It has been another busy week for Australia’s top brokers. This has led to the release of a large number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

BHP Group Ltd (ASX: BHP)

According to a note out of Morgans, its analysts have retained their add rating on this mining giant’s shares with a trimmed price target of $47.00. This follows the release of a mixed quarterly update from the Big Australian. One positive, though, was that BHP has reaffirmed its production and cost guidance for the full year despite the tough operating environment. Overall, the broker remains positive and continues to rate BHP as one of the best options in the sector. The BHP share price is trading at $38.11 today.

Santos Ltd (ASX: STO)

A note out of Citi reveals that its analysts have retained their buy rating and $10.70 price target on this energy producer’s shares. Citi was pleased with Santos’ performance during the third quarter and notes its strong realised prices. Overall, the record result was ahead of expectations and its strong free cash flow was a major highlight. The Santos share price is fetching $7.61 on Friday.

Transurban Group (ASX: TCL)

Analysts at JP Morgan have upgraded this toll road operator’s shares to an overweight rating with a $15.00 price target. According to the note, the broker has been pleased to see that traffic continues to increase on the company’s roads. This bodes well for its earnings and distributions, particularly given how toll prices are increasing. The Transurban share price is trading at $12.40 this afternoon.

The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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More reading

• Broker names the ASX dividend shares to buy now
• Here are the top 10 ASX 200 shares today
• Here’s what Goldman Sachs is saying about the BHP share price after the miner’s update
• ASX dividend shares ‘likely to remain attractive’ despite rising bank deposit rates: expert
• Santos share price lifts following US$1 billion quarter

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 Bitcoin (CRYPTO: BTC) price is trading right about where it was this time yesterday, at US$19,112 (AU$30,463).

The world’s first and top-valued crypto remains down 60% in 2022, and down some 72% from the all-time highs BTC reached on 10 November last year.

With the Bitcoin price down so dramatically so quickly, it’s little wonder that many retail investors have lost their appetite for the digital token and its fellow altcoins.

But, as Justin Arzadon, head of digital assets at Betashares, pointed out to Livewire, institutional investor interest remains relatively robust. And that could bode well for Bitcoin and the wider world of cryptos in the year ahead.

Why institutional investors could spur the Bitcoin price into a new bull run

Citing data from Cointree, Arzadon noted that retail investor sentiment in crypto assets, based largely on the Bitcoin price and “other large cryptocurrencies”, is in the “extreme fear” part of Cointree’s Fear and Greed Index.

But he said the smart money, or institutional funds, aren’t nearly as timid.

“Looking at the price and action of Bitcoin and the rest of the crypto market over the last year, it looks like the institutional money is following Warren Buffett’s advice, ‘Be fearful when others are greedy, and greedy when others are fearful,’” he said.

Stressing there are no assurances in life, let alone when it comes to crypto investors hoping the Bitcoin price will soar to new heights, Arzadon added:

Some of the largest institutional managers in the world are getting involved in, or deeper into, the crypto economy. This makes me believe that they are not only going to be major beneficiaries of the next bull run, but they are also laying down the infrastructure that could help make it happen.

Institutional adoption has arrived

Global asset manager BlackRock is just one of the major firms to enter the crypto space in 2022.

Blackrock announced the launch of its Bitcoin private trust for its institutional clients in early August. That gives ‘the smart money’ direct exposure to the movements in the Bitcoin price.

According to Blackrock:

Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities.

Bitcoin is the oldest, largest, and most liquid cryptoasset, and is currently the primary subject of interest from our clients.

So, when might investors expect the next bull run in the Bitcoin price?

“For the next bull run to occur, I have been adamant that three things are needed. Adoption from both institutional and retail segments, regulatory clarity, and real-world use cases,” Arzadon said.

“The use-cases continue to develop, regulations are slowly being put into place and are expected to become clearer in 2023-24, but it is evident that institutional adoption has arrived,” he added.

The post Could the next bull run be coming for the Bitcoin price? appeared first on The Motley Fool Australia.

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More reading

• How has the Bitcoin price responded to the network’s latest hiccup?
• Crypto surges: Is now the time to buy Bitcoin and Ethereum?
• I’ve already made 158% on Bitcoin. Here’s why I keep holding
• Is Google now joining the crypto party following its latest move?
• Why is the Bitcoin price outperforming for Australian crypto investors?

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 Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. 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 Wesfarmers Ltd (ASX: WES) share price is trading in the red today, currently swapping hands at $43.71 apiece.

Zooming out, and Westfamers shares have been on a downward trajectory across the past 12 months.

After testing 52-week highs of approximately $60 per share roughly five to six times in late FY21, the share broke away to the downside, as seen on the chart below.

It has continued on this path since and continues to drift towards the company’s 52-week low of $41.16 on 17 June.

Wesfarmers ready for a comeback?

In order for a reversal in the Wesfarmers share price from the long-term downtrend, there needs to be support from both fundamental factors and valuation.

Wesfarmers currently trades at a price-to-earnings (P/E) ratio of 21.2 times, or 20.5 times on a forward P/E basis.

Both of these are in front of the GICS Consumer Cyclical median scores of 20.7 times and 16.5 times, respectively.

In addition, it is priced at almost 17.5 times cash from operations, and this looks to reduce to 12.2 times by the next 12 months based on consensus data from Refinitiv Eikon.

What this means for the Wesfarmers share price we won’t know for some time. However, there look to be some challenges ahead at the valuation level.

Brokers are constructive on the Wesfarmers share price too, with six analysts rating the share a buy, per Refinitiv. This is coupled with a consensus price target of $49.07, suggesting a small amount of upside from its current market price.

In particular, those at investment house Morgans reckon Wesfarmers is set to deliver strong upside growth over the next year or so.

“Wesfarmers possesses the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks,” it said in a recent note.

“The company is run by a highly regarded management team and the balance sheet is healthy.”

Those at Morgans also reckon there is good reason to enter or size up a position on this volatility.

“We see the pullback in the share price as a good entry point for longer-term investors,” it added.

Alas, whether the company is a buy or not remains to be seen. However, time will certainly tell.

In the meantime, the Wesfarmers share price is down 21% in the past year and 26% this year to date.

The post Is the Wesfarmers share price due to make a comeback in FY23? appeared first on The Motley Fool Australia.

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More reading

• Wesfarmers shares could be one of the best options on the ASX 200: Morgans
• These ASX 200 dividend shares have been named as buys by analysts
• Top ASX dividend shares to buy in October 2022
• Is the Wesfarmers share price in the buy zone ahead of this month’s AGM?
• Down 9% in a month, is the Wesfarmers share price a bargain buy for dividends?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. 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 AMP Ltd (ASX: AMP) share price might be giving the company’s latest update a lukewarm reception, but it’s still better than what it could be.

In afternoon trade, shares in the wealth management business are swapping hands for $1.165 — roughly flat with yesterday’s closing price. However, the AMP share price did sneak a little higher, reaching $1.175, earlier in the day.

The paltry performance possibly isn’t worth writing home about. Though, it’s a darn sight better than the 0.48% fall put on by the S&P/ASX 200 Index (ASX: XJO) today.

Let’s unpack the announcement helping AMP shares outperform on Friday.

What’s helping the AMP share price today?

While most ASX financial shares are getting the boot today, the AMP share price is catching a bid from investors.

It appears the market is content with the figures posted by AMP in its third-quarter assets under management (AUM) and cash flows update.

According to the release, AMP experienced positive inflows and growth across much of its operations. For example, the company’s banking division — AMP Bank — recorded growth of 1.4 times above system. In turn, the bank’s loan book increased by $0.6 billion to $23.3 billion despite market headwinds.

Furthermore, the company’s financial platform offerings — categorised under the ‘Platforms’ division — witnessed net cash inflows of $363 million during the quarter. Notably, the ‘North’ platform captured $483 million in inflows from independent financial advisers — increasing by 45% from the prior corresponding period.

Another improvement was the reduction in net cash outflows from the Australian Wealth Management (AWM) segment. Specifically, net outflows were reduced to $0.8 billion from $1.9 billion in the prior corresponding period.

However, not all third-quarter numbers were as rosy. For example, assets under management through AWM tumbled to $121.4 billion, down from $125.1 billion. Nonetheless, it looks like investors aren’t too worried about the decrease considering the AMP share price gain.

What did management say?

AMP chief executive, Alexis George, provided her commentary on the Q3 numbers, stating:

We have made strong progress in the third quarter, which is reflected in the cashflows we’ve announced today. While challenging investment markets continued to have an impact on assets under management, we have seen a significant improvement in our cashflows as more customers choose to join or stay with AMP.

Additionally, George dished out some points on what AMP is up to so far in the fourth quarter:

In the fourth quarter, we have already launched our digital mortgage and unique-to -market retirement offer. These are important strategic deliverables that will support AMP’s longer-term growth and deliver on our purpose to help people create their tomorrow

The AMP share price is up 16.5% so far in 2022. For reference, this exceeds the performance of all of the big four banks.

The post Why is the AMP share price beating the ASX 200 today? appeared first on The Motley Fool Australia.

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More reading

• This is what will get ASX shares rising again early 2023: economist
• Is the company’s buyback helping boost the AMP share price?
• ASX investors, STOP reading economic forecasts: economist
• Under pressure: 3 reasons to be bullish on ASX shares
• Why is AMP doing a share buyback but not paying dividends?

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 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 Whitehaven Coal Ltd (ASX: WHC) share price is well in the green today.

Whitehaven shares are rising 6.33% and are currently trading at $10.67. For context, the S&P/ASX 200 Index (ASX: XJO) is down 0.48%

Let’s take a look at why this ASX coal share is having such a good day.

What’s going on

Whitehaven is not the only ASX coal share lifting today. The New Hope Corporation Limited (ASX: NHC) share price is up 7.4%, while Yancoal Australia Ltd (ASX: YAL) shares are 5.52% ahead.

The coal price is up 0.24% to US$391.95 a tonne, Trading Economics data shows. Coal prices are high amid tight supplies and increased global demand amid the European energy crisis.

News on the coal price from Yancoal last night may also be providing ASX coal shares, including Whitehaven, with a boost. “Record high coal price” was a key driver in Yancoal’s financial performance. Yancoal’s average realised price of coal surged 211% to $364 a tonne.

On Wednesday, Whitehaven delivered quarterly results. Production in the September quarter fell 37% compared to the June quarter. However, coal prices hit another record during the quarter.

Whitehaven achieved a record average coal price of $581 a tonne.

Commenting on the coal price, CEO Paul Flynn said:

With demand for high-quality coal continuing to outstrip global supply, coal prices set another record in the September quarter and continue to be well supported.

Whitehaven is predicting it will produce 20Mt to 22Mt in FY23 and achieve 17.5Mt to 18.5Mt of managed coal sales.

Macquarie has recently placed a $12 price target on Whitehaven shares. Analysts are also tipping Whitehaven to deliver dividends of $1.07 per share in FY 2023 and $1.25 a share in FY 2024.

Whitehaven Coal share price snapshot

The Whitehaven Coal share price has soared 310% in the year to date and 260% in the past 12 months.

For perspective, the ASX 200 has fallen nearly 10% in the past year.

Whitehaven has a market capitalisation of $9.3 billion based on the current share price.

The post Why is the Whitehaven Coal share price smashing it on Friday? appeared first on The Motley Fool Australia.

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More reading

• Why Adairs, Life360, Siteminder, and Whitehaven Coal shares are racing higher
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• These 2 ASX 200 shares have turned a $10,000 investment into $35,000 in 2022
• Whitehaven Coal share price sinks 7% on Q1 disappointment
• Why Adbri, Rio Tinto, St Barbara, and Whitehaven Coal shares are dropping today

Motley Fool contributor Monica O’Shea 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 Macquarie Group Limited. 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 S&P/ASX 200 Index (ASX: XJO) is on track to end the week with a decline. In afternoon trade, the benchmark index is down 0.5% to 6,697.1 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are racing higher:

Adairs Ltd (ASX: ADH)

The Adairs share price is up 4% to $2.00. The catalyst for this has been the release of the homewares retailer’s trading update at its annual general meeting. Management advised: “Trading in the first 16 weeks of FY23 remains in line with our plan and is consistent with the guidance we provided to the market in August.”

Life360 Inc (ASX: 360)

The Life360 share price is up 5% to $6.19. This morning this location technology company announced increases to the price of its subscriptions. The good news is that test price increases delivered positive results and thus management has decided to make those changes permanent. And while Life360 suspects that some level of customer churn will be inevitable from the change, testing to date has pointed to this being within management’s target of a 10% reduction in retention.

Siteminder Ltd (ASX: SDR)

The Siteminder share price is up almost 3% to $3.00. Investors have been buying this hotel technology company’s shares after it released its quarterly update and revealed a 31.8% increase in annualised recurring revenue to $144.95 million. Management notes that transaction revenue growth continues to significantly outperform the travel recovery, reflecting increasing customer uptake and usage rates across all products.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price is up over 6% to $10.67. This morning this coal miner announced the completion of its on-market share buyback. Whitehaven Coal bought back a total of 103.3 million shares at an average price of $5.69 per share for a total cost of $587.9 million. Combined with the dividends paid in FY 2022, this brings the company’s total capital return to over $1 billion.

The post Why Adairs, Life360, Siteminder, and Whitehaven Coal shares are racing higher appeared first on The Motley Fool Australia.

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More reading

• Why is the Whitehaven Coal share price smashing it on Friday?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• 2 beaten down ASX shares with plenty of upside potential: analysts
• These 2 ASX 200 shares have turned a $10,000 investment into $35,000 in 2022
• Whitehaven Coal share price sinks 7% on Q1 disappointment

Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO, Life360, Inc., and SiteMinder Limited. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. 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 Pro Medicus Limited (ASX: PME) share price is up 1% to $51.83 at the time of writing.

The ASX healthcare share got a bit of a plug from two analysts today. Let’s see what Hayborough Investment Partners’ Ben Rundle and Medallion Financial’s Michael Wayne had to say.

Pro Medicus share price a buy: experts

In a Livewire interview, Rundle said the ASX 200 darling is a buy despite its eye-watering valuation.

Westpac data shows the Pro Medicus share price is trading on a price-to-earnings (P/E) ratio of 105.18.

That’s almost five times the healthcare sector of 21.83 and seven times the broader market P/E of 14.79.

In its FY22 full-year results released in August, Pro Medicus reported a net profit of $44.4 million, up 44.1% on FY21, and no debt.

Rundle said:

Look, I recognise that it’s on an eye-watering valuation, but it’s just such a high-quality business. The quality of its earnings is fantastic, it has a fantastic management team, and a great product.

It’s really hard to bet against this company. It has all the qualities of a compounder, and therefore I think it keeps compounding.

Wayne added his buy endorsement, too:

It’s one that we’ve held for some time and continue to like it. You look at the balance sheet, all those key metrics are trending in the right direction — revenue, earnings, margins, and return on equity (ROE).

They developed a very good product, and have been able to go out and market it very well and win very high-quality contracts. A lot of their contracts are six to eight years. A lot of those have been renewed and rolled over.

They’ve also got a good backlog of inquiries for different tenders.

What’s next for Pro Medicus?

Wayne said he was keeping an eye on the expansion of Pro Medicus and the take-up of its product.

He explained:

One concern that we might have just to be careful of long term is they’ve targeted the academic hospitals in the US (private academic hospitals). They’ve been very successful there. A lot of those hospitals aren’t as cost-conscious as some of the others, so they might struggle to have as much of an impact on the broader hospital network in the US.

However, it’s a proven product. It’s very, very technologically advanced and can save a lot of time within those hospital operations.

Pro Medicus announced yesterday that it will hold its annual general meeting on 21 November.

The post This ASX 200 share has ‘all the qualities of a compounder’: experts appeared first on The Motley Fool Australia.

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More reading

• Morgans names 2 of the best ASX growth shares to buy now
• Why dividends matter
• Morgans names 2 ASX growth shares to buy

Motley Fool contributor Bronwyn Allen has positions in Pro Medicus Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd. 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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Actively investing in ASX shares can be quite the rollercoaster. 

There are good days, bad days, and many days where you’re better off not checking your brokerage account. But that’s all part of the ride.

In no particular order, here are five reasons why I love investing in ASX shares.

Being a part-owner of everyday businesses

For me, one of the best parts of investing in ASX shares is being able to own stakes in companies that we regularly interact with in our daily lives.

Walking down the street or browsing the internet and being greeted with brands that belong to publicly-traded companies we can own a slice of.

Think Wesfarmers Ltd (ASX: WOW), Telstra Corporation Ltd (ASX: TLS), and REA Group Limited (ASX: REA).

As someone who’s constantly Googling the parent company of brands I come across and wondering if they’re public, I love that I’m able to easily invest in a vast range of well-known companies around the globe.

Wealth-building potential

For many, investing is often seen as a means to an end. Personally, I love the process and journey itself. But there’s no denying that my overarching goal is, of course, to build wealth.

And history has shown that the ASX share market is one of the best places to do just that. 

Vanguard data shows that over the past 10 years, the S&P/ASX All Ordinaries Total Return Index (ASX: XAOA) has achieved an average return of 9.4% per annum. Compounded over decades, this can spin up a sizeable amount of money.

The magic of compound interest

Speaking of compounding, the magic of compound interest never ceases to amaze me. 

Albert Einstein famously called it the eighth wonder of the world. Play around with a compound interest calculator and you’ll start to see where he was coming from.

The basic premise is that you’re earning interest on interest (or returns on returns), which helps your money to grow at an accelerated rate.

Compounding investment returns can see your portfolio experience exponential growth. 

Take a $50,000 portfolio, for example, achieving average returns of 5% per year. In the first year, this portfolio generates $2,500, which is 5% of $50,000. But in year two, we’re now generating 5% returns on a larger balance of $52,500.

And so on and so forth, to the point where after 30 years, this hypothetical portfolio would have turned into $216,000. All without adding an extra cent.

Ongoing learning

It’s a bit nerdy, I know, but I love the aspect of learning that comes with investing in ASX shares. Learning about the ins and outs of individual businesses, business models, industries, you name it.

As someone who’s always been fascinated by businesses and brands, I enjoy getting into the weeds of a potential investment idea and discovering what makes a business tick.

With thousands of public companies operating in dynamic industries that are constantly evolving, the learning never stops. 

It’s always interesting

Investing is always interesting, and no day is ever the same. Whether it be a takeover offer, a big contract win, a poor trading update, or a management reshuffle, there’s never a dull moment.

Plus, given that there are two sides to every transaction – a buyer and a seller – there are always bound to be people camping on either side of the bullish and bearish fences.

With this comes the opportunity to make money, but so too the opportunity to be humbled.

The post 5 things I love about investing in ASX shares appeared first on The Motley Fool Australia.

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More reading

• 3 ASX All Ords shares smashing multi-year highs today
• It wasn’t all bad news for ASX All Ords shares on Monday. Here are some big winners
• Top broker says opportunities abound for ‘high quality’ ASX shares
• 3 ASX All Ords shares smashing multi-year highs on Friday
• This embattled ASX All Ords mining share is gearing up to be a FY23 winner: fundie

Motley Fool contributor Cathryn Goh 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 Corporation Limited. The Motley Fool Australia has recommended REA Group Limited. 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 share price of S&P/ASX 300 Index (ASX: XKO) favourite BetMakers Technology Group Ltd (ASX: BET) is in the red on Friday amid news one of its major shareholders has banked $11 million from selling its stock.

Bookmaker-turned-businessman Tom Waterhouse is behind the selling.

The BetMakers share price is 33 cents at the time of writing, 2.94% lower than its previous close.

For comparison, the ASX 300 is down 0.54% right now.  

Let’s take a closer look at what’s been going on with the betting and wagering technology provider’s stock lately.

Waterhouse offloads shares in ASX 300 favourite

The BetMakers share price is tumbling on Friday amid news one of the company’s major shareholders has been selling down their stake.

Waterhouse’s waging and gaming investment fund, Waterhouse VC, first bought into BetMakers in January, snapping up around 72.4 million shares. That saw the former bookie with an 8.01% stake in the company.

In September, Waterhouse’s hold of the ASX 300 company was increased to 9.06% on the exercise of performance rights.

Today, a release to the ASX revealed Waterhouse has dumped the additional holding, selling it in three equal parcels. The first parcel of 3.33 million shares sold on 21 September, the second on 5 October, and the third on Wednesday.

Waterhouse walked away from the shares’ sales with his pockets $11.4 million heavier and an 8.05% voting power in BetMakers.

Sadly, today’s tumble is just the latest to be experienced by the BetMakers share price. It has fallen a whopping 60% since the start of this year. It’s also 71% lower than it was this time last year.

Meanwhile, the ASX 300 has fallen 12% year to date and 10% over the last 12 months.

The post A certain ex-bookie has sold off $11m worth of this ASX 300 share in a month appeared first on The Motley Fool Australia.

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• These are the 10 most shorted ASX shares

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 positions in and has recommended Betmakers Technology Group Ltd. The Motley Fool Australia has recommended Betmakers Technology Group Ltd. 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 Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is down 1.28% to $25.50 today. But over the past month, it’s had quite a run — up 8%.

Next week, ANZ will report its FY22 full-year results and final dividend on Thursday.

ANZ will be the first among three of the big four banks to report soon. Westpac Banking Corp (ASX: WBC) will follow on 7 November, and National Australia Bank Ltd (ASX: NAB) on 9 November.

So, is this ASX 200 bank share a buy ahead of its results reveal?

Is the ANZ share price in the buy zone?

Currently, the ANZ share price is 13% off its 52-week high of $28.75, which it reached in January.

It’s 46% off its highest-ever share price of $37.25, reached in April 2015.

According to Westpac data, ANZ is trading on a price-to-earnings (P/E) ratio of 12.12. This compares to a sector (ASX financials) ratio of 9.55 and a broader market ratio of 12.98.

The ANZ dividend yield is 5.5%, and the dividends are usually 100% franked.

But we need more than numbers to determine whether it’s a buy. How’s the business?

Was buying Suncorp a good idea?

The big news relating to ANZ of late is its $4.9 billion acquisition of the banking operations of Suncorp Group Ltd (ASX: SUN). The bank also announced a $3.5 billion capital raising to help fund the deal.

As my Fool colleague James reported at the time, the purchase price represented a P/E of 13.8 times pre-synergies or 9.3 times post-full run-rate synergies.

The acquisition is expected to be earnings per share (EPS) neutral pre-synergies and low single-digit earnings per share accretive, including full run-rate synergies on a pro forma FY23 basis.

Joseph Koh, a senior analyst at Schroders, writes on Livewire that the deal “highlights a common problem in much of corporate thinking: that a company would be better if it were bigger”.

Koh says:

Another company that has, in our view, been unfaithful in the small things is ANZ when it agreed to buy Suncorp Bank in July this year. ‘Small’ here is relative; it is a $4.9bn transaction, after all – but with ANZ’s market cap of around $65bn the transaction represents less than 8% of ANZ’s value. Which is just as well for ANZ shareholders.

The acquisition price equates to about 1.3x Price / Net Tangible Assets, a significant premium to ANZ’s own shares trading at 1.1x, and comparable regional banks such as BOQ and Bendigo at 0.8-0.9x Price / Net Tangible Assets.

While ANZ has directed investors’ attention to potential synergies, there is every likelihood that the assimilation of a small company into big bank bureaucracy will more than wipe out any such theoretical benefits …

Why buy ANZ shares ahead of the bank’s report?

Some investors adopt a strategy called ‘dividend stripping’. It’s when you buy an ASX share that is due to announce, or has announced, a dividend. You buy the share before its ex-dividend date, which entitles you to the dividend, then you look to exit the position as soon as possible.

Of course, we don’t know what amount of dividend ANZ is going to pay, but brokers can give us an educated guess.

Citi tips ANZ to declare a 72-cent final dividend, bringing the full dividend for FY22 to $1.44 per share.

So, if you bought 1,000 ANZ shares at the current share price, you’d pay $25,400 and you’d receive a $720 dividend fully franked, if Citi is right. That’s a 2.83% base dividend yield or a 4.05% grossed-up dividend yield (taking franking into account).

Another reason to buy ANZ is that it may follow the fortunes of the Bank of Queensland Ltd (ASX: BOQ).

Earlier this month, the Bank of Queensland share price soared by 8% when the company revealed better-than-expected net interest margins (NIMs). This could bode well for other banks and their NIMs.

If ANZ also reports a surprisingly strong NIM, will the ANZ share price receive a boost on Thursday?

What do other experts think?

It’s interesting to note what the experts think about an ASX share we are considering buying. So, here’s one more insight.

Last month, top broker Macquarie upgraded its rating on ANZ from neutral to outperform. The broker increased its share price target from $23.50 to $24 for ANZ shares.

The ANZ share price is already above that level, so is that a sign it’s not a buy?

Over to you.

The post Is the ANZ share price a buy ahead of next week’s full-year results? appeared first on The Motley Fool Australia.

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More reading

• ASX dividend shares ‘likely to remain attractive’ despite rising bank deposit rates: expert
• Own ANZ shares? Here’s what to expect from the bank’s FY22 results next week
• What’s driving the ANZ share price today?
• Top broker says ‘we struggle to see CBA underperforming peers’. Here’s why
• ANZ shares: Buy, hold, or fold?

Motley Fool contributor Bronwyn Allen has positions in Australia & New Zealand Banking Group Limited, Macquarie Group Limited, and Westpac Banking Corporation. 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 Macquarie Group Limited and Westpac Banking 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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