The APA Group (ASX: APA) share price is surging higher on Monday, hitting a new 52-week high in the process.

In intraday trade the company’s stock rose to trade at $10.62 ­– the highest it’s been since November 2020.

At the time of writing, the APA share price is $10.54, 1.74% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) has gained 0.45% on Monday. Meanwhile, the All Ordinaries Index (ASX: XAO) is up 0.37%.

The energy infrastructure company’s gains come after an update on a hydrogen feasibility study it’s involved in.

Let’s take a closer look at what’s going on with the APA share price today.

Is this helping to boost APA’s stock today?

The APA share price is taking off today amid positive results from a feasibility study conducted in Australia’s Mid-West region.

The study is investigating the potential to produce clean hydrogen and ammonia. It’s also developing a multi-staged pathway to the commodity’s production.

It is made up of 4 feasibility studies, of which 2 are now completed, yielding positive results. The remaining 2 studies are expected to be finished in the coming weeks.

Some of the feasibility studies are being funded by a consortium made up of Pilot Energy Ltd (ASX: PGY), APA, and Warrego Energy Ltd (ASX: WGO).

So far, they’ve confirmed the opportunity to create a large-scale clean hydrogen production project for domestic and international markets.

Such a project would use carbon capture and storage and renewable energy generation.

Additionally, the S&P/ASX 200 Utilities Index (ASX: XUA)’s performance might be helping to buoy the APA share price on Monday.

The sector is recording a 0.74% gain at the time of writing. Right now, APA is its best performer.

APA share price snapshot

The APA share price has been outperforming the ASX 200 through 2022 so far.

The company’s shares have gained 3% since the start of this year, while the ASX 200 has fallen around 2%.

However, over the last 12 months, the company’s stock is up just 4% compared to the ASX 200’s 9% gain.

The post Why did the APA (ASX:APA) share price just ink a new 52-week high? appeared first on The Motley Fool Australia.

More reading

• The APA (ASX:APA) share price is up $1 in 7 years. Have the dividends been worth it?
• Are analyst upgrades on the way for APA (ASX:APA) shares?
• Here’s why the APA (ASX:APA) share price could be a top dividend share

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

from The Motley Fool Australia https://ift.tt/odYNlJL

The Gold Road Resources Ltd (ASX: GOR) share price is lower today after the company released its financial results for the full year ended 31 December 2021.

At the time of writing, the Gold Road Resources share price is trading at $1.64, a 2.95% drop from the open this morning.

Gold Road share price jumps on earnings growth

Key takeouts from the company’s earnings results on Friday include:

• Revenue from gold sales of $274.8 million, down from 2020 result of $294.7 million
• Average realised gold price of $2,210 per ounce on this revenue, down from $2,330 last year
• Gold sales of 124,335 ounces, down from 126,434 ounces year on year
• EBITDA for the 12-month period totalled $120.2 million, down from $170.6 million in 2020
• EBITDA margin of 44%, down 14 percentage points from 2020 margin of 58%
• Consolidated net profit after tax (NPAT) for the 2021 financial year of $36.8 million, down from $80.8 million in 2020
• 0.5 cents per share dividend fully-franked declared
• Basic earnings per share (EPS) of 4.18 cents – 9.19 cents last year.

What else happened in 2021 for Gold Road?

Earnings were a mixed result for Gold Road as sales came in stronger but didn’t pull through further down the income statement.

Much of this was seen at the operating level as operating cash flow for the 12 months was $89.2 million, down from $142.7 million in 2020.

As a result, the company’s margin on EBITDA of 44% was down 14 percentage points from the 2020 margin of 58%.

Not surprisingly, NPAT thinned by 54% year on year to just $37 million as earnings were compressed throughout the year.

Consequently, EPS was less than half of 2020’s result and group free cash flow for 2021 was $22.1 million, a substantial decrease from $105.5 million last year.

Management commentary

Speaking on the group’s full-year results, Gold Road Managing Director and CEO Duncan Gibbs said:

The year 2021 saw a significant increase in attributable reserves and resources, and positive progress from our exploration efforts at Yamarna. Net profit after tax was $36.8 million for 2021. The Company continued to return income to shareholders in the form of six-monthly dividend payments, and the Board has determined to pay a dividend for the six-months to 31 December 2021 of 0.5 cents.

What’s next for Gold Road?

The company says it has a “strong production outlook” in the coming periods. Its Gruyere asset remains on target to “grow annual production to a sustainable 350,000 ounces per annum by 2023”, the company says.

Meanwhile, it reports its attributable Ore Reserves “grew to 2.23 million ounces, whilst attributable Mineral Resources grew to 4.71 million ounces during 2021”.

Gold Road share price snapshot

In the last 12 months, the Gold Road Resources share price has spiked 36% and is up 6% year to date.

The post Profits slide 54% in FY21 sending Gold Road (ASX:GOR) share price tumbling on Monday appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to sell next week
• These were the worst performers on the ASX 200 last week
• Why these 2 ASX gold shares are charging higher today
• Top broker says this ASX share will surge another 17% amid soaring gold prices
• 3 ASX gold shares rocking new 52-week highs today

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

from The Motley Fool Australia https://ift.tt/SLuVqij

The Sayona Mining Ltd (ASX: SYA) share price is sitting at 10-year highs.

Shares in the ASX lithium explorer and producer closed yesterday at 23 cents. At the time of writing Sayona shares are trading at 24 cents, up 2.2%.

Indicating the amount of ASX investor interest in the company, CommSec data is that more than 81.6 million shares have been traded by lunchtime today.

A total of 2,152 trades have been executed, with a value of more than $19.5 million.

What’s driving ASX investor interest in the lithium share?

With no fresh news out of the company, there looks to be two factors helping push up the Sayona Mining share price today.

First, global demand for lithium to power the world’s ever-growing fleet of electric vehicles and home battery storage systems is ushering in a new era of rising lithium prices.

That strong lithium demand is an extra boost for Sayona Mining shares. It comes after the explorer earlier this month doubled its mineral resource from management’s previous estimates.

As The Motley Fool reported on the day, “Upgraded resource estimates now peg Sayona’s North American Lithium (NAL) and Authier projects at a combined measured, indicated, and inferred mineral resource of 119.1 million tonnes at 1.05% lithium oxide.”

Also likely offering a tailwind for the Sayona Mining share price is the miner’s recent inclusion in the All Ordinaries Index (ASX: XAO) and the S&P/ASX 300 Index (ASX: XKO).

That means that any funds tracking either of these indexes will now likely include Sayona shares. It also means that fund managers restricted to certain indexes, generally for reasons of minimal-sized market caps, can now trade in Sayona shares.

Sayona Mining share price snapshot

Sayona Mining shares are now up 68% in 2022 and up a whopping 488% over the past 12 months.

For some context, the All Ords has gained 10% over the last 12 months.

The post Why is the Sayona Mining (ASX:SYA) share price rocking a new 10-year high today? appeared first on The Motley Fool Australia.

More reading

• Why is the Sayona (ASX:SYA) share price getting so much love on Friday?
• 5 ASX mining shares smashing 52-week highs today
• Why Brickworks, JB Hi-Fi, Mesoblast, and Sayona shares are charging higher
• Why is the Sayona (ASX:SYA) share price rocketing 19% higher?
• Surging again: Why has the Sayona (ASX:SYA) share price rallied 46% in a month?

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.

from The Motley Fool Australia https://ift.tt/J9EoskM

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a solid gain. At the time of writing, the benchmark index is up 0.45% to 7,436.8 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are charging higher:

APM Human Services International Ltd (ASX: APM)

The APM Human Services share price is up 3.5% to $2.94. Investors have been buying this human services provider’s shares after it announced new contract wins. According to the release, APM has been awarded 44 Workforce Australia contracts across 27 employment regions in Australia.

Firefinch Ltd (ASX: FFX)

The Firefinch share price is up 2.5% to 96.8 cents. This morning the gold and lithium explorer announced that the final conditions have been met regarding Jiangxi Ganfeng Lithium Co’s investment into its Goulamina Lithium Project. The 50:50 joint venture will benefit from a total debt and equity funding package of at least US$170 million.

Rio Tinto Limited (ASX: RIO)

The Rio Tinto share price is up 2% to $119.23. This appears to have been driven by a broker note out of UBS this morning. According to the note, the broker has taken its sell rating off the mining giant’s shares and upgraded them to neutral. UBS made the move after increasing its iron ore price forecasts.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

The Soul Patts share price is up 3.5% to $28.59. Investors have been buying this investment company’s shares after they were the subject of a positive broker note out of Morgans. According to the note, the broker has upgraded Soul Patts’ shares to an add rating with a $30.60 price target. It made the move largely on valuation grounds following recent weakness in its share price.

The post Why APM, Firefinch, Rio Tinto, and Soul Patts shares are charging higher today appeared first on The Motley Fool Australia.

More reading

• What is the outlook for ASX 200 mining shares in April?
• Up 350% in a year, here’s why the Firefinch (ASX:FFX) share price is flying higher on Monday
• Why is the Rio Tinto (ASX:RIO) share price up today?
• Why Allkem, Firefinch, JB Hi-Fi, and Piedmont Lithium are charging higher
• BHP share price higher on broker upgrade

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 Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/ym0jesV

The Lynas Rare Earths Ltd (ASX: LYC) share price is up more than 5% today. It’s currently one of the biggest risers in the S&P/ASX 200 Index (ASX: XJO).

Lynas has also been one of the stronger performers over the past year. Over the last 12 months, the Lynas share price has risen by around 85%.

The materials sector is the strongest-performing sector on the ASX right now. Looking at some of the biggest names, the BHP Group Ltd (ASX: BHP) share price is up 2.44%, the Rio Tinto Limited (ASX: RIO) share price is up 1.94%, and the Fortescue Metals Group Limited (ASX: FMG) share price is up 1.92%.

What’s happening with the Lynas share price?

While there has been no official news from the rare earth miner today, the company’s share price has risen by around 20% since its FY22 half-year result.

The first six months of the current financial year showed a significant year-on-year increase in revenue and profitability.

Revenue rose by 55% to $314.8 million. The cost of sales decreased by 7% to $140.3 million. Net profit after tax (NPAT) surged 286% to $156.9 million.

Management said there is continued “buoyancy” of the market and strong customer demand for a sustainable supply of rare earths. According to Lynas, its customers are optimistic about demand growth, and market conditions are robust. The NdPr (neodymium and praseodymium) market price exceeded US$100 per kilo in November 2021, for the first time since 2011.

The company is investing in several areas in line with its Lynas 2025 strategy. For example, it’s working on a rare earth processing facility in Kalgoorlie and it’s also investing in its Mt Weld resource in Western Australia.

The post Why is the Lynas (ASX:LYC) share price having such a stellar start to the week? appeared first on The Motley Fool Australia.

More reading

• Despite a lacklustre Wednesday, the Lynas (ASX:LYC) share price remains up 20% in a month. Here’s why
• Why are ASX 200 mining shares having such a dire day?
• What’s the outlook for the Lynas (ASX:LYC) share price?
• Up 10% in one week, down 10% in the next. What’s going on with the Lynas (ASX:LYC) share price?
• These were the best performing ASX 200 shares last week

Motley Fool contributor Tristan Harrison owns Fortescue Metals 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.

from The Motley Fool Australia https://ift.tt/7zNf60W

Large-cap ASX mining shares are outperforming again today, with the resources sector a key reason why the S&P/ASX 200 Index (ASX: XJO) has also outperformed over the past several weeks.

But some may be wondering if ASX 200 mining shares can keep delivering the goods next month after their strong run.

Some experts believe they can. In fact, they claim we may be only at the start of a significant earnings upgrade cycle, according to the Australian Financial Review.

Bright outlook for ASX 200 mining shares

Analysts have been slow to lift their commodity price assumptions even as metals and energy prices have soared.

The war in Ukraine and ongoing bottlenecks caused by the COVID-19 pandemic appear to be forcing prices higher.

The gap between consensus forecasts and spot prices have widened further this quarter. This gap is likely to remain large given the prices commodities are fetching in the futures market.

Playing catch-up to rallying prices

The AFR noted that this could trigger large upgrades for ASX 200 mining shares and energy shares.

Ben Cleary, portfolio manager of the Tribeca Natural Resources Fund, told the publication:

The quarterly earnings and forecast revision cycle usually comes out around this time and analysts are only just playing catch up now.

They probably started the year too bearish on commodity prices anyway and the prices are going to have to be upgraded.

And just in case you were wondering, this situation where analysts are rushing to play catch up is not uncommon. If anything, analysts have a history of being slow to lift forecasts when volatile commodities rally.

Morgan Stanley is one that is moving to close the gap. It upped its zinc forecast by a whopping 48% to US$1.72 a pound, reported the AFR.

Commodities with large upgrades

It also increased its nickel estimates by 19% to US$12.48 a pound and iron ore by 9% to US$155 a tonne.

For iron ore, this brings the broker a lot closer to spot price than many of its peers, who have pencilled in a price of less than US$100 a tonne for 2022.

The upgrades for energy-related commodities are even larger for Morgan Stanley. Its forecast for lithium carbonate is now 225% higher at US$46,000 a tonne, while thermal coal is upgraded by 96% to US$255 a tonne.

Good news for miners

As other analysts follow Morgan Stanley’s move, we can potentially see a big valuation lift for several ASX 200 mining shares.

That’s good news for the share prices of ASX iron ore miners including BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG), as well as the major lithium players.

The post What is the outlook for ASX 200 mining shares in April? appeared first on The Motley Fool Australia.

More reading

• Why is the Rio Tinto (ASX:RIO) share price up today?
• The BHP dividend is being paid today. Here’s what you need to know
• How big will the Fortescue (ASX:FMG) dividend be in 2022?
• Here are 2 ASX 50 dividend shares analysts rate as buys
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Brendon Lau owns BHP Billiton Limited, Fortescue Metals Group Limited, and Rio Tinto Ltd. 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.

from The Motley Fool Australia https://ift.tt/vGdjp5C

The Flight Centre Travel Group Ltd (ASX: FLT) share price is slipping today amid a company leadership restructure.

The travel company’s shares are currently swapping hands at $19.20 apiece, a 1.03% fall. The Webjet Ltd (ASX: WEB) share price is also down 0.53% at the time of writing while Qantas Airways Ltd (ASX: QAN) is trading flat.

Let’s take a look at what is happening at Flight Centre.

Leadership changes

Flight Centre has made changes to the company’s global leadership structure. The travel company’s leisure and supply CEO Melanie Waters-Ryan will now be responsible for supply only. Flight Centre said this is due to the “post-pandemic travel rebound” gaining momentum.

Meanwhile, James Kavanagh will take on the role of global leisure CEO. Chris Galanty will stay on as the global corporate CEO.

Commenting on the changes, CEO and managing director Graham Turner said:

This is an important step in our business’s evolution and means we will now have dedicated CEOs responsible for each of our three business divisions – corporate travel, leisure travel and supply.

Having three senior executives focussed solely on these key areas will help ensure we successfully execute our growth strategies and capitalise on opportunities across all areas of the business during the post-pandemic recovery, which is now well and truly underway.

Flight Centre remains within the top 10 shorted shares on the ASX this week, with a short interest of 17.6%. My Foolish colleague James reported short-sellers appear to think the market is too optimistic about the travel market recovery.

Flight Centre share price snapshot

The Flight Centre share price has jumped nearly 4% in the last year but has surged more than 9% year to date.

For perspective, the S&P/ASX 200 Index (ASX: XJO) index has returned 9% over the past year.

In the past month, Flight Centre shares have jumped nearly 6% while they have climbed almost 2% in the past week.

The company has a market capitalisation of about $3.8 billion based on the current share price.

The post Flight Centre share price edges lower despite ‘important step’ appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Why is the Flight Centre share price soaring today?
• Own Flight Centre (ASX:FLT) shares? Here’s the company’s outlook on corporate travel
• 2 founders have been selling Flight Centre (ASX:FLT) shares. Here’s what you need to know
• The Flight Centre share has tumbled 23% in less than 6 months. Is it now cheap?

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 Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/PVxit9S

For as long as Telstra Corporation Ltd (ASX: TLS) has been an ASX share, investors have expected big things out of it in the dividend department. After all, when Telstra was progressively privatised in the late 1990s, investors were promised a mature, monopolistic business with strong cash flows and an unassailable market position. 

But over the past decade, the game has changed for Telstra. The rollout of the National Broadband Network (NBN) punched a hole in Telstra’s dominance. As has the move away from landline phones to mobile. This has had direct consequences for dividend investors. Longer-term shareholders would acutely remember the infamous ‘night of the long knives’ dividend cuts that the telco delivered back in 2017. 

Until that point, Telstra investors had gotten used to receiving a generous and fully franked 31 cents per share in annual dividends from Telstra. But between 2017 and 2019, this fell to 16 cents per share, a period which also saw steep falls in the Telstra share price. And that is the level of dividends we have seen ever since.

So now that it’s dividend paying season on the ASX, what might Telstra hold in store for investors this time around? 

What dividend do Telstra shares have up their sleeve? 

Well, the ASX 200 telco reported its half-year earnings on 17 February. This included a slight fall in revenues, but a rise in underlying earnings. It also included a dividend announcement.

Telstra’s interim dividend for FY2022 will be… 8 cents per share, fully franked. That’s exactly the same interim dividend as Telstra has paid out every year since 2019.

If Telstra follows this up with another 8 cents per share for its final dividend later this year, it will come to another year of 16 cents per share dividends for the telco. One can’t fault the company for consistency. 

So investors will receive this interim dividend on 1 April (April Fool’s Day). Its ex-dividend date was 2 March, meaning that anyone who bought Telstra shares on or after that date will miss out this time.

At the current Telstra share price of $3.89, those dividends work out to give Telstra a yield of 4.11%, or 5.87% grossed-up with full franking. 

The post How much is the next Telstra dividend? appeared first on The Motley Fool Australia.

More reading

• Own Telstra shares? Here’s how the telco plans to use drones to create carbon credits
• Is the Telstra share price a buying opportunity after sliding 7% in 2022?
• 2 high-yield ASX dividend shares that brokers love
• 2 ASX 200 dividend shares analysts are urging income investors to buy
• These ASX 200 shares are topping the volume charts on Friday

Motley Fool contributor Sebastian Bowen owns Telstra Corporation 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 owns and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/qNUpou2

The ASX Ltd (ASX: ASX) share price is in the red today, down 0.57%.

This as the S&P/ASX 200 Index (ASX: XJO) notches up another day of gains, up 0.5% at the time of writing.

ASX shares closed on Friday at $80.49 and are currently trading for $80.03.

Here’s the update that looks to be dragging on the listed exchange group today.

What update was announced?

The ASX share price has come under some selling pressure after the company reported a delay in the rollout of its CHESS replacement project.

The ASX has been working on a blockchain-based clearing and settlement system to replace its CHESS platform.

If you’re not familiar, CHESS stands for Clearing House Electronic Subregister System. While that’s a mouthful, it’s just a computer system the ASX employs to settle transactions in shares and record shareholdings.

The ASX pointed to the timing of the next software release as causing the delay.

The company opened its first fully-integrated industry test environment (ITE1) in November. It said accreditation can begin once this software is available, which will now be in July instead of late April.

The ASX noted, “there is a strong likelihood of delay to the go-live date. We will engage with our software provider and stakeholders to assess the impact, and will update the market on this process.”

Tim Hogben, group executive of ASX’s securities and payments business, said:

We now have 25 software providers – including all vendors – working through functional testing and we have built and successfully system tested almost all mandatory features and over 90% of optional features of the new systems’ functionality with software providers in ITE1.

Looking ahead to the rollout of the replacement system, Hogben added:

CHESS replacement is an ongoing process with the industry, and industry engagement will be even more important as we move into the CHESS user testing environment and operational readiness activities, and as we agree an approach that ensures utmost confidence in a safe, secure and performant system at go-live.

ASX share price snapshot

The ASX share price has been under pressure in 2022, down 13% since the opening bell on 4 January.

By comparison, the ASX 200 is down 1.9% year to date.

The post Game of chess? Here’s what’s dragging the ASX Ltd (ASX:ASX) share price lower today appeared first on The Motley Fool Australia.

More reading

• The ASX share price has slumped 13% this year. Is it still overpriced?
• Top brokers name 3 ASX shares to sell today
• No sale? What you need to know about the most recent ASX outage
• Why ASX, Coronado, Graincorp, and Integral Diagnostics shares are dropping today
• Leading brokers name 3 ASX shares to sell today

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.

from The Motley Fool Australia https://ift.tt/S0PbImz

The Wesfarmers Ltd (ASX: WES) share price is starting the week in the red.

In afternoon trade, the conglomerate’s shares are down 0.7% to $50.00.

Why is the Wesfarmers share price falling?

The weakness in the Wesfarmers share price on Monday appears to have been driven by a broker note out of Goldman Sachs this morning.

According to the note, the broker has initiated coverage on the company with a sell rating and $38.60 price target.

Based on the current Wesfarmers share price, this implies potential downside of almost 23% for investors over the next 12 months.

Goldman notes that this compares unfavourably to an average “14.5% total return for our Buy-rated stocks.”

Why is Goldman bearish on Wesfarmers?

Goldman highlights that the Wesfarmers share price is trading at a premium to its average historical forward price-to-earnings ratio despite slowing growth and compressing returns. In light of this, it feels that its shares are overvalued at the current level.

In respect to its slowing growth, Goldman believes the market is too bullish on the company’s outlook. It commented:

“After a period of elevated growth, we expect Bunnings revenue growth to moderate to 3.4% CAGR over 2022-2024E vs 9.3% 2019-2022E during COVID. This is due to slowing housing transactions/completions as well as rising inflation, resulting in softening of volumes as spending shifts back to staples consumption.

Similarly, we also see Kmart Group growth softening from 4.0% during COVID (2019-2022E) to 2.2% post COVID (2022-2025E) especially with recent (and potential future) China lock-downs impacting supply chains where Kmart has material sourcing exposure.

While Target is showing early signs of turnaround after the conversion of underperforming stores to Kmart, we are cautious on ramp-up post conversion to Kmart, and we think the Catch acquisition is not yet performing in line with management expectations, most notably the slow growth in active customer acquisition and ARPU dilution in 1H22.”

In addition, the broker isn’t confident that recent acquisitions of API, Catch, and Kidman Resources will bolster its growth and believes the company will new growth options. If not, Goldman sees a “devaluation risk on slowing growth and compressing returns.”

It concludes: “We forecast that Catch will post only mid-single digit ROIC given (in our view) a lack of clear strategy and increasing competition, and that Kidman’s and API’s ROIC will both reach mid-teens but find it difficult to match the strength of Bunnings and Kmart in the short term. On the back of this slowing growth and with lower returns, we expect current elevated valuation multiples to compress.”

The post Wesfarmers (ASX:WES) share price falls after top broker calls Bunnings owner a sell appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 ASX 200 dividend shares to buy right now
• 3 high-yield ASX dividend shares trading near 52-week lows
• If you were smart enough to buy $10,000 of Wesfarmers (ASX:WES) shares a decade ago, here’s how much you’d have now
• Broker: The Coles (ASX:COL) dividend will keep rising
• Today is the last hurrah for API. What does this mean for Wesfarmers (ASX:WES) shares?

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

from The Motley Fool Australia https://ift.tt/mBLcioC