021, we have improved our digital business and online EBIT was ahead of last year.

Outlook

While no guidance has been provided for the second half, management notes that trading has been strong. Like for like sales were up 16% for the first seven weeks of the half.

Pleasingly, management appears optimistic that this positive form can continue thanks to its focus on younger consumers. Mr Agostinelli concludes:

Whilst we recognise that there is some uncertainty in the economic outlook, to this point we have not yet seen any significant change to consumer spending in our categories. Many of our brands target a younger customer demographic who tend to be less impacted by interest rates and cost of living pressures.

In conclusion, I am pleased with the ongoing progress that has been made on our key growth strategies as we continue to build a strong, defensible business in Australia and New Zealand. Our portfolio of global distributed brands, owned vertical brands, integrated digital capability and large store network are core assets of the Group and position the Company well for growth into the future.

The post Accent share price races 10% higher after half-year profits triple 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 recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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