The PointsBet Holdings Ltd (ASX: PBH) share price is on the move on Wednesday.

In morning trade, the sports betting and iGaming provider’s shares are up 2.5% to $3.14.

Why is the PointsBet share price pushing higher?

Investors have been bidding the PointsBet share price higher today following an announcement relating to the company’s iGaming operations.

PointsBet’s iGaming business complements the company’s core sports betting operation by offering gamblers a range of slot, video poker, and table games via an online casino.

According to today’s announcement, PointsBet has successfully launched its online casino product in Pennsylvania following authorisation by the Pennsylvania Gaming Control Board (PGCB) for a soft launch in the state.

The company notes that the roll out of its online casino operations follows quickly on the heels of the launch of its mobile app and digital sports betting product in the state in February.

In accordance with PGCB requirements, PointsBet will operate in a soft launch environment for two days before launching its full online casino operations in the state.

This is the fifth state that PointsBet’s proprietary iGaming platform will be active in. This follows previous launches in Michigan, New Jersey, West Virginia, and Ontario (Canada).

Management commentary

PointsBet’s President of Product and Technology, Manjit Gombra Singh, was pleased with the news.

He commented: “”It is an exciting time for the online casino market, and we’re proud to be able to tap into this momentum and introduce our proprietary product in Pennsylvania.”

“We’re quickly scaling our online casino business and looking forward to expanding and refining our suite of products throughout the year to deliver more options for our users in PointsBet online casinos,” Mr Singh added.

Investors will no doubt be hoping the good news keeps rolling in to support the PointsBet share price, which is down 55% in 2022.

The post Here’s why the PointsBet share price is charging higher today appeared first on The Motley Fool Australia.

More reading

• PointsBet share price sinks despite positive news
• These were the worst performers on the ASX 200 last week
• Game on: Why the PointsBet (ASX:PBH) share price is zipping higher today
• These were the worst performing ASX 200 shares during the first quarter
• ‘Compelling valuation’: Broker tips PointsBet (ASX:PBH) share price to rise 80%

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. owns and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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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

Over the last 24 hours, as of 9:30 a.m. ET today, the price of Shiba Inu (CRYPTO: SHIB) had risen as much as 24% after the token was added to Robinhood’s online investing platform. The token also appears to be rising due to an upcoming mechanism being added to the network that would burn SHIB tokens and reduce the overall supply.

So what

Robinhood announced Tuesday morning that it had added four tokens that can now be traded on the platform, including SHIB. The popular online brokerage has been slow to add tokens, largely because CEO Vlad Tenev has wanted to make sure they don’t spook regulators by adding tokens that regulators believe are unregistered securities. The four new additions bring Robinhood up to 11 cryptocurrencies available on the platform. In comparison, SoFi’s online brokerage offers 30 different cryptocurrencies for sale.

The news is good for Shiba Inu because it makes the token accessible to potentially a whole new group of retail traders who have been asking Robinhood for more tokens. The platform has more than 17 million monthly active users.

In other news, Shiba Inu is expected to add a new burning portal to its network, which will burn tokens on every transaction, potentially removing trillions of tokens from circulation, which investors hope will drive up the price. Shiba Inu reportedly has roughly one quadrillion tokens in circulation.

Now what

Both of these events seem to be boosts for Shiba Inu. More exposure to millions of retail investors on an easy-to-use trading platform could certainly lead to more purchases, while future burning could take down supply, although I am not sure how much of a dent it would make.

I’m still not interested in investing in this cryptocurrency because it doesn’t seem to have any real unique advantage other than a popular following, but these are positive developments for SHIB.

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

The post Why Shiba Inu is soaring today appeared first on The Motley Fool Australia.

More reading

• Why Shiba Inu is plummeting today
• Why Bitcoin, Ethereum, Dogecoin, and Shiba Inu are down today
• Shiba Inu’s ride higher accelerates as the token surges 18%
• Is Shiba Inu ready for a bull run?

Bram Berkowitz 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 Bruce Jackson.

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

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The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price could be facing more pressure after a top broker downgraded its shares.

The ANZ Bank share price is already the worst performer among ASX big banks over the past year with a drop of over 5%.

While some may argue that the bank therefore represents better value, Morgan Stanley disagrees.

Why the ANZ Bank share price got downgraded

The broker cut its recommendation on ANZ Bank to equal-weight from overweight. This was largely due to the belief that bank revenue will keep falling.

“We expect ANZ’s revenue to decline again this year due to market share loss, falling margins and lower non-interest income,” said Morgan Stanley.

“Its 3-yr revenue CAGR is also likely to be below the major bank average, given weaker volume growth and more headwinds from increasing competition for deposits in Australia and New Zealand.”

Feeling the squeeze

If that wasn’t enough of a concern, its margins could be squeezed by rising costs too. The broker is unconvinced that ANZ Bank can deliver on its cost cutting promises in the near- and medium-term.

This is due to emerging inflation that is impacting on every sector and ANZ Bank’s ongoing need for investment.

Management is likely to stick to its FY23 exit rate target of $7 billion for normal operating expenses. But Morgan Stanley reckons that might be circa $400 million too little over a three-year period due to inflation.

“The need for higher ongoing investment could also see ‘change the bank’ costs stay >A$1bn for longer,” said the broker.

“We forecast total expenses of ~A$8.5bn in FY23E and ~A$8.4bn in FY24E.”

Other reasons why ANZ Bank could struggle

There are a few other niggling headwinds that could weigh on the ANZ Bank share price ahead of its results in May.

Morgan Stanley believes that the bank is not only losing share of the mortgage market, but also business banking.

ANZ Bank is also expected to benefit the least from the rising RBA cash rate compared to the other big banks.

What is the ANZ Bank share price worth?

The broker added that while ANZ mortgage run-off (loss of borrowers on its books) has stabilised, it will struggle to win business without sacrificing margin.

Those hoping that its IT initiative, ANZ Plus, will inject new life into the franchise will be disappointed too, according to Morgan Stanley.

The broker cut its 12-month price target on the ANZ Bank share price to $28.60 from $30.30 a share.

The post Own ANZ shares? Here’s why this broker is predicting ‘revenue headwinds’ appeared first on The Motley Fool Australia.

More reading

• Do CBA shares offer the highest big bank dividend yield?
• Is the ANZ share price a smart idea for dividend income?
• Why are ASX 200 bank shares having such a stellar start to the week?
• Leading brokers name 3 ASX shares to buy today
• Is the NAB share price entering a ‘sweet spot’?

Motley Fool contributor Brendon Lau owns Australia & New Zealand Banking Group Limited. 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 Bruce Jackson.

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While there are more than 2,000 companies listed on the ASX, smaller companies are considered to be riskier investments. This is due to having smaller resources than large cap companies, making them vulnerable to negative events and bearish sentiments.

In contrast, large cap companies are more established and have a much bigger balance sheet that can ride through market downturns. In effect, this provides investors with peace of mind when investing, delivering safe and reliable return over the long term.

Below, we take a look at which are the top 10 ASX mining companies by market capitalisation.

Who are the ASX’s biggest mining companies?

According to the ASX, the largest mining company in Australia, and the world for that matter, is none other than BHP Group Ltd (ASX: BHP).

The mining giant boasts a market capitalisation of $261.62 billion and is by far the biggest player on the ASX.

Next up, which may surprise you, is rags to riches business Fortescue Metals Group Ltd (ASX: FMG). The company was listed for just three cents per share (split adjusted) in 1989 and has surged to $21.17 as of yesterday’s close. That represents an astonishing increase of over 70,400%.

Fortescue commands a market capitalisation of around $65.24 billion.

Third on the list is Rio Tinto Ltd (ASX: RIO), valued at $43.62 billion.

As you can see, the top three spots are taken up by companies that are predominately involved with the mining and export of iron ore. This is undoubtedly Australia’s largest revenue source, accounting for $153 billion last financial year.

The following three places on the largest mining companies list are Newcrest Mining Ltd (ASX: NCM), South32 Ltd (ASX: S32), and Northern Star Resources Ltd (ASX: NST).

They preside a market capitalisation of $25.17 billion, $23.50 billion, and $12.43 billion, respectively.

Newcrest and Northern Star mine gold assets while South32 is focused on producing aluminium, coal, nickel, silver, and other metals.

The last four spots are covered by Mineral Resources Ltd (ASX: MIN), IGO Ltd (ASX: IGO), BlueScope Steel Ltd (ASX: BSL), and Pilbara Minerals Ltd (ASX: PLS).

The above companies have a market capitalisation of $11.20 billion, $10.60 billion, $10.07 billion, and $8.63 billion, respectively.

Foolish takeaway

In summary, selecting any of these ASX mining companies from 12 months ago would have increased your wealth.

Depending on which company you bought into, you would have achieved a gain of between 2% to 150% on your investment. Also bear in mind, that this does not include the juicy dividends the miners pay out to shareholders.

The post Here are the top 10 ASX mining companies by market cap appeared first on The Motley Fool Australia.

More reading

• If you’d bought $10,000 of Rio Tinto shares 5 years ago, here’s how much you’d have now
• 5 things to watch on the ASX 200 on Wednesday
• What is the biggest mining company on the ASX right now?
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• What’s dragging the Pilbara Minerals share price 5% lower today?

Motley Fool contributor Aaron Teboneras owns Northern Star Resources Limited. 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 Bruce Jackson.

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The Aurizon Holdings Ltd (ASX: AZJ) share price powered through last quarter, besting the market’s performance by 5%.

As of the final close of the March quarter, the Aurizon share price was $3.69, 5.73% higher than where it started the period.

For comparison, the S&P/ASX 200 Index (ASX: XJO) managed to end the quarter in the green – just. It gained 0.74% over the three months ended 31 March.

Additionally, Aurizon’s sector – the S&P/ASX 200 Industrials Index (ASX: XNJ) – slumped 3.84% over that same time frame.

So, what drove Aurizon’s stock to outperform through the first quarter of 2022? Let’s take a look.

What boosted the Aurizon share price last quarter?

After suffering through a rough 2021, the Aurizon share price bounced into the new year.

Interestingly, its strong performance in the March quarter came despite no price-sensitive news inspiring it to gain.

In fact, the only price-sensitive news to hit the market – Aurizon’s first-half earnings – saw its share price dip 0.55%.

Over the six months ended 31 December, Aurizon’s revenue increased by 1% on the prior comparable period. Meanwhile, its earnings before interest, tax, depreciation, and amortisation (EBITDA) fell 1%.

Aurizon also cut its dividend by 27% to maintain its credit rating ahead of its One Rail acquisition.

On top of that, the Aurizon share price might have been impacted by the company’s removal from the S&P/ASX 50 Index (ASX: XFL).

Its shares were dumped from the index on 21 March, replaced by those of Bluescope Steel Limited (ASX: BSL).

Finally, sentiment for Aurizon’s shares might have been boosted by demand for coal last quarter.

The company operates Australia’s largest coal rail network. It connects about 50 coal mines to three of Queensland’s major ports.  

As The Motley Fool Australia reported last quarter, sanctions placed on Russia following its invasion of Ukraine disrupted global supply of the black rock.

That could have pushed other nations to turn to Australian coal to fill the gap.  

The post The Aurizon share price had a stellar first quarter. Here’s why appeared first on The Motley Fool Australia.

More reading

• The Aurizon (ASX:AZJ) dividend is being paid today. Here’s what you need to know

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Rio Tinto Limited (ASX: RIO) share price has continued to deliver wealth to investors over the past five years.

Arguably, investing your money in the ASX’s safest and most reliable companies can reap some serious rewards over time.

Below, we wind the clock back and calculate how much you would have made if you’d bought $10,000 worth of Rio Tinto shares five years ago.

How much would your initial investment be worth now?

If you spent $10,000 on Rio Tinto shares exactly 5 years ago, you would have picked them up for $61.89 apiece. The purchase would deliver approximately 161 shares without reinvesting the dividends.

Looking at yesterday’s closing price, the Rio Tinto share price finished at $118.09. This means those 161 shares would be worth $19,012.49.

When looking at percentage terms, this implies an average yearly return of 13.71%. In comparison, the S&P/ASX 200 Index (ASX: XJO) has given back roughly 4.67% over the same timeframe.

As you can see from the above, investing in Rio Tinto shares would have almost doubled your initial investment.

In comparison, investing the same amount in an ASX 200 index-tracking fund would have netted you a total figure of $12,561.51 (albeit excluding any dividends).

And the Rio Tinto dividends?

Over the course of the last five years, Rio Tinto has made a total of 11 dividend payments from 2017 to 2022. Its latest dividend distribution was significantly increased on the back of favourable market conditions, notably the rise of iron ore prices.

Adding those 12 dividend payments gives us an amount of $41.06 per share. Calculating the number of shares owned against the total dividend payment gives us a figure of $6,610.66.

When putting both the initial investment gains and dividend distribution, an investor would have $25,623.15 worth of Rio Tinto shares.

Rio Tino share price snapshot

Over the past 12 months, the Rio Tinto share price has travelled 2% higher but is up almost 18% year to date.

The company’s shares hit a 52-week low of $87.28 in November before rebounding higher in the following months.

Rio Tinto presides a market capitalisation of roughly $43.84 billion and has more than 371.22 million shares on its registry.

The post If you’d bought $10,000 of Rio Tinto shares 5 years ago, here’s how much you’d have now appeared first on The Motley Fool Australia.

More reading

• ASX mining shares were the leaders last quarter. Here are the top performers
• The Rio Tinto share price rallied 19% in the March quarter. What’s next?
• 2 ASX 200 dividend shares analysts rate as buys
• What drove the Rio Tinto share price higher on Friday?
• 5 things to watch on the ASX 200 on Friday

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 Bruce Jackson.

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Commonwealth Bank of Australia (ASX: CBA) is one of the largest payers of dividends on the ASX. But does it offer the biggest dividend yield?

With a market capitalisation of $182 billion, CBA is one of the biggest businesses in Australia. But it isn’t the only big bank on the ASX.

There is also National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC).

How big is the CBA dividend going to be?

CBA paid an interim dividend of $1.75 per share on 30 March. The final dividend won’t be announced til August. So, at this stage, even the CBA Board probably doesn’t know what it will pay yet for the full year.

Commsec does have estimates for the bank dividends. But these estimates come from independent third-party providers. The Commsec estimate is an annual dividend of $3.85 per share in FY22 from CBA.

But, how much of a dividend are the other banks going to pay?

If a $3.85 annual dividend per share were paid in FY22, that would translate into a grossed-up dividend yield of 5.1%.

Using Commsec numbers again, let’s have a look at the estimated grossed-up dividend yields for FY22.

• NAB is expected to pay a grossed-up dividend yield of 6.2% in FY22

• Westpac is expected to pay a grossed-up dividend yield of 7.2% in FY22

• ANZ is expected to pay a grossed-up dividend yield of 7.5% in FY22

So, CBA is actually expected to pay the smallest dividend yield in FY22 of the big four banks.

But there can be more to an investment than just how much of a yield it pays.

Is the CBA share price a buy?

Analysts are noting, and adding to, the general expectation that interest rates are going to increase in Australia this year. This is expected to be a positive for bank interest margins. It will allow the net interest margin (NIM) to climb towards levels last seen a few years ago.

However, the broker Citi still rates CBA shares a sell with a price target of $90.75. The CBA share price closed yesterday’s session at $106.71. So, this implies a decline of about 15% over the next year.

For Citi, CBA is at the bottom of the preference list. ANZ, Westpac and NAB are better picks.

The broker Macquarie has a similar rating on CBA – ‘underperform’. The CBA share price target is $90, implying a possible decline of 16% over the next 12 months. Macquarie says that lending growth is slowing down, with the sector likely to continue to see ongoing strong competition.

While higher interest rates could help the net interest margin (NIM), higher costs on customer savings could negate some of that benefit.

Valuation

According to Citi, the CBA share price is valued at 20x FY22’s estimated earnings. Macquarie’s numbers put the bank at 21x FY22’s estimated earnings.

The post Do CBA shares offer the highest big bank dividend yield? appeared first on The Motley Fool Australia.

More reading

• What to expect from the Westpac half year result
• Leading brokers name 3 ASX shares to sell today
• Is the ANZ share price a smart idea for dividend income?
• Why are ASX 200 bank shares having such a stellar start to the week?
• Leading brokers name 3 ASX shares to buy today

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 recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Woolworths Group Ltd (ASX: WOW) investors will be happy to know the company pays out its latest dividend today.

The retail conglomerate is rewarding eligible shareholders with a fully-franked interim dividend of 39 cents per share.

At Tuesday’s market close, the Woolworths share price finished 0.26% lower to $38.12.

For context, the S&P/ASX 200 Index (ASX: XJO) also fell yesterday with a 0.42% loss to 7,454 points.

Let’s take a look at all the details regarding the company’s dividend.

Woolworths distributes interim dividend

Woolworths reported mixed numbers across key financial metrics for its half-year results on 23 February.

Management stated the financial performance for the first half of FY22 was materially impacted by the COVID-19 pandemic.

And while the company experienced strong sales growth for continuing operations, this was offset by $239 million of COVID costs. This was due to the Omicron variant outbreak at Woolworths’ stores and distribution centres from late last year to early 2022.

Notably, Woolworths shelves were left bare in stores across the country as a result of the staff shortages. This resulted in about 50% of delayed deliveries for major product lines.

With that in mind, the board decided to slash its upcoming interim dividend by 26.4% over the prior corresponding period.

When calculating against the current share price, Woolworths is trailing on a forecast fully-franked dividend yield of 2.83%.

Under the company’s capital management framework, there is typically a 70% to 75% dividend payout.

Woolworths share price snapshot

At today’s levels, Woolworths shares are trading at the same price since the beginning of 2022.

While the recent COVID-19 outbreak in Australia caused logistical supply issues, other macroenvironmental factors also weighed down investor sentiment. This relates to the Reserve Bank of Australia indicating potential rate hikes to curb rising inflation.

Woolworths shares reached a 52-week low of $33.45 in February, before treading upwards over the following months.

Woolworths has a price-to-earnings (P/E) ratio of 5.8 and commands a market capitalisation of roughly $46.2 billion.

The post Woolworths shareholders get their dividends today. Here’s the lowdown appeared first on The Motley Fool Australia.

More reading

• What’s impacting the Woolworths share price on Tuesday?
• Price check: Why did the Woolworths share price push 5% higher in March?
• ASX market beater? Here’s how Coles shares performed during March
• Are Woolworths shares positioned for ‘a long-term, post-COVID trend?’
• Are Woolworths shares worth buying for their defensive properties?

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 Bruce Jackson.

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Next month, investors will have their eyes on the Westpac Banking Corp (ASX: WBC) share price when the banking giant releases its highly anticipated half year results.

Ahead of the release, let’s take a look to see what the market is expecting from Australia’s oldest bank on 9 May.

What is the market expecting from Westpac’s half year results?

According to a note out of Bell Potter, its analysts are expecting a big improvement in cash earnings over the second half of FY 2021.

The broker has pencilled in cash earnings of $3.11 billion, up from $1.82 billion during the second half but down 12% over the prior corresponding period.

It said: “We expect cash earnings of $3.11bn in 1H22e. This compares with $1.82bn in 2H21 (the miss being revenue shortfalls – i.e. largely lower Consumer other banking income – and higher overall operating expenses including a slew of one-off expenses) and $3.54bn in 1H21. The negative trend should then reverse and the 1H22e number appears to be in line with the 1Q22 cash earnings of $1.58bn.”

Bell Potter expects this to allow the Westpac Board to declare a fully franked 59 cents per share interim dividend, which represents a 1 cent increase on last year’s interim dividend.

What about its margins?

One thing that has been weighing heavily on the Westpac share price this year has been margin concerns. In light of this, its net interest margin (NIM) will be an area of focus for investors.

Bell Potter expects further weakness in its margins and is forecasting a NIM of 1.86%.

The broker commented: “We expect NIM to be 1.86%, falling another 5bp since 2H21a. This was again mainly due to higher liquidity, pressure on mortgages – consumer and business lending – and growth in lower spread fixed rate mortgages. On the other hand, the bank continues to enjoy cheaper funding rates especially in deposits. NIE is expected to be $7.93bn, lower than the annualised figure of $8.36bn in 1Q22a, and WBC still expects FY22e NIM to decline further as a result.”

Costs will be a focus

Another area of focus will be Westpac’s costs. Especially given the bank’s bold plan to cut its operating costs down to $8 billion by FY 2024.

Bell Potter doesn’t believe the bank will be able to achieve its cost cutting targets and appears to believe this will start to be evident with this result. Though, it acknowledges that even a cut to $9 billion would be a big reduction.

“Operating expenses – We expect this to be $5.45bn in 1H22e (54% CIR and down from $5.98bn in 1H21a and a massive $7.30bn in 2H21a) and broadly in line with $2.70bn in 1Q22a. As suggested and excluding notable items, cost reduction was $191m in 1Q22 mainly from cost resets including lower FTEs and third party contractors (by more than 1,100, and was despite further investment in risk management activity).”

“We think there may be more cost savings in this space but the $8.00bn as suggested by the bank in FY24e is highly unachievable we think. Our forecast is for $9.00bn operating expenses instead that is still a large decrease from the current environment.”

Is the Westpac share price in the buy zone?

Bell Potter is sitting on the fence with the Westpac share price.

The broker has a neutral rating and $25.00 price target on the bank’s shares. This suggests modest upside of just 3.5% for investors.

The post What to expect from the Westpac half year result appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 bank shares having such a stellar start to the week?
• Is the NAB share price entering a ‘sweet spot’?
• How much are Westpac shares worth in April?
• Why these ASX bank shares could outperform over the next 6 weeks
• Here are the 5 best performing ASX 200 bank shares of the March quarter

Motley Fool contributor James Mickleboro owns 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 Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The EML Payments Ltd (ASX: EML) share price is under the spotlight today on reports that the business has been in takeover talks.

EML Payments is an ASX tech share that provides payment technology for various uses such as gift cards, virtual accounts, gaming payouts and buy now, pay later.

Potential EML takeover

According to reporting by Street Talk in the Australian Financial Review, the private equity group Bain Capital has been sniffing around EML.

The AFR reported that EML has “gone a few rounds” with takeover talks with the private equity player. This included a period of exclusivity, allowing Bain to do some due diligence on the payments business.

That exclusivity ended at the end of March 2022, with no deal agreed.

According to the AFR’s sources, Bain has “walked away” from the table “for now”. A key sticking point was the price needed to seal the deal.

There have already been many weeks of “high-level talks” between EML Payments and Bain Capital.

The AFR reported:

It remains to be seen whether Bain has a change of heart and returns with a higher offer. Sources said Bain loved the business, its footprint and had invested in similar companies offshore in the past, but couldn’t stack up the mooted price tag, which was well above $1 billion.

What is driving this interest in EML?

It has been a challenging period of time for EML shareholders. Since the start of 2022, the EML Payments share price has fallen by around 20%. In the last year, EML shares have dropped 54%.

The AFR said that a few investment banks have been trying to find a potential buyer for EML Payments amid its difficulties with the Central Bank of Ireland (CBI) and a general sell-off of tech names.

CBI decision not the worst case?

After looking at EML’s Irish subsidiary, the CBI decided on three things.

It would permit EML to sign new customers and launch new programs while staying within the material growth restrictions. EML’s subsidiary is confident it can meet these obligations.

Second, broad-based reductions in limit controls on programs will not be imposed. The CBI said it was satisfied to continue to engage with EML’s subsidiary, with a view to agreeing on appropriate limits.

Finally, it said the CBI intends to put a material growth limitation over the Irish subsidiary’s total payment volume.

EML has been removing higher volume lower-yielding programs to enable it to comply with the material growth restriction and is confident it can meet those obligations.

Is the EML share price attractive?

Macquarie recently called EML shares a buy with a price target of $3.95. That’s a possible upside of almost 50%. It suggested that the ASX payment share can benefit from rising interest rates, helping it earn interest income on the money it’s holding.

The post Takeover talks: EML share price in focus appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• These are the 10 most shorted ASX shares
• The EML share price jumped 25% in March 2022. What happened?
• These are the 10 most shorted ASX shares
• These were the best performing ASX 200 shares in March

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. owns and has recommended EML Payments. The Motley Fool Australia owns and has recommended EML Payments. 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 Bruce Jackson.

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