The recovery of retail share prices?

It’s been big.

I can’t say I hadn’t noticed – disclosure alert: I own some of the companies I’m about to talk about.

But I hadn’t noticed just how big the recovery has been.

The Motley Fool’s Director of Research, Kevin Gandiya, shared some numbers with the team yesterday.

As of that date, these were the one-month share price gains of four online retailers:

– Cettire Ltd (ASX: CTT) up 156%
– Adore Beauty Ltd (ASX: ABY) up 93%
– Temple & Webster Group Ltd (ASX: TPW) up 64%
– Kogan.com Ltd (ASX: KGN) up 44%

(I own Adore and Kogan shares, for the record.)

Those are some serious one-month numbers.

And remarkable that they’re four similar companies.

But they’re not oil explorers. Or biotech hopefuls. Or – god forbid – crypto funds.

They’re retailers.

Online retailers, to be sure, but retailers.

Not the sort of businesses that can turn on a dime. Or are particularly easy to grow.

Software companies can sell to customers, who download infinite copies of inventory-less products, instantly.

Biotechs can make a discovery, get an approval, or sign a distribution deal that can dramatically change a company’s future with a single signature.

Retailers?

Even online ones need to attract customers, make a sale in a hyper-competitive environment, then fulfill the order with physical inventory that’s been made, stored and then shipped.

Not the easiest businesses to scale.

So, what gives, to see share prices soar so significantly in such a short amount of time?

In short, sentiment.

The market – writ large – has simply changed its collective mind.

A month ago, the market hated these companies.

In the 20-odd trading days since… it hates them a lot less.

Don’t get me wrong – they’re all lower than past highs.

There are no victory laps here.

But the phenomenon is too notable to pass up.

Yes, some sales numbers have been better than expected.

That helps.

But that only helps if the ‘expectations’ were wrong in the first place which — I don’t think it’s controversial to say – they clearly were.

Otherwise?

The market just changed its mind.

In a very big way.

But I’ve got to ask you: is it really possible that a retailer – even one relatively early in its corporate life, like Cettire – can be worth one price a month ago, and 2.5 times that price, this week?

Note I didn’t ask about its price.

I asked about its ‘worth’.

And the difference between those two terms is precisely the point I want to make.

See, it’s my contention that some of the current retail valuations are way too low.

It’s a point I’ve made almost everywhere in the past few months – TV, radio, online and here.

Here’s why:

It seems to me that the market has decided that, because the economy might slow (maybe even dramatically) many – most – retail stocks are worth nearly nothing.

(Okay, not ‘nothing’, but some are trading at or near single-digit price/earnings ratios!)

Now, let’s play this forward.

Let’s say – touch wood – we go into recession in 2023, and sales and profits fall.

Not great.

But let’s say you have a 5, 7 or 10 year time horizon.

As long as these businesses aren’t significantly or permanently damaged by a recession, they’ll come out the other side.

They’ll probably go on to deliver even higher sales and profits in the years ahead.

Sure, the ‘recession’ year is a net detractor.

But if you could buy an asset that might struggle for a short time, then go back to its successful past… well, a share price that suggests relative Armageddon is likely to be, in hindsight, cheap.

And that downturn may not even come, or be shorter or shallower than some expect.

Put more simply, investing is a game of probabilities. There is a range of possible outcomes.

Right now, most retail companies’ shares are priced as if the most likely outcome is a permanent (or very-long-term) loss of value.

Which means that if the future is brighter, the shares are available at pretty attractive prices.

And moreso, if you were to consider this group (and more besides) as a basket.

One or two might struggle for one reason or another.

But as a group?

Now, that doesn’t mean I know what’s going to happen next.

They might fall again before they rise.

I might even – how many people say this out loud? – be dead wrong.

But I think there’s a very, very good chance that companies priced for Armageddon will do well from here, if such disaster doesn’t, well, actually happen.

And unless the Australian economy falls into a permanent funk, I reckon that’s a pretty good bet.

Fool on!

The post Are the stores themselves on sale? appeared first on The Motley Fool Australia.

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More reading

• 50% off: Why I think this ASX All Ords share could be a sparkling buy
• Adore Beauty share price slips 12% following ASX speeding ticket
• Why BHP, Life360, Tassal, and Temple & Webster shares are charging higher
• Why is the Adore Beauty share price rocketing 19% on Tuesday?
• The BHP share price now trades on a fully franked dividend yield of 11%

Motley Fool contributor Scott Phillips has positions in Adore Beauty Group Limited and Kogan.com ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cettire Limited, Kogan.com ltd, and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has positions in and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Adore Beauty Group Limited, Cettire Limited, and Temple & Webster 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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

What happened

On an otherwise down day in the cryptocurrency market, EOS (CRYPTO: EOS) is one token that’s absolutely rocketing higher. As of 12:30 p.m. ET, EOS has soared 19% over the past 24 hours.

The move follows an interesting court ruling this week in which a judge from the Southern District of New York threw out a settlement between Block.one (the company that initially designed the EOS network) and investors. This $27.5 million settlement, which was proposed by Block.one and agreed to in June of this year, stemmed from a dispute with investors over whether an initial coin offering back in 2018 constituted an unregistered securities offering.

Other crypto projects have been mired in scrutiny from regulators and investors over alleged unregistered securities offerings, but this settlement was one of the more substantial the crypto community had seen. In addition, it’s important to note that Block.one also previously settled with the U.S. Securities and Exchange Commission for $24 million over the same allegations.

So what

While the company sought to settle these claims to focus on moving its blockchain endeavors forward, it’s clear that investors are paying close attention to what this ruling could mean for various projects embattled with legal issues. The fact that EOS is surging following this news indicates investors are taking the cue that the downside pressure from this headwind could be over. 

Now, EOS isn’t the only token that’s been caught up in allegations of unregistered securities offerings. Other projects, including XRP, are fighting similar battles. That said, the rather massive $4 billion raise Block.one managed to pull off in 2018, then the largest ever, made a settlement more likely. The ability for other projects to settle, given limited liquidity, remains uncertain.

Now what

The reason for this settlement being thrown out — that the party representing investors didn’t “adequately represent the interests of all investors” — is interesting. From here, it will be interesting to see how this decision impacts ongoing litigation with other projects. Investors are clearly watching these cases closely, and EOS is one token that could represent the upside following potentially positive future rulings for other embattled crypto projects.

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

The post Why cryptocurrency EOS soared 19% while the market took a breather today appeared first on The Motley Fool Australia.

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• Brokers name 2 blue chip ASX 200 shares to buy

Chris MacDonald 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.

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

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

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

What happened

After initially surging more than 4% early this morning during Asian trading hours, top cryptocurrencies Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) have each moved lower in early afternoon trading. As of 1 p.m. ET, these three tokens have slumped 1.5%, 2%, and 2.2%, respectively, over the past 24 hours.

Interestingly, the moves for these top tokens tracked the price action for global equity markets quite closely. Most major Asian indices moved higher overnight. However, U.S. equity markets have moved lower today as investors await the release of the most recent Federal Open Market Committee (FOMC) meeting minutes. Concerns around the forward hiking schedule of the Fed saw bond yields shoot higher today, affecting all risk assets, including major cryptocurrencies.

So what

Investors across all risk assets appear to be remaining cautious right now given uncertainty tied to the steps the Federal Reserve intends to take to bring down inflation. With bond yields moving to such a wild degree this year, investors have had a difficult time anticipating when a shift toward more accommodative monetary policy might come about.

For cryptocurrencies, it’s clear that the very dovish monetary policy mandate from the Fed following the pandemic provided the fuel for an incredible bull market rally through the end of 2021. Accordingly, given the decline in higher-risk asset classes following a very hawkish shift, investors looking for the next surge in cheap money-fueled speculation await some additional clarity from the Federal Reserve as to how the central bank is thinking about the issues at hand.

Now what

In general, since the onset of the pandemic, the crypto market has traded in a relatively high correlation to equity markets. In fact, as of May this year, the crypto sector’s correlation to equities hit its highest level ever. Accordingly, how stocks perform matters a great deal for the higher-beta (higher-volatility) performance of this higher-risk asset class.

Today’s price action across both equity and crypto markets will certainly be interesting to watch. Investors might get a sneak peek into how these assets will perform through the end of the year, depending on the commentary provided this afternoon.

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

The post Why Bitcoin, Ethereum, and Dogecoin are slumping today appeared first on The Motley Fool Australia.

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• Dogecoin just added $1 billion of market cap on this catalyst
• This is why Ethereum has been outpacing the Bitcoin price gains. Will it last?
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• Will the next era of computing break the Bitcoin price or boost it?

Chris MacDonald has positions in Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. 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.

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Motley Fool Australia Chief Investment Officer Scott Phillips joined Michael Thomson for Nine’s Late News on Wednesday night to discuss the latest from earnings season, plus a rate call from the RBNZ that might foreshadow the RBA’s next move.

[youtube https://www.youtube.com/watch?v=UXq0ugTIJ0Q?feature=oembed&w=500&h=281]

The post Earnings in focus, and a hint about the RBA’s next move. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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• Here’s the BHP dividend forecast through to 2026
• Medibank share price on watch amid ‘standout customer growth’
• Why did the Amazon share price fall today?
• 2 little-known ASX shares this fund manager rates highly
• 50% off: Why I think this ASX All Ords share could be a sparkling buy

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 positions in and has recommended CSL Ltd. and Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Super Retail 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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Earlier this week, BHP Group Ltd (ASX: BHP) released its full year results and rewarded its shareholders with another huge dividend.

For the 12 months ended 30 June, the mining giant will pay total fully franked dividends of US$3.25 per share.

This was well ahead of the market’s expectations and is being underpinned by the record free cash flow the mining giant generated during FY 2022.

Investors may now be wondering where the BHP dividend is heading from here. So, let’s take a look to see what analysts are forecasting.

Where is the BHP dividend going from here?

According to a note out of Goldman Sachs, its analysts believe the BHP dividend may have peaked for the time being.

Nevertheless, the broker is still expecting the Big Australian’s shares to provide above-average yields for the foreseeable future.

In FY 2023, Goldman is forecasting a US$1.62 (A$2.34) per share fully franked dividend. Based on the current BHP share price, this will mean a yield of 5.75%.

The following year, in FY 2024, the broker is expecting the BHP dividend to reduce again. It has pencilled in a US$1.54 (A$2.23) per share fully franked dividend. This equates to a 5.5% dividend yield at current prices.

Moving on, in FY 2025, a fully franked US$1.41 (A$2.04) per share dividend is expected. This will mean a yield of 5% for investors in that financial year.

Finally, in FY 2026, Goldman Sachs is forecasting a US$1.24 (A$1.79) per share fully franked dividend. At current levels, this will mean a yield of 4.4% for investors.

All in all, Goldman doesn’t expect the BHP dividend yield to fall below 4% between now and 2026, which is good news for income investors.

The post Here’s the BHP dividend forecast through to 2026 appeared first on The Motley Fool Australia.

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• Is the BHP share price a buy after the miner’s FY22 results?
• Can BHP shares keep cashing in on coal?
• An ASX 200 market darling in the past, but don’t expect fireworks from the CSL share price going forward
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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 Medibank Private Ltd (ASX: MPL) share price is on watch this morning after the company released its full year results for the 2022 financial year.

Shares in the private health insurer finished 0.28% higher to $3.52 yesterday.

Medibank share price on watch following ‘another strong result’

Medibank has delivered its FY 2022 results for the 12 months ended 30 June 2022. Here are some of the key takeaways:

• Group revenue from external customers up 3.2% year over year to $7,128.5 million
• Segment operating profit up 11.9% to $638.1 million
• Group net profit after tax (NPAT) down 10.7% to $393.9 million
• Final dividend up 5.8% to 7.3 cents per share, fully franked.

What happened in FY 2022?

Medibank recorded a solid financial performance against the backdrop of the COVID-19 pandemic.

Net resident policyholders increased by 60,900 or 3.2% to more than 500,000 policyholders. This was led by strong growth in new to industry and younger customers, reflecting continued buoyancy in the market. The Medibank and ahm brands were positioned well and improved by 1.9% and 7.3% respectively.

In addition, Medibank achieved high levels of customer advocacy and its highest-ever brand advocacy results, with the group leading the top health insurers.

The group achieved operating profit growth in both its Health Insurance and Medibank Health businesses. These numbers lifted by 10% to $592.6 million, and by 33.9% to $45.5 million respectively.

Whilst group operating profit was up 12.5% to $594.1 million, this had been offset by a $24.8 million loss in net investment income compared to a $120 million gain in FY21. This dragged down Medibank’s bottom line with NPAT decreasing 10.7% to $393.9 million.

What did management say?

Medibank CEO, David Koczkar touched on the results, saying:

Today we have delivered another strong result driven by continued policyholder growth, double-digit growth in Medibank Health and remaining disciplined in how we grow and run our business.

We have been able to deliver these results because of the hard work of everyone at Medibank and their unwavering focus on our customers.

The pandemic has triggered a new focus on health and wellbeing, which we expect to continue. A record number of Australians continue to take out private health insurance, especially younger customers.

What’s the outlook for FY 2023?

Looking ahead to the new financial year, Medibank stated it will continue to assess claims activity. It said that any permanent net claims savings due to COVID-19 will be given back to customers through support programs.

In terms of policyholder numbers, the company is striving to reach roughly 2.7% in policyholder growth in FY 2023. This involves targeting areas in priority segments including corporate and regional customers.

Underlying average net claims expense per policy unit is forecast to increase by 2.3% among resident policyholders. Medibank is looking to increase penetration of preventative programs such as Live Better.

And lastly, management is aiming to invest $150 million to $250 million in total over the next three years. This will primarily be in health and wellbeing, primary care, and new care models.

Medibank share price snapshot

The Medibank share price has risen by 5% in 2022 but is flat when looking over the last 12 months.

For context, the S&P/ASX 200 Financials (ASX: XFJ) sector is down 2% for the current calendar year.

Medibank presides a market capitalisation of approximately $9.67 billion.

The post Medibank share price on watch amid ‘standout customer growth’ appeared first on The Motley Fool Australia.

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More reading

• How much have Medibank shares paid in dividends over the past 5 years?
• Is this why the NIB share price is lagging Medibank on Friday?
• Medibank shares are currently trading on a 4% dividend yield. How does this compare to NIB?
• Is the Medibank share price a smart buy for rising inflation?

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

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

What happened

Shares of Amazon (NASDAQ: AMZN) traded 1.85% lower on Wednesday after rival Walmart (NYSE: WMT) announced it had signed a partnership with Paramount Global (NASDAQ: PARA) to offer the movie studio’s streaming service to its Walmart+ member loyalty program.

While the deal isn’t about to prove particularly competitive to Amazon Prime Video since few sign up for Amazon’s own membership program to simply get streaming video, Prime itself is coming under greater scrutiny. With Walmart+ priced some $50 less than Prime, it could be seen by some as a better value now.

So what

Walmart has tried offering movies to its customers before, once with a DVD rental service and once via its Vudu streaming offering. Both never gained traction and were subsequently sold off. This could be a better option for Walmart+ members since Paramount+ is operated by someone else and Walmart is simply providing access to it, albeit it being Paramount’s ad-supported level.

Amazon Prime, though, is being investigated by the Federal Trade Commission over the ease of unsubscribing from the service. The probe has since expanded to include other Amazon subscription services including Audible, Amazon Music, Kindle Unlimited, and Subscribe & Save.

Amazon has an estimated 150 million U.S. subscribers in its Prime program, which costs $149 a year. Walmart+, on the other hand, boasts just 11 million U.S. customers.

Now what

The reason most people sign up for Prime is the fast, efficient delivery of goods from the e-commerce site. Walmart+ won’t likely see any crush of people paying $98 a year because it now has streaming video.

Yet along with discounts on gasoline and a six-month free trial to Spotify, a free subscription to the Paramount+ Essential Plan, a $59 value, is a nice add-on benefit.

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

The post Why did the Amazon share price fall today? appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rich Duprey 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 Amazon and Walmart Inc. The Motley Fool Australia has recommended Amazon. 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.

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The fund manager Wilson Asset Management (WAM) has named two ASX shares which may be little-known but could be good opportunities.

WAM runs a number of different listed investment companies (LICs) which focus on different areas of the market. Some of those LICs include WAM Capital Limited (ASX: WAM), WAM Research Limited (ASX: WAX) and WAM Leaders Ltd (ASX: WLE).

While WAM Leaders focus on names that can be found in the S&P/ASX 200 Index (ASX: XJO), some of the others, like WAM Research, are able to look at smaller businesses to find opportunities.

Here are those two ASX shares that some investors may not have heard of, but could be interesting:

Capricorn Metals Ltd (ASX: CMM)

The fund manager describes this ASX share as an Australian-based gold producer in Western Australia.

WAM noted that the company reported a strong result in the quarter for the three months to June 2022. This update showed record production from its Karlawinda gold project, completing an “outstanding” first full year of operations at the site.

This meant that Capricorn Metals was able to achieve the upper end of its FY22 earnings guidance, with total gold production of 118,432 ounces.

The fund manager also pointed out that the company announced further results from its Mount Gibson project in July after expanding the drilling program from 81,000m to 105,000m, highlighting the “quality and growth potential of the resource at the site”.

WAM called the result “excellent” because the sector is facing a “challenging” environment with increasing costs and labour shortages. The fund manager also said that the ASX share continues to deliver “strong” operational performance, it’s in an “excellent position to create balance sheet flexibility” and the investment team is positive on the outlook and growth opportunities for the company in the upcoming year.

Johns Lyng Group Ltd (ASX: JLG)

Another business that WAM covered was Johns Lyng, which specialises as an integrated building service group delivering building and restoration services across Australia and the US for properties and contents damaged by insurable events.

The fund manager pointed out that in June, it upgraded its revenue and earnings guidance for FY22, driven by “increased demand” for the ASX share’s core business-as-usual services, and an increase in catastrophe activity during FY22. The catastrophe work was primarily in flood-affected regions such as northern NSW and south-east Queensland.

Johns Lyng upgraded its revenue forecast by $64.6 million to $867 million. Projected earnings before interest, tax, depreciation and amortisation (EBITDA) was upgraded by $4.3 million to $83 million. The fund manager remains “positive” on the business and it sees a “very strong” outlook for double-digit earnings growth over the next few years.

The post 2 little-known ASX shares this fund manager rates highly appeared first on The Motley Fool Australia.

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More reading

• ‘Strong growth’: Expert names 2 ASX shares to buy for the long run
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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 positions in and has recommended Johns Lyng Group Limited. The Motley Fool Australia has recommended Johns Lyng 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 Adore Beauty Group Ltd (ASX: ABY) share price has glowed up this week, shimmering 30% on Tuesday to outperform the wider S&P/ASX All Ordinaries Index (ASX: XAO).

Curiously, there was no news out of the ASX All Ords company, which was issued a speeding ticket yesterday and gave back some gains. 

But fellow ASX e-commerce share Temple & Webster Group Ltd (ASX: TPW) also rocketed 30% on Tuesday after the company’s FY22 results surprised to the upside.

This positive sentiment could be flowing through to Adore Beauty, with investors believing the shares could be oversold.

After going public in late 2020 at a price of $6.75 apiece, the market fell out of love with Adore Beauty shares.

Despite Tuesday’s meteoric rise, the Adore Beauty share price is still down more than 50% this year. And since its initial public offering (IPO), Adore shares have tumbled around 70%.

But while Adore Beauty struggles to win over investors, here are three reasons why I like this ASX All Ords share.

Alluring tailwinds

As an online-only retailer, Adore is benefitting from the industry’s structural shift to e-commerce.

The company plays in an $11.2 billion beauty and personal care (BPC) market in Australia. And despite the COVID tailwind, online penetration still sat at a lowly 11.4% at the end of 2020. 

The key here is that Australia is a laggard compared to larger Western countries. Online penetration in the United States was up to 17.1% in 2020. The United Kingdom boasted penetration rates of 18.4%. 

Globally, places like South Korea and China are streets ahead with 40-50% of the beauty industry already online. 

What’s more, the company’s brand awareness and presence in the industry have plenty of room to grow. Adore Beauty commands a 13% share of the online BPC market in Australia.

It’s a double-whammy here as Adore Beauty seeks to carve out more market share, all the while the market itself is also growing.

Range authority and scale

In its early days, Adore’s biggest issue was getting brands onto the platform. As its size and reputation grew, and the benefits of social proof flowed through, the conversations with brands have become much easier. 

Adore started out with just two Australian brands when it launched in early 2000. It went on to sign its first international brand, Clarins, in 2006.

Fast forward to today and Adore’s online store boasts more than 11,000 products across more than 270 brands. This vast range of brands and products has attracted 880,000 active customers to Adore in the last 12 months.

What’s more, with larger order volumes, a growing audience, and a specialisation in online, brands are turning to Adore not just as a distributor but also as a marketing partner. 

As a result, Adore is reaping the benefits of co-marketing support from brands through promotions, special giveaways, events, and samples. 

Together with increased product rebates, this has seen the company’s gross margin improve over time as the business scales and takes a bigger slice of the market.

A beautiful brand

In today’s landscape where barriers to entry are low and competing sites are popping up out of the woodwork, trust is increasingly important.

The fact that Adore is a long-standing, established Australian business with a strong reputation and high customer satisfaction levels are big ticks. 

The company has also leveraged its brand to create a powerful content arm across a media network of podcasts, videos, and blog posts. 

Not only are these channels a means of marketing but through curated blog posts and podcasts, Adore can move up the funnel to customers who may not be in a shopping frame of mind. 

Here, it’s more about content marketing where Adore can introduce customers to the products they didn’t know they needed. As you can imagine, this can do wonders for engagement and purchasing patterns.

So what’s the verdict?

​​At first glance, it’s easy to write Adore off as a glorified distributor. But over the years, this ASX All Ords company has evolved to become more than just an online store.

In my eyes, competition, customer retention, and customer acquisition costs remain the key risks for Adore.

But the Adore Beauty share price may already reflect these risks, with shares currently trading on a trailing price-to-sales ratio of 1.2x.

According to our Foolish ASX reporting season calendar, Adore will release its FY22 results on Monday 29 August.

Some of the things I’ll be watching include revenue and customer growth, the company’s gross margin profile, marketing expenses, progress on its private label initiatives, and earnings margins.

It’s also worth noting that the company is on the hunt for a new CEO. Tennealle O’Shannessy handed in her resignation last week. She’ll be leaving Adore in February next year to take the top job at IDP Education Ltd (ASX: IEL).

The post 50% off: Why I think this ASX All Ords share could be a sparkling buy appeared first on The Motley Fool Australia.

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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 positions in and has recommended Idp Education Pty Ltd and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited and Temple & Webster 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 CSL Limited (ASX: CSL) share price was out of form on Wednesday.

The biotherapeutics company’s shares fell as much as 6% before recovering to end the day 1.5% lower at $292.50.

This followed the release of a full year result that met expectations but included guidance for FY 2023 that fell short of what the market was expecting.

Is the CSL share price pullback a buying opportunity?

According to a note out of Goldman Sachs, its analysts aren’t ready to press the buy button just yet.

This morning the broker retained its neutral rating with a trimmed price target of $291.00.

This is broadly in line with where the CSL share price is trading today.

What did the broker say?

Goldman highlights that the CSL Behring business was the driver of its weaker than expected guidance for FY 2023. It commented:

Plasma collections grew +24% in FY22 (from +18% in 1H22), and whilst this acceleration was widely expected, it underpins the volume recovery through FY23-24E. However, the updates on Behring costs/margins were less assured and were the primary driver of FY23 NPAT guidance falling (3)-(7)% below consensus today (despite another strong performance from Seqirus).

And while the broker suspects that management could be being conservative with its guidance, it also believes it is a reminder that the company is not out of the woods just yet.

On both fronts, CSL would have applied at least its typical dose of conservatism but management now sees the trough in Behring gross margins as 1H23 (from 2H22 previously), a timing-driven downgrade but a material one, reminding investors that the industry is not out of the woods (2H22 margins of 52.5% are -531bps below pre-Covid levels). Staffing pressures and collections costs will remain key challenges through the mid-term, but we see enough tailwinds to drive a sequential improvement from 2H23 (primarily price/mix and improved fixed cost absorption, but also some modest benefit from Rika). Overall, we revise Behring EBIT forecasts by -15%/-2%/-1% through FY23-25E.

All in all, the broker appears to believe investors should wait for the CSL share price to pullback a little more before making a move.

The post Broker gives its verdict on the CSL share price post-FY22 results appeared first on The Motley Fool Australia.

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More reading

• Why CSL, Downer, Magellan, and PointsBet shares are falling today
• Everything you need to know about the latest CSL dividend
• An ASX 200 market darling in the past, but don’t expect fireworks from the CSL share price going forward
• CSL share price drops despite expectations of growth in FY23
• CSL share price on watch following FY22 results

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 CSL Ltd. 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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