The Worley Ltd (ASX: WOR) share price is backtracking today, taking a breather from its recent 52-week high.

This comes after the engineering group announced it has been awarded a contract from energy giant, Santos Ltd (ASX: STO).

At the time of writing, Worley shares are swapping hands at $13.47, down 2.18%.

Worley expands partnership with Santos

Investors are selling off Worley shares despite the company announcing positive news to the ASX.

In its release, Worley advised it has won a professional services contract to support Santos’ Bayu-Undan carbon capture and storage (CCS) project.

Under the deal, Worley will provide front-end engineering and design (FEED) services for the Bayu-Undan offshore facilities and pipeline.

The scope of work includes re-purposing the Bayu-Undan facility along with other offshore sections from hydrocarbons to carbon dioxide service.

Furthermore, Worley will also provide FEED services for the life extension of the facility and pipeline to ensure safe operation.

The Bayu-Undan CCS project is expected to store up to 10 million tonnes of carbon dioxide per annum. To put that into perspective, that’s about 1.5% of Australia’s total carbon emissions for the year.

The CCS project could be one of the largest in the world and help Australia transition to a low-carbon future.

Worley stated it will use its Perth team to execute the work, whilst receiving support from its global branches.

Worley CEO, Chris Ashton commented:

We are excited to strengthen our relationship with Santos and support this important carbon capture and storage project. This project is one of the ways we are helping our customers to decarbonize and re-purpose existing assets as we deliver a more sustainable world.

Worley share price recap

Over the past 12 months, the Worley share price has gained close to 20% following a rally in energy prices.

The company’s shares reached a 52-week high of $15.69 in early June before treading lower in the weeks after.

Worley presides a market capitalisation of roughly $7.21 billion with 523.7 million shares outstanding.

The post Worley shares dip despite deal with Santos appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Monday
• Why is the Santos share price glowing green at the end of the week?
• Why are ASX 200 energy shares making a comeback on Friday?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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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It hasn’t been the easiest of years for ASX share investors so far.

With the majority of ASX shares struggling as they’re faced with rising inflation and higher interest rates for the first time in a decade, the All Ordinaries Index (ASX: XAO) has fallen 14% in 2022.

Despite the market turmoil, Aussie retail investors remain upbeat, with many looking to buy the dips.

That’s according to social investment network eToro’s latest Retail Investor Beat. The quarterly report surveys 10,000 retail investors across 14 countries, including 1,000 in Australia.

Here’s how the Aussie investors responded.

75% of ASX share investors confident with their investments

Despite the majority of ASX shares sliding over the past quarter, 58% of Australian retail investors said they’re ‘quite confident’ with their investments with another 17% saying they’re ‘very confident’.

Which is not to say they don’t have concerns.

The top concern among Aussie respondents is rising inflation, with 52% citing that as a chief worry. Also high on the list is the state of the global economy, named by 43% of retail investors. Atop those, 42% were concerned about international conflict, while rising interest rates were alarming to 38% of respondents.

Yet few ASX share investors opted to sell during the past quarter’s selloffs.

Of those surveyed, only 7% of retail investors chose to sell, while 68% held onto their investments, and 25% went bargain hunting, buying the dips when prices retraced.

In terms of how Australian retail investors repositioned their portfolios, 20% favoured cash, 17% named domestic equities, 16% said commodities, and 14% went for crypto.

Breaking that into sectors, the survey revealed that ASX share investors increased their allocations to energy by 17%, technology by 17%, utilities by 15%, healthcare by 15%, and financial services by 14%.

Eyeing the next bull market

Commenting on the survey results, eToro’s global market strategist Ben Laidler said:

Despite a barrage of setbacks across global financial markets, retail investors in Australia and around the globe have found the strength to look past the short-term volatility and use these drops in prices to bolster their portfolios for the long-term.

With bull markets ultimately built on the shoulders of bear markets and near four times the length and magnitude, staying the course and repositioning their portfolios should serve these investors well.

eToro’s Australian market analyst Josh Gilbert pointed out the importance of time in the markets for ASX share investor strategies.

According to Gilbert:

The reality is that investment strategies depend on an investor’s risk profile and timeline. Most retail investors are Millennials and Gen Z that have a much longer time horizon. Therefore, they are generally happier to buy these assets at the current discounts with the view of holding for many years until markets eventually recover.

The post ASX share investors confident despite market turmoil: survey appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for the Wesfarmers share price over the rest of 2022?
• Are falling BNPL shares pushing the ASX banks higher today?
• These were the best (and worst) performing ASX 200 sectors of FY22
• ASX 200 travel shares slide amid travel chaos and cancellations
• Outlook for Zip share price ‘uncertain’ following scrapped merger: UBS

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 Wesfarmers Ltd (ASX: WES) share price has sunk by more than 20% over the past six months. But could the next six months offer hope for this S&P/ASX 200 Index (ASX: XJO) retail share?

While Wesfarmers may not be an often-mentioned name in a typical Aussie household, plenty of the businesses within the Wesfarmers stable are famous retailers in the country.

Some of the businesses that Wesfarmers operates include Bunnings, Kmart, Target, Officeworks, Catch, and Priceline. The Priceline name is a recent addition after the acquisition of Australian Pharmaceutical Industries (API).

However, Wesfarmers also has other businesses in areas like safety, chemicals, energy, fertilisers, lithium, and other industrial sectors.

Latest outlook according to Wesfarmers

Wesfarmers will report its FY22 results on 26 August during the upcoming earnings season.

However, earlier this year Wesfarmers said that the Australian economy was in a favourable shape, with strong employment and high levels of accumulated household savings.

It is continuing to “actively manage” increasing inflationary pressures and it said it will “leverage its scale” to mitigate the impact of rising costs.

Specifically in relation to its retail businesses, Wesfarmers said it will increase its focus on price leadership. Time will tell what this means for margins and volume.

For example, Wesfarmers said in a recent presentation that Bunnings is aiming to deliver more value. It will “go harder on lowest prices that matter the most”, but be disciplined about it.

The hardware business is leveraging its volume to purchase at the lowest cost. Its own-brand products can provide “greater value” in selected categories.

Bunnings is the key business for Wesfarmers because it generates the lion’s share of operating profit. Therefore, it can have the biggest impact on the Wesfarmers share price.

Growth prospects in FY23

Bunnings sees opportunities to grow in various ways. For households, it’s expanding in-room furniture and storage, garden and décor, and kitchen and bathroom. It has identified growth opportunities with in-home services, pet ‘durables’, and recreation.

Wesfarmers is also taking aim at commercial customers. Beaumont Tiles and Tool Kit Depot are two growth opportunities.

With Kmart Group, Wesfarmers notes that it’s uniquely positioned in this inflation environment to extend its low price leadership. The full-year sales benefit of store conversions will be seen in FY23. It’s also looking to grow online sales, reduce costs, and convert revenue growth into profit growth.

It’s a similar story for Officeworks. It wants to offer the best value, become more efficient, and grow the profit.

Wesfarmers Health is the new division that includes Priceline, Soul Pattinson Chemists, Clear Skincare Clinics, and so on. The company points out that healthcare is an important, large sector with long-term growth tailwinds. The population aged over 65 in Australia is expected to double to 8.9 million by 2060.

The company also notes that customers are becoming more interested in health and wellness, particularly preventative health.

Broker thoughts on the Wesfarmers share price

Macquarie currently rates Wesfarmers as underperform, which is essentially like a sell rating. The price target is $43.30, implying a single-digit decline over the next year. The suggestion is that it will be a struggle for Wesfarmers to grow sales, with households changing their spending to services.

According to Macquarie, the Wesfarmers share price is valued at 22 times FY23 estimated earnings.

The broker Ord Minnett is also negative on the business. It has a ‘lighten’ rating and a price target of $41.20, suggesting a high single-digit decline over the next year.

While it thinks the decline largely reflects the worsening situation for the retailer, it decided to reduce its expectations.

The post What’s the outlook for the Wesfarmers share price over the rest of 2022? appeared first on The Motley Fool Australia.

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• Does the FY23 outlook make ASX retail shares look like bargains?
• Analysts name 2 ASX 200 blue chip shares to buy
• What’s the outlook for ASX 200 dividend shares in FY23?
• 5 worst ASX energy shares of FY22
• Analysts name 2 excellent ASX dividend shares for income investors to buy

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. 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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It’s been a bumpy ride for ASX shares and the S&P/ASX 200 Index (ASX: XJO) so far this Tuesday. At the time of writing, the ASX 200 has gained 0.17% at just over 6,610 points after initially surging to almost 6,650 points this morning. But it’s a bit of a different story when it comes to the ASX banks today.

Most ASX bank shares are doing very well this Tuesday. Take the Commonwealth Bank of Australia (ASX: CBA) share price. It’s currently up a rosy 0.98% at $93.46. National Australia Bank Ltd (ASX: NAB) is doing even better, having risen more than 1.3% to back over $28. The gains are more muted for Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ), but both are still in the green.

We haven’t had any news out of the banks themselves today that could easily explain why some are displaying such a strong performance. However, we do have some news out of the buy now, pay later (BNPL) space that could be playing a part here.

It’s been a tough few weeks (and months) for ASX BNPL shares. Earlier this week, my Fool colleague Brooke looked at how some BNPL shares, including Zip Co Ltd (ASX: ZIP) and Sezzle Inc (ASX: SZL), fell more than 90% over FY2022. Indeed, the Sezzle share price lost a painful 97% over the financial year just passed.

Are ASX bank shares getting a BNPL boost?

BNPL and bank shares are not interchangeable of course. But nor are they completely independent from each other. For one, BNPL products arguably compete against the credit offerings of banks, most obviously credit cards. A case can be made that BNPL successes come at the expense of the banks.

So that might be why we are seeing some strength in ASX bank share prices today. For this Tuesday we got the news that the long-mooted merger that was planned between BNPL players Zip and Sezzle has been abandoned. As my Fool colleague covered this morning, Zip and Sezzle have agreed to leave each other at the altar.

This merger was first gazetted back in February. It would have seen Zip buy out Sezzle for what was then a $491 million, all-scrip deal. This would have resulted in Sezzle shareholders receiving 0.98 Zip shares for every Sezzle share owned.

But as both companies’ share prices plummetted in the months following this announcement, concerns grew and ultimately sunk the deal. So perhaps investors are treating the loss of what would have been a more consolidated, larger BNPL share as a positive for the ASX banks today.

In CBA’s case, the news might be especially positive. CBA owns a stake in the Swedish BNPL giant Klarna. It built out its position across 2019 and 2020, although it might have to take a $2 billion hit to its investment in 2022. If Klarna doesn’t have to compete against a merged Zip and Sezzle, it could be good news for CBA.

Whatever the reason, it’s certainly been a good day to hold some ASX bank shares today.

The post Are falling BNPL shares pushing the ASX banks higher today? appeared first on The Motley Fool Australia.

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More reading

• Outlook for Zip share price ‘uncertain’ following scrapped merger: UBS
• Why Allkem, Kogan, Metcash, and Sezzle shares are sinking
• Down 9%, can CBA shares bounce back in FY23?
• Why Eagers Automotive, Viva Energy, Woolworths, and Zip shares are rising
• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ZIPCOLTD FPO. The Motley Fool Australia has recommended 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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Financial year 2022 (FY22) was a rough one for the S&P/ASX 200 Index (ASX: XJO), but not all the index’s sectors suffered.

The ASX 200 slumped around 10% last financial year. It was weighed down amid rising inflation and three consecutive interest rate hikes.

But FY22 spelled good news for one particular sector. It gained around 25% last financial year.

Keep reading to find out which ASX 200 sector outperformed all others, and which came in as the market’s worst performer, in FY22.

Best and worst-performing ASX 200 sectors of FY22

The best

The S&P/ASX 200 Utilities Index (ASX: XUJ) was the market’s best performing sector of FY22, gaining around 25%. The sector is made up of just three constituents. Here’s how their shares performed in FY22:

• APA Group (ASX: APA) gained 27%
• AGL Energy Limited (ASX: AGL) gained 0.6%
• Origin Energy Ltd (ASX: ORG) gained 27%

Interestingly, the two top-performing ASX 200 utility stocks were also those pushing to make major strides in renewable energy.

APA continued preparing for the energy transition in FY22 while Origin Energy announced it’s ditching coal seven years earlier than previously planned.

Meanwhile, AGL – Australia’s biggest emitter – faced heat to accelerate its transition to renewables.

The worst

But it wasn’t all sunshine and renewables on the ASX last financial year.

The S&P/ASX 200 Information Technology Index (ASX: XIJ) plummeted around 40% after the market took a turn in early 2022.

Inflation and interest rates were likely partly to blame for its downfall. Many ASX tech stocks’ valuations are based on future earnings, and rising inflation and rates makes those earnings less attractive.

On that note, shares in ASX tech giant Block Inc (ASX: SQ2) plunged around 49% last financial year, while those of EML Payments Ltd (ASX: EML) and Megaport Ltd (ASX: MP1) plummeted 64% and 70% respectively.

The post These were the best (and worst) performing ASX 200 sectors of FY22 appeared first on The Motley Fool Australia.

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• Own ASX 200 energy shares? Retailers could hit back on AEMO fees
• What were some of the key lessons for ASX investors in FY22?
• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack
• ‘Gems in the chaos’: The outlook for ASX 200 shares in FY23
• The ASX sector set to pay out ‘massive record dividends’: fund manager

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 Block, Inc., EML Payments, and MEGAPORT FPO. The Motley Fool Australia has positions in and has recommended APA Group, Block, Inc., and EML Payments. The Motley Fool Australia has recommended MEGAPORT 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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ASX 200 travel shares are plunging today amid ongoing travel chaos.

Travel shares falling on Tuesday include Qantas Airways Limited (ASX: QAN), Flight Centre Travel Group Ltd (ASX: FLT), and Webjet Ltd (ASX: WEB).

Let’s take a look at what’s impacting travel shares today.

Why are ASX travel shares falling today?

Qantas shares are down 3.42%, while Flight Centre shares are 2.26% lower. Meanwhile, the Webjet share price is sliding 2.03% in late afternoon trading.

News emerged that Qantas cancelled 6.7% of its domestic flights and just 44% of flights landed on time, the Daily Mail reported. Meantime, Virgin Airlines, a Qantas rival not listed on the ASX, cancelled 14.7% of flights.

A Qantas spokesperson told the publication it was “a pretty challenging week” all round. She added:

We appreciate how frustrating flight cancellations and delays are for customers with severe weather in New South Wales and a spike in Covid cases for operating crew impacting airline schedules over the past week.

In a recent market update, Qantas revealed it would cut domestic capacity on flights in the 2023 financial year. However, the company is also rolling out new check-in and baggage kiosks in Sydney in a bid to speed up the check-in process.

Travel shares in Australia are following a similar fall in US airline stocks on Monday. The American Airlines Group Inc (NASDAQ: AAL) share price fell 3.87%, while Delta Air Lines Inc (NYSE: DAL) slid 1.45% and United Airlines Holdings Inc (NASDAQ: UAL) shares fell 3%.

The post ASX 200 travel shares slide amid travel chaos and cancellations appeared first on The Motley Fool Australia.

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• How did ASX 200 travel shares go in FY22?
• These are the 10 most shorted ASX shares
• Expert names ASX share that could fly 67% higher
• Top broker names the ASX travel shares to buy before it’s too late
• Flight Centre share price fails to lift-off amid recovering aircraft engine demand

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 recommended Delta Air Lines. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Webjet 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 Zip Co Ltd (ASX: ZIP) share price is up 7% in early afternoon trading to 53 cents per share.

Investors are bidding up the ASX buy now, pay later (BNPL) company following the report its merger with Sezzle Inc (ASX: SZL) will not proceed, under a mutual agreement.

Zip originally announced its intention to acquire Sezzle on 28 February, intending to pay about $491 million for its rival BNPL company. With the deal off the table, Zip will pay Sezzle $11 million in fees.

Sezzle shares crashed 33% on the news today.

And the outlook for the Zip share price is now uncertain, according to leading broker UBS.

Lower costs with slower scaling ahead

UBS said that while Zip will see less money flowing out the door now that it won’t acquire the unprofitable Sezzle, the scrapped merger will also slow its expansion plans in the massive BNPL market of the United States.

And that means investors who’d assumed the merger would go through – as Zip indicated just three weeks ago – may need to re-evaluate the outlook for the Zip share price.

According to Tom Beadle, analyst at UBS (quoted by The Australian Financial Review):

The termination of the proposed merger has the potential to slow Zip’s near-term cash burn given Sezzle is loss-making, but it also slows the scaling of Zip’s US business, where we continue to have concerns around transaction frequency.

With macroeconomic and market conditions cited as a reason, we believe this adds further uncertainty to the near-term outlook, and highlight recent work we published on Zip’s credit risks which indicates that Zip’s credit performance is likely to remain soft this half, with initiatives taken to improve credit performance likely to impact in FY23.

Prior to the termination of its merger with Sezzle, UBS had a sell rating on the company with a 45-cent target for the Zip share price. That will now be reassessed.

Zip share price snapshot

Despite today’s welcome boost, the Zip share price remains down a painful 88% in 2022.

That compares to a year-to-date loss of 14% posted by the All Ordinaries Index (ASX: XAO).

The post Outlook for Zip share price ‘uncertain’ following scrapped merger: UBS appeared first on The Motley Fool Australia.

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More reading

• Why Allkem, Kogan, Metcash, and Sezzle shares are sinking
• Why Eagers Automotive, Viva Energy, Woolworths, and Zip shares are rising
• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack
• Zip share price jumps 6% after merger deal with Sezzle is cancelled
• Sezzle share price plunges 35% as Zip merger scrapped

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 ZIPCOLTD FPO. 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 S&P/ASX 200 Index (ASX: XJO) is fighting hard to stay in positive territory. In afternoon trade, the benchmark index is up a modest 0.15% to 6,612.9 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Allkem Ltd (ASX: AKE)

The Allkem share price is down over 5% to $9.46. This is despite there being no news out of the lithium miner. However, it is worth noting that Allkem isn’t the only lithium share that is falling on Tuesday. The lithium industry is a sea of red this afternoon as investors reduce exposure to higher risk shares.

Kogan.com Ltd (ASX: KGN)

The Kogan share price is down 10% to $2.70. Investors have been selling Australian ecommerce shares on Tuesday following a poor night for their international peers. Investors appear to believe that online retailers may struggling in the current environment. The Kogan share price is now down by approximately 70% since the start of the year.

Metcash Limited (ASX: MTS)

The Metcash share price is down 2% to $4.23. This decline has been driven by the wholesale distributor’s shares trading ex-dividend this morning for its latest dividend. Eligible shareholders can now look forward to receiving Metcash’s fully franked final dividend of 11 cents per share next month on 10 August.

Sezzle Inc (ASX: SZL)

The Sezzle share price has crashed 37% lower to 26 cents. Investors have been selling the buy now pay later (BNPL) provider’s shares after its merger with Zip Co Ltd (ASX: ZIP) was scrapped. One small positive for Sezzle is that it will receive a termination fee of US$11 million. However, with its market capitalisation now just ~$50 million, investors appear to believe it could soon be lights out for the company.

The post Why Allkem, Kogan, Metcash, and Sezzle shares are sinking appeared first on The Motley Fool Australia.

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• Does the FY23 outlook make ASX retail shares look like bargains?
• Why are these 2 ASX ecommerce shares hitting two-year lows?
• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack
• Sezzle share price plunges 35% as Zip merger scrapped
• Why is the Metcash share price in reverse today?

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com ltd. The Motley Fool Australia has positions in and has recommended Kogan.com 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 Eagers Automotive Ltd (ASX: APE) share price is climbing today amid a positive trading update from the company.

At the time of writing, the automotive retailer’s shares are swapping hands at $10.89, up 3.13%.

Eagers Automotive expects to exceed profit guidance

Investors are driving up the Eagers Automotive share price after the company is forecasting a bumper result for H1 FY22.

According to the company’s announcement, Eagers Automotive is expecting to report a statutory net profit before tax of $246 million. This represents an improvement on the previous profit guidance given in May of between $225 million and $240 million.

Furthermore, underlying operating profit before tax is anticipated to be roughly $195 million, up from the $183 million to $189 million indicated in May.

Both guidance updates are for the six-month period ending 30 June 2022 (H1 FY22).

Management stated the improved outlook is from a number of factors that are helping support the business despite supply issues. This includes strong demand for its new car order bank and the benefits of its ongoing productivity and cost-out programs.

Eagers Automotive said that it recently completed the sale of the Bill Buckle Auto Group and associated properties to the Australian Motor Group.

The cash proceeds from the divestment led to the company realising $88 million and a profit before tax of around $48 million.

Eagers Automotive has liquidity of $843 million, including $326 million in cash and corporate debt of $13 million.

Given the superb health of the balance sheet, the company intends to carry out its share buyback program.

Investors may also want to keep an eye out on 25 August when the company is scheduled to release its results.

Eagers Automotive share price snapshot

Over the past 12 months, the Eagers Automotive share price has lost more than 28%, with year-to-date down around 19%.

The company’s shares touched a 52-week low of $8.65 last month following extreme volatility on the ASX.

Regarded as Australia’s largest car dealership group, Eagers Automotive commands a market capitalisation of about $2.78 billion.

The post Eagers Automotive share price lifts on ‘improved outlook’ appeared first on The Motley Fool Australia.

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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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The ASX retail share sector has seen much volatility in recent times. With how the outlook is shaping for FY23, can investors be confident about retailers at the current prices?

Let’s look at some of the carnage seen since the beginning of 2022.

The Wesfarmers Ltd (ASX: WES) share price has dropped around 25%.

The JB Hi-Fi Limited (ASX: JBH) share price is down 19%.

The Temple & Webster Group Ltd (ASX: TPW) share price is down 71%.

The Adairs Ltd (ASX: ADH) share price is down almost 50%.

The Nick Scali Limited (ASX: NCK) share price is down 44%.

The Harvey Norman Holdings Limited (ASX: HVN) share price is down 23%.

The Kogan.com Ltd (ASX: KGN) share price is down 68%.

There’s a lot of pain out there.

What’s the latest?

In terms of the latest updates, each business is seeing different trading conditions. Some of them are still seeing growth.

In the FY22 third quarter, Kogan’s total gross sales went down 3.8% to $262.1 million.

In the three months to March 2022, JB Hi-Fi said that JB Hi-Fi Australia sales grew by 11.9% while The Good Guys’ sales rose by 5.5%.

Meantime, Temple & Webster said that revenue rose by 23% for the period of 1 January 2022 to 30 April 2022 and was up 116% compared to 2020.

So, some businesses were still reporting growth earlier in 2022. However, the concern is that things may be looking worse with changing economic conditions.

Why the negativity on ASX retail shares?

There are two things that retailers are facing, which could hit their customers.

One difficulty is inflation. Households only have so much money to spend in their budgets. The essentials are getting much more expensive – mortgage interest, rent, food, petrol, energy, and so on.

If households have less discretionary money to spend, then this could impact how much money is spent, collectively, at these retailers.

Brokers Ord Minnett and UBS both have recently noted the worsening outlook for retailers. Both have cut profit projections for retailers like JB Hi-Fi because of the higher costs that households are facing. This, in turn, may see Aussies may tighten their spending.

Broker ratings

However, every business’s valuation and prospects are different. So, let’s look at some of the ratings and price targets. A price target is essentially a guess of where brokers think a share price could be in 12 months.

With share prices down so much in 2022, could these lower prices be attractive discounts?

UBS is ‘neutral’ on JB Hi-Fi, with a price target of $38.

Temple & Webster also gets a ‘neutral’ rating from UBS, but the price target of $4.25 offers plenty of upside from its current share price of $3.07.

However, UBS still rates Adairs as a buy, but has reduced its price target to $3.70. This still implies a possible rise of more than 70%, suggesting it’s cheap because of the low price/earnings (P/E) ratio.

One of the latest ratings on Wesfarmers comes from Macquarie. It has an ‘underperform’ rating, with a price target of just $43.30. The current Wesfarmers share price is $44.84.

The post Does the FY23 outlook make ASX retail shares look like bargains? appeared first on The Motley Fool Australia.

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More reading

• Why are these 2 ASX ecommerce shares hitting two-year lows?
• What were some of the key lessons for ASX investors in FY22?
• Why did the JB Hi-Fi share price fall more than 20% in FY22?
• These are the 10 most shorted ASX shares
• What caused the Adairs share price to halve in FY22?

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 ADAIRS FPO, Harvey Norman Holdings Ltd., Kogan.com ltd, and Temple & Webster Group Ltd. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, Harvey Norman Holdings Ltd., Kogan.com ltd, and Wesfarmers Limited. The Motley Fool Australia has recommended 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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