The Wesfarmers Ltd (ASX: WES) share price has dropped around 11% after reporting. It has just hit a 52-week low. Wesfarmers hasn’t been this low since late 2020. Is the smart money now jumping on the diversified business?

Considering the Wesfarmers market capitalisation is in the tens of billions of dollars, an 11% drop represents a large fall in dollar terms.

What did investors see in the FY22 half-year result?

Total revenue fell 0.1% to $17.76 billion, whilst net profit after tax (NPAT) dropped 12.7% to $1.2 billion.

Management said that the first half of FY22 was the most disruptive for its businesses since the start of COVID-19, with store closures in NSW, Victoria and New Zealand.

The biggest profit generator for Wesfarmers is Bunnings, which the company said generated a pleasing result. However, this represented a 1.2% earnings before tax (EBT) decline to $1.26 billion. This division can have a big impact on the Wesfarmers share price.

Kmart Group saw a 63.4% decline of EBT to $178 million and an 18% drop of EBT for Officeworks to $82 million.

Management blamed store closures for the Kmart Group difficulties – 25% of store trading days were lost – as well higher costs and lower stock availability. It also paid employees when there was no meaningful work during lockdowns and when they were required to isolate. But Catch transaction value increased 1% year on year and 97.5% over two years, but earnings were lower as it invested for long-term growth.

Officeworks saw declining sales in higher-margin office supplies and print and copy categories, as well as higher costs for elevated levels of online orders.

The Wesfarmers chemicals, energy and fertilisers (WesCEF) EBT jumped 36.3% to $218 million.

Wesfarmers decided to cut the dividend by 9.1% to $0.80 per share.

Management said that overall economic conditions in Australia remain favourable, but it’s managing increasing inflation and will leverage its scale to mitigate the impact of rising costs. The retail businesses will increase their focus on price leadership. It wants to keep providing customers with great value in this rising cost-of-living environment.

Retail conditions were subdued in January due to COVID, but trading momentum has improved in recent weeks. It’s still seeing extra costs and stock availability impacts because of supply chain disruptions. These impacts are expected to continue in the second half.

However, the company continues to invest in its data and digital ecosystem to provide customers with a more personalised digital experience.

The acquisition of Australian Pharmaceutical Industries Ltd (ASX: API) is expected near the end of the 2022 calendar year first quarter.

Is the Wesfarmers share price an opportunity?

Most brokers don’t think so.

UBS recognised that COVID impacts caused the difficulties in the first half, but ongoing impacts into the second half were discouraging for the broker. UBS is ‘neutral’ on the business. However, the UBS price target is $54 – 10% higher than right now.

Plenty of other analysts also rate Wesfarmers as neutral/a hold.

But, there is one broker that is positive on the Wesfarmers share price. Morgans rates it as a buy, with a price target of $58.50, implying a potential upside of around 20% over the next 12 months. This broker believes that Wesfarmers will see a good recovery once the current impacts subside.

On Morgans’ numbers, Wesfarmers is priced at 25x FY22’s estimated earnings and 22x FY23’s estimated earnings.

The post The Wesfarmers (ASX:WES) share price just hit a new 52-week low. Is the smart money buying? appeared first on The Motley Fool Australia.

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• Own Wesfarmers (ASX:WES) shares? Here’s all you need to know about the latest dividend
• Why Block, Domain, Telstra, and Wesfarmers shares are dropping
• Wesfarmers (ASX:WES) share price plunges 6% as Omicron takes its toll
• ASX 200 (ASX:XJO) midday update: Telstra, Wesfarmers, and Woodside report

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 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.

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The Uniti Group Ltd (ASX: UWL) share price is plummeting after the release of the company’s earnings for the first half of financial year 2022.

At the time of writing, the Uniti share price is $3.325, 10.38% lower than its previous close.

Uniti share price plunges despite record results  

• Revenue came to $109.5 million ­– 98% higher than that of the first half of financial year 2022
• Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA)­ of $70.5 million ­– a 140% increase
• Reoccurring revenue now makes up 90% of total revenue, coming to $99.2 million
• Operating cash flow reached $65.4 million ­– a 130% increase

The market is seemingly disappointed by the technology infrastructure constructor’s performance over the first half. That’s despite it posting a record result.

Additionally, in calendar year 2021, the company’s underlying EBITDA grew by 30% to $135 million.

According to Uniti, that demonstrates “exceptional wholly organic growth” from its acquisitions of Opticomm and Velocity in 2020.

The largest indicator of growth, said Uniti, is its ‘win rate’ of new fibre-to-the-premises (FTTP) developments and strategic partnerships with apartment and housing developers.

It secured 115,000 new FTTP contracts in 2021, taking its contracted order book to 292,000.

However, the company’s earnings growth from construction revenue was around $5 million lower than the second half of financial year 2021. The drop was due to delays caused by lockdowns in Eastern Australia.

That will see revenue from construction deferred to later periods.

Uniti’s wholesale, enterprise, and infrastructure (WEI) digital infrastructure and technology business accounted for around 95% of its EBITDA before overheads last half.

Meanwhile, the company’s telecommunications business unit grew its customer base and earnings. It contributed EBITDA of around $4 million.

What else happened in the half?

The company’s EBITDA margins expanded to 64% of revenue in the first half.

It believes that leaves it in a strong position to fight against macroeconomic inflationary pressures.

It also paid $36.5 million off its borrowings last half, leaving it with $172 million of net debt.

Uniti also announced an upcoming on-market share buyback program.

What did management say?

Uniti managing director and CEO Michael Simmons commented on the company’s first-half results, saying:

Our commitment to our shareholders is to build a strong, sustainable company. We are doing that by continuing to win in market, building best-in-class fibre access networks, and filling those networks with customers – ‘Win, Build, Fill’ remains our core strategy.

Well over 90% of our earnings are now generated from high margin, recurring, annuity revenues which are delivered predominantly on our owned super-fast FTTP networks, and this ratio will continue to expand as our contracted FTTP order book of nearly 300,000 premises deploys over the years ahead.

With integration and simplification largely completed in 2021, Uniti is now primed for continued organic growth in greenfields and adjacent property markets and inorganic growth through asset acquisitions aligned to our core infrastructure business.

What’s next?

Uniti believes it is on track to meet its financial year 2022 consensus underlying EBITDA of $145 million, notwithstanding COVID-19‘s impact on construction.  

Additionally, its property developer partners are committed to maintaining and expanding their pipelines.

Particularly, as residential buyer demand and population growth are expected to return to pre-pandemic levels in financial year 2023 and will likely be driven higher by international migration.

Uniti share price snapshot

Today’s fall puts the Uniti share price well and truly in the year-to-date red.

It is currently around 27% lower than it was at the start of the year. Though, it’s still 70% higher than it was this time last year.

The post Uniti (ASX:UWL) share price tumbles 10% despite revenue surging 98% appeared first on The Motley Fool Australia.

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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 Uniti 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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Shares in Virtus Health Ltd (ASX: VRT) are on the move today after the company released its interim report and financial results for the half-year ended 31 December 2021.

At the time of writing, the Virtus Health share price is trading down in the red at $7.29 apiece.

Investors were seeking more from the company today, as net profit came in lower and the company failed to provide any firm earnings guidance, must to the dismay of investors on Tuesday.

Virtus Health share price tanks amid mixed earnings growth

Key takeouts from the company’s earnings results today include:

• Group revenue of $171.3 million up 1.8% from the prior corresponding period (pcp)
• Reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $37.9 million, versus $59 million
• Reported net profit after tax (NPAT) attributable to equity holders is $15.1 million, down from $29.9 million
• Improved leverage (Net Debt/Adjusted EBITDA) ratio of 1.3x at 31 December 2021
• New clinic developments in Australia and Europe progressing towards completion
• Restructure of Virtus Fertility Diagnostics & Reproductive Genetics service completed
• 12 cents per share interim dividend for 1HFY22, fully franked

What else happened last period for Virtus Health?

The company notes that its fresh cycle activity in Australia increased by 1.3% over the prior year, compared to “an increase in Virtus Health’s available Australian market growth of 3.4%”.

Premium service volumes increased by 1.2% during the period with growth secured across all regions. This represents approximately 80-85% of Virtus Australia and builds on 28% growth in the pcp, the company says.

Overall, EBITDA in the Australian segment decreased by $12.5m compared to the pcp, underscored by a $2.8 million gain in employee costs. Gross margins were also impacted by around $2 million from COVID-19 related costs.

Virtus Health says its international operations “also demonstrated resilience”, yet recognised that EBITDA decreased by approximately $1.5m compared to pcp in this segment.

The company also managed to reduce its net debt from $108 million to $76.5 million as at 31 December 2021.

Even with the mixed results, Virtus Health’s board declared an interim dividend of 12 cents per share, fully franked. The interim dividend will be recorded on 24 March 2022 and paid on 14 April 2022.

“The interim dividend represents a payout ratio of approximately 65% with the target forward dividend payout ratio to be based on a full year dividend range of 45-55% to enhance balance sheet flexibility for investment in organic and inorganic growth initiatives”, the company said.

Management commentary

Speaking on the results, Virtus Health Group CEO, Kate Munnings said:

It was a resilient performance across all our services globally, in the face of ongoing COVID-19 operating restrictions and heightened infection control requirements. These results are a testament to all Virtus Health staff and specialists who have worked extremely hard throughout the period to progress Virtus’s ability to help more people become parents.

What’s next for Virtus Health?

Virtus Health did not provide any specific earnings or revenue guidance today. It says it is focused on “growth investments in FY22 and FY23” in areas of precision fertility, genetics capability and infrastructure.

It hopes to realise a collective incremental EBITDA of $5-10 million per annum from FY23 onwards “from a mix of revenue and efficiency”.

It suggested that operating expenditure will increase over the next 12 months “but with greater fixed cost margin leverage going forward”, without going into any detail to define what that means.

Nevertheless, the company is motivated to perform well into the coming periods.

“H2 started with a disrupted Jan-22 due to Omicron, primarily in Australia in Dec21 & Jan-22, with International
impacted to a lesser but longer extent over Q2 & Jan-22. We have confidence in the ongoing resilience of the sector, but deferrals and cancellations may not all be caught up within H222″, it remarked.

Virtus Health share price snapshot

The Virtus Health share price has gained more than 16% in the past 12 months and is up over 6% this year to date.

The post Why are investors selling the Virtus Health (ASX:VRT) share price post-earnings today? appeared first on The Motley Fool Australia.

More reading

• Why is the Whispir (ASX:WSP) share price sliding 5% on record revenue?
• ASX 200 (ASX:XJO) midday update: Coles and Cochlear impress, Nanosonics sinks
• Alumina (ASX:AWC) share price sinks despite dividend boost
• Down but not out: AMA Group (ASX:AMA) share price holds amid CEO’s optimism
• The Westpac (ASX:WBC) share price has gained less than $4 in 10 years. Have the dividends been worth it?

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 recommended Virtus Health 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 Whispir Ltd (ASX: WSP) share price is not in the good books of investors today.

At the time of writing, the cloud-based communications company’s shares are down 5.5% to $1.89. The negative sentiment towards the share price follows Whispir’s half-year results.

Whispir share price gets shouted down by rising costs

• Record revenue of $39.4 million, up 70.4% over prior corresponding period
• Record increase in annual recurring revenue (ARR), rising 26.6% to $60 million
• Operating expenses increased 75% to $29.9 million
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) losses widened to $4.6 million compared to $1.8 million
• Net customer revenue retention of 122.4%
• Cash position of $38.1 million at 31 December 2021 with no debt

What happened during the first half?

While Whispir achieved record revenue for a six-month period in the first half, investors are not letting it get away with the significant increase in expenses. Record revenue is fantastic for shareholders if it can be done without a disproportional increase in spending.

The communications workflow company witnessed a runaway train for its cost of services during the financial period. A 78.7% surge in cost of services chewed up $16.4 million of the company’s $39.4 million of revenue. Given this outpaced revenue growth, margins were compressed.

Likewise, the bottom line felt the pain of rising costs during the first half. This was due to a 75% increase in operational expenses, a line item that removed a further $30 million from Whispir’s income for the period. Investors appear to be focusing on this aspect today as the Whispir share price tumbles.

According to the release, a major portion of the increase comes from the addition of 169 employees. Another contribution to the higher costs was Whispir’s continued marketing push, resulting in marketing spend rising by 49%.

On the positive side, the Australian and New Zealand business segment achieved the bulk of revenue growth. The region benefitted from a dramatic uplift in high-value contracts across government departments. Additionally, ASX-listed Whispir highlighted particular uptake among utility companies.

Management commentary

Whispir chief executive officer Jeromy Wells said:

The global mega trends of digital transformation are providing strong tail winds, as our established customer base continue to expand use cases and enhance the way they communicate.

It is clear the market is recognising the benefits of the Whispir platform, evidenced by the acceleration in revenue growth in the first half of the current financial year, with ARR increasing 26.6% on the previous corresponding period, to $60.0 million.

Moreover, Wells touched on the benefits that customers can see from the company’s technology, stating:

New customers are leveraging the benefits of our technology, particularly the no-code/low-code capability, which means they can get started quickly with no up-front costs or the need for developers. Whispir puts the power of predictive, data-driven communications intelligence at the fingertips of all employees, driving engagement, informing stakeholders with actionable insights to deliver better business and community outcomes.

What’s next?

Despite revenue in Whispir’s Asia segment falling, the company is pushing forward with its global expansion. Through the expansion of its customer base and increasing platform usage, Whispir still believes cash flow breakeven is possible in the next two years.

November’s FY22 guidance has been maintained, targeting $64 million to $68 million in revenue. Whispir’s CEO highlighted the platform’s low revenue churn (1.8%) as a good indicator these numbers are achievable.

Whispir share price snapshot

Simply put, it hasn’t been Whispir’s week, month, or even year as we look at the company’s share price performance.

In the past 5 trading days, the ASX-listed Whispir share price has fallen more than 12%. Meanwhile, in the last month, the view gets bleaker, with shares down 18%. However, the one-year performance is the most disappointing, with the Whispir share price down by 56%.

The post Why is the Whispir (ASX:WSP) share price sliding 5% on record revenue? appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Whispir Ltd. The Motley Fool Australia has recommended Whispir 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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At lunch on Tuesday, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of European markets and tumbled lower. The benchmark index is currently down 0.9% to 7,164.9 points.

Here’s what is happening on the ASX 200 today:

Coles half year results impress

The Coles Group Ltd (ASX: COL) share price is charging higher today after the supermarket giant’s half year results impressed the market. Although Coles reported a 4.4% decline in EBIT to $975 million, this was ahead of the Visible Alpha analyst consensus estimate of $965 million. Analysts at MST Marquee thought the result was solid and are expecting it to lead to “small upgrades to earnings” estimates.

Nanosonics’ shares sold off following half year results

The Nanosonics Ltd (ASX: NAN) share price hit a new 52-week low this morning after the infection prevention company’s half year update disappointed. Although Nanosonics reported strong growth over the prior corresponding period, this was due to COVID impacts a year ago. When judged against the second half of FY 2021, Nanosonics reported a 45% reduction in profit. It also warned that its full year operating expenses would be up markedly year on year.

Cochlear share price jumps

The Cochlear Limited (ASX: COH) share price is jumping on Tuesday after the hearing solutions company delivered a 26% increase in half year underlying net profit to $158 million. As mentioned here last week, the market consensus estimate was for a net profit of $127.6 million. Despite this outperformance, management has only reaffirmed its full year guidance.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Tuesday has been the Monadelphous Group Limited (ASX: MND) share price with a gain of 9%. This follows the mining services company’s half year update. The worst performer has been the Nanosonics share price with an 11% decline. This follows the release of its disappointing results.

The post ASX 200 (ASX:XJO) midday update: Coles and Cochlear impress, Nanosonics sinks appeared first on The Motley Fool Australia.

More reading

• Cochlear (ASX:COH) share price 6% higher on juicy 35% dividend spike
• Nanosonics (ASX:NAN) share price sinks amid 45% half-on-half profit decline
• Coles (ASX:COL) share price on watch after COVID costs hit earnings
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 shares stage comeback amid Russia optimism

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 Cochlear Ltd. and Nanosonics Limited. The Motley Fool Australia owns and has recommended COLESGROUP DEF SET and Nanosonics Limited. The Motley Fool Australia has recommended Cochlear 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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Shares in Alumina Limited (ASX: AWC) are edging lower today after the company released its preliminary report and financial results for the full-year ended 31 December 2021.

At the time of writing, the Alumina share price is trading less than 1% in the red at $2.12 apiece.

Alumina share price flat despite 9% dividend spike

Key takeouts from the company’s earnings results today include:

• Alumina net profit after tax (NPAT) of US$187.6 million up 18% year on year
• Final dividend 2.8 US cents per share, a 9% increase
• Alumina prices constrained by higher freight costs but bounced following supply disruptions in second half
• EBITDA of US$1,146.2 million, an increase of US$250.3 million from the previous corresponding period (pcp)
• Margin for alumina refineries was US$85 per tonne, an increase of US$16 per tonne compared to the pcp
• Net cash inflow of US$488.1 million, an increase of US$9.6 million

What else happened for Alumina this period?

Alumina’s half was hallmarked by a statutory net profit after tax of US$187.6 million for the full-year 2021 compared to $146.6 million in 2020.

EBITDA was recognised at US$1.14 billion after climbing more than US$250 million during the year, which carried through to free cash flow (before dividends) of $146 million – down 12% on the pcp.

Average realised price of alumina was US$321/tonne and signified a 20% gain from the previous year, whereas the cash cost per tonne of alumina produced gained 19% to $236.

Net debt also closed higher on the pcp at US$56 million. However, this was partially offset by a 6% increase in net receipts from AWAC, also known as Alcoa World Alumina & Chemicals, which is owned 40% by Alumina and 60% by Alcoa Corporation.

Aside from that, the market has been kind to Alumina, seeing as aluminium prices continue to rally in 2022, building on the past two years of returns.

“Primary aluminium prices are at record highs due to stronger demand, supply disruptions and higher energy costs. Alumina prices have also increased and are currently above $420 per tonne”, it says.

“In particular, demand for aluminium for electric vehicles and the construction sector continues to grow. As
a participant in the aluminium supply chain, Alumina Limited is well placed to support this growth.”

Management commentary

Speaking on the announcement, Alumina’s Chief Executive Officer, Mike Ferraro said:

In 2021 AWAC demonstrated resilience in moderate markets of the first half, and took full advantage of opportunities once markets turned positive in the second half. As a result, Alumina Limited has been able to increase dividends to shareholders for 2021 by 9 percent. The realised alumina price for the year was higher but API was still constrained by higher freight costs attributed to global shipping disruptions. Distributions, whilst still above last year, were partially impacted by higher input costs and unplanned outages. AWAC’s average cash cost in 2021 was once again in the lowest quartile of the global cost curve and our alumina refining portfolio has the lowest average CO2 emissions intensity amongst major refiners.

What’s next for Alumina?

The company is forecasting 12.8 million tonnes of alumina production for the 2022 full year, a small change on this year’s result.

With respect to aluminium, the company estimates it will produce 165,000 tonnes of the metal, a 14% jump on the current result.

It also expects sustaining capital expenditures (capex) to circle around US$300 million for the year which is a 73% change whilst it anticipates growth capex to hit approximately $40 million.

Alumina share price snapshot

In the last 12 months, the Alumina share price has gained 25%. It has climbed another 14%.

The post Alumina (ASX:AWC) share price sinks despite dividend boost appeared first on The Motley Fool Australia.

More reading

• Down but not out: AMA Group (ASX:AMA) share price holds amid CEO’s optimism
• The Westpac (ASX:WBC) share price has gained less than $4 in 10 years. Have the dividends been worth it?
• Jumbo (ASX:JIN) share price down 10% as first half margins get crunched
• Here’s why the IAG (ASX:IAG) share price is outperforming today
• Own Zip (ASX:Z1P) shares? Rumours are circulating the company may be set for a capital raise

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.

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The AMA Group Ltd (ASX: AMA) share price has fought back from the red after the company released its earnings for the first half of financial year 2022.

At the time of writing, the AMA Group share price is 35 cents, the same as yesterday’s close. This morning, the company’s shares hit a high of 36.5 cents each before dipping into the red then settling at 35 cents apiece.

Here are the highlights of the automotive aftercare and accessories company’s 1H FY22 results:

AMA Group share price slips as profits tumble

• Revenue $418.1 million ­­– down from $435.1 million in the first half of financial year 2021
• Earnings before interest, tax, depreciation, amortisation, impairment, and fair value adjustments for continuing operations (EBITDAI) of around $2.8 million – down from $55.7 million
• Operating loss before tax of $52.4 million – down from a $7 million profit
• Total loss of $48 million – down from a $4.6 million profit
• No dividend declared

The first half of financial year 2022 has hit the automotive repair service provider hard.

In fact, it saw the lowest number of repairs completed in a six month period since the onset of the pandemic due to COVID-19-induced lockdowns, restrictions, and a resulting drop in vehicle use.

According to the company, fewer repairs dinted its revenue last half while its raw material costs increased.

Additionally, its employee benefits expenses grew in the first half of financial year 2022, mainly due to the end of JobKeeper assistance.

For context, the company received $28.4 million of JobKeeper in the first half of financial year 2021.

It also reported a $16.7 million non-cash impairment expense, mostly related to its hibernation and consolidation of sites.

However, AMA Group’s balance sheet is looking strong.

The company ended the half with a cash balance of $81.3 million, $8.2 million of undrawn debt facilities, and $307.6 million of net assets.

It has also paid off $175 million of debt since mid-2020, leaving it with debts of just $165 million.

The company says this leaves it in a good position to continue battling the ongoing COVID-19 impacts.

What else happened in the half?

The company’s vehicle collision segment brought in $357.5 million of revenue last half – down from $380.3 million in the first half of financial year 2021.

Its heavy motor segment’s revenue increased to $27.8 million – up from $25.4 million.

The company’s supply leg’s revenue grew around $2.5 million to approximately $42.7 million. It also began to evolve its strategy to create an integrated parts supply chain for the collision repair industry.

Meanwhile, its corporate and eliminations segment recorded a $9.9 million loss. Though, that’s better than the prior comparable period’s $10.7 million loss.

The company also underwent a capital raise during the half. AMA Group raised around $53 million through an institutional entitlement offer where its shares were offered at a price of 37.5 cents apiece.

A retail entitlement offer raised another $46 million at the same offer price.

Finally, the company placed $50 million of subordinated notes.

Most of the capital raised went towards paying off the company’s debt.

What did management say?

AMA Group CEO and managing director Carl Bizon commented on the company’s outlook, saying:

Repair volume challenges are situational, not structural. We are well placed to weather the ongoing effects of COVID and are actively tackling the industry’s parts and labour supply issues.

The continued downtrend in COVID-19 cases leaves me optimistic about return to historical repair volumes.

What’s next?

The company is expecting its vehicle collision repair segment to recover as vehicle use normalises post-COVID.

It’s ready to hit the ground running with its workforce mostly intact despite the competitive labour market.  

Additionally, the company’s heavy motor segment’s future performance looks good. Its forward workbook has continuously remained strong.

However, the company’s supply business has lost a complete vehicle wreck insurer agreement that brought revenue of $6 million. However, its recycling business is still going strong and its parallel import performance has improved.

The supply chain segment’s new procurement business is expected to bring around $10 million of annual benefits, identified and in place for 2022.

The company is also targeting several acquisitions in collision repair and associated industries.

Additionally, AMA Group took on 71 new apprentices in January 2022. Apprentices now represent 10% of its workforce while skilled visa holders represent another 8%.

Thus, the company is expecting the reopening of Australia’s borders to positively impact its workforce as it looks to hire from the international talent pool.

Looking to the company’s performance for early 2022, its repair volumes are slowly recovering after the summer holidays.

However, COVID-19 is still challenging its business, with customers delaying superficial repairs.

There has also been an increase in customers not turning up for appointments due to being in isolation.

Staff absenteeism also increased to between 15% and 20% in January.

AMA Group share price snapshot

2022 has been rough on the AMA Group share price.

It has fallen around 20% since the start of this year. It’s also currently 50% lower than it was this time last year.

The post Down but not out: AMA Group (ASX:AMA) share price holds amid CEO’s optimism appeared first on The Motley Fool Australia.

More reading

• The Westpac (ASX:WBC) share price has gained less than $4 in 10 years. Have the dividends been worth it?
• Jumbo (ASX:JIN) share price down 10% as first half margins get crunched
• Here’s why the IAG (ASX:IAG) share price is outperforming today
• Own Zip (ASX:Z1P) shares? Rumours are circulating the company may be set for a capital raise
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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 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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58.4%. That’s how much the Westpac Banking Corp (ASX: WBC) share price has appreciated since late March of 2020 and today. For investors who have held Westpac shares since early 2020, this ASX 200 bank has been a reasonably well-performing investment. Heck, Westpac shares are even up close to 9% in 2022 so far, handily outperforming the S&P/ASX 200 Index (ASX: XJO).

So it might come as a surprise for many investors to hear that Westpac has been an exceptionally unimpressive investment over the past 10 years. As you can see on the chart below:

Yes, roughly a decade ago, the Westpac share price was sitting at $20.52. Today, it’s at $23.56 at the time of writing, down 1.22% for the day so far. That’s a 10-year gain of 14.8%. Not exactly ‘set-the-world-on-fire’ stuff. In contrast, the ASX 200 is up approximately 66.1% over the same period. So Westpac has been a clear market laggard over the past decade.

But, as most investors would know, Westpac shares are often held purely for the dividends they generate. So let’s see if the dividends of the past decade have made an investment in Westpac worth it.

Can Westpac’s dividends make up for its poor share price performance?

So since February 2012, Westpac has paid out a total of $16.16 in dividends per share.

Let’s now assume that an investor bought $10,000 worth of Westpac shares back in February 2012. At the price named above, that would have resulted in the owner receiving 487 shares, with some change left over.

Today, those 487 shares would be worth roughly $11,473.70. But this shareholder would have also enjoyed an approximate $7,870 in dividend income over that time as well. That would have boosted the shareholder’s total return to around $19,343.70. That equates to a 10-year return of 93.44%, or an annual average of 6.82%.

So yes, Westpac’s dividends have had a meaningful impact on its shareholders’ total returns over the past 10 years. Throw in franking credits and the returns would be even higher. So the vast majority of Westpac’s total returns have come from dividends, perhaps as you would expect from an ASX 200 banking share.

That’s still not quite in the same league as the returns an ASX 200 index fund would have given an investor. For example, the iShares Core S&P/ASX 200 ETF (ASX: IOZ) has returned 142.5% in total, or an average of 9.26% per annum over the past decade (as of 31 January) when you account for dividend distributions.

But even so, it certainly puts Westpac’s laggardly share price performance over this period in a far rosier light.

At the current Westpac share price, this ASX 200 bank has a market capitalisation of $85 billion, with a trailing dividend yield of 5.1%.

The post The Westpac (ASX:WBC) share price has gained less than $4 in 10 years. Have the dividends been worth it? appeared first on The Motley Fool Australia.

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Fetching Disclosure…

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The Jumbo Interactive Ltd (ASX: JIN) share price is under pressure on Tuesday morning. This follows the release of the lottery ticket seller’s half year results.

At the time of writing, the Jumbo share price is down 10% to $16.36.

Jumbo share price falls

• Total transaction value (TTV) up 41% to $327.9 million
• Revenue up 29% to $52.8 million
• Underlying EBITDA up 18% to $28.3 million
• Underlying net profit after tax (NPAT) up 18% to $16.5 million
• Fully franked interim dividend up 22% to 22 cents per share

What happened during the first half?

For the six months ended 31 December, Jumbo reported a 41% increase in TTV to $327.9 million and a 29% lift in revenue to $52.8 million.

A key driver of this top line growth was an increase in jackpots greater than or equal to $15 million during the first half. There were 23 of these jackpots during the period, compared to 15 in the prior corresponding period.

This was supported by its Powered by Jumbo software business, which doubled its TTV on a reported basis, and its Managed Services operations, which are led by its Gatherwell business, which reported 56% TTV growth during the half.

One slight disappointment was that this strong top line growth didn’t fully flow through to the bottom line. Jumbo’s underlying EBITDA margin reduced by 5.3 percentage points to 53.7%. This reflects an increase in Tabcorp Holdings Limited (ASX: TAH) service fees, higher marketing expenses, and a rise in employee expenses to support its growth.

This led to underlying EBITDA growth of 18.2% to $28.3 million and underlying NPAT growth of 18.2% to $16.5 million. Judging by the Jumbo share price reaction, this appears to have fallen short of expectations.

Management commentary

Jumbo’s CEO and Founder, Mike Veverka, was pleased with the half.

He said “We are very pleased with the growth that we have achieved this half, across all our operating segments, and the positive momentum across the business. Lottery Retailing continues to perform exceptionally well, underpinned by the improved jackpot cycle and our focus on player engagement and retention. Our SaaS and Managed Services segments continue to demonstrate good organic growth, with all our Australian SaaS clients contributing on a full run-rate basis.”

“We are successfully executing on our strategy and planning is underway to ensure we efficiently and effectively integrate the Stride and StarVale acquisitions post completion. The global lottery industry is in the midst of a digital change and our Powered By Jumbo software platform will be key to supporting lotteries through this change. Our balance sheet remains strong and when combined with our new debt facility, provides additional headroom for further strategic growth.”

No guidance or commentary has been given for the second half, which could be weighing a touch on the Jumbo share price this morning.

The post Jumbo (ASX:JIN) share price down 10% as first half margins get crunched appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive 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 Insurance Australia Group Ltd (ASX: IAG) share price is in the green today, up 0.4% to $4.84 per share.

While that’s no huge leap, it comes as the S&P/ASX 200 Index (ASX: XJO) is under renewed pressure, currently down 0.9%.

So why is the IAG share price outperforming?

Business interruption court case appeal

This morning the ASX 200 insurance giant reported on the outcome of the second business interruption test case appeal.

The judgment from the Full Court of the Federal Court of Australia was handed down yesterday.

Investors are rewarding the IAG share price after the court “substantially agreed with the conclusions” reached by the Federal Court of Australia on 8 October 2021. That ruling came out in favour of insurers on most policy wording questions surrounding the coverage of business interruption, particularly relating to pandemic issues.

At the time, the Insurance Council of Australia stated that the insurance industry has “long maintained that pandemics are not intended to be covered under most business interruption policies.”

In yesterday’s judgement the Full Court did reverse two elements of the IAG v Meridian Travel case judgment. According to the release, it ruled that “JobKeeper payments are not to be taken into account in the assessment of loss, and interest payments are to be calculated on a different basis”.

IAG said it will review the judgment to “determine whether to seek leave to appeal any aspect of the judgment”. Parties in the case have 28 days to do so.

The insurance giant said there won’t be any adjustment to its $1.22 billion provision for potential business interruption claims. It added that “as the legal position becomes more certain and claims experience emerges, IAG will refine the prediction of ultimate claim costs and adjust its provision accordingly”.

IAG share price snapshot

The IAG share price has been a strong performer in 2022, up 8.7%. That compares to a year-to-date loss of 5.5% posted by the ASX 200.

The post Here’s why the IAG (ASX:IAG) share price is outperforming today appeared first on The Motley Fool Australia.

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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 Insurance Australia 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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