The Aurizon Holdings Ltd (ASX: AZJ) share price is wobbling after the company released its results for the first half of financial year 2022 this morning.

At the time of writing, the Aurizon share price is $3.68, 1.1% higher than its previous close.

However, it hit a low of $3.57 earlier this morning, representing a 1.9% fall.

Aurizon share price up despite decreased dividend

• Around $1.5 billion of revenue, a 1% improvement on that of the first half of financial year 2021
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $727 million – down 1% on the prior comparable period
• $257 million of net profits after tax (NPAT) – a 4% drop
• Earnings per share (EPS) came to 14 cents
• 10.5 cent, 95% franked interim dividend – a 27% decrease
• The company’s free cash flow increased 26% to $362 million

Aurizon announced it has dropped its interim dividend to 10.5 cents. This is to support its commitment to maintaining its credit rating as the company works towards a $2.35 billion acquisition of One Rail Australia.

The rail freight operator announced the acquisition in October. The market bid the Aurizon share price down 6% on the back of the news.

The lower dividend represents a 75% payout ratio of after-tax profits for continuing operations.

Also, over the half year just been, the company’s bulk business EBITDA increased 1% to $75 million while its coal business saw a 4% jump in EBITDA, reaching $12 million.

The network business EBITDA, however, slumped 7% to $28 million. Though, the dip was mainly due to $49 million of once-off historical Wiggins Island Rail Project fees having been recognised in the prior period.

Discounting that fee, the network business EBITDA increased 6%.

Additionally, discounting that fee, the group’s EBITDA for the first half of financial year 2022 would represent a 5% increase on that of the prior comparable period.

What else happened during the half?

The company’s bulk business saw the acquisition of the Newcastle Port Services and the start of the 10-year CBH grain contract.

However, those positive events were offset by the end of two contracts and start-up costs associated with the CBH contract.

Aurizon’s coal business tonnages were down 3% compared to the first half of last financial year. The company transported 99 million tonnes of the commodity over the six months ended 30 December 2021.

The drop was mainly due to lower demand brought on by flooding in New South Wales, mine-specific impacts, derailments, and protest activities.

Meanwhile, the Aurizon Network business transported 105 million tonnes of coal over the half. That’s a 1% increase on the prior comparable period.

Aurizon also implemented a new safety metric. It replaced its Rail Process Safety metric with the Potential Serious Injury and Fatality Frequency Rate.

The company said this will capture the number of incidents that had the potential to, or did, cause serious injury per million hours worked.

What did management say?

Aurizon managing director and CEO Andrew Harding commented on the company’s results for the first half:

The business has remained resilient and Aurizon’s earnings have remained stable despite challenges in markets that have seen reduced demand due to COVID-19 and customer-related issues.

As an essential service, we have been able to continue to operate the freight supply chains sustainably that are vital for our communities, farmers, manufacturers, and the resources sector.

Aurizon’s aim is to double the size of the bulk business by 2030 through organic growth and acquisitions, delivering a significant change in our portfolio mix and continuing to increase non-coal revenues.

What’s next?

For those interested in the Aurizon share price, here’s what the company expects for the remainder of financial year 2022.

Its EBITDA guidance for the financial year has stayed put at between $1.425 billion and $1.5 billion.

Its group capital expenditure guidance sits between $540 million and $580 million, including around $100 million supporting growth of its bulk business.

The company plans to haul the same amount of coal this financial year as it did last financial year. It expects customer mix and cost management to offset lower contracted rates.

That’s despite the company’s August prediction that its coal haulage volumes would increase by around 5% in financial year 2022.

It predicts its bulk business revenue and EBITDA will be higher on the back of recent contract wins and port acquisitions.

The company’s guidance excludes EBITDA and capital expenditure for its One Rail acquisition. It’s also subject to no material disruptions to the commodity supply chain because of weather or COVID-19.

Aurizon is also planning to complete the One Rail acquisition this calendar year, with a tentative target of April. The acquisition will be followed by the divestment of East Coast Rail. Harding commented:

The acquisition supports Aurizon’s ambition to increase bulk’s share of revenue (excluding network), with an increase of eight percentage points to 41% in the first full year of contribution to Aurizon.

Aurizon share price snapshot

The Aurizon share price is outperforming the market in 2022, recording a 5.44% gain year to date.

That compares to the 3% drop recorded by the S&P/ASX 200 Index (ASX: XJO).

However, the company’s stock isn’t performing so well in the long term. It has fallen 6.84% over the last 12 months.

The post A fair price? Aurizon (ASX:AZJ) share price gains despite 27% dividend dive 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 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 Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is in the green this morning, trading 1.94% higher.

Shares in Australia’s fifth-largest retail bank closed Friday afternoon at $9.26 and are $9.44 at the time of writing.

Today’s move is propelled by Bendigo Bank’s interim results for the half-year ending 31 December 2021. Here’s a closer look at the details.

Bendigo Bank share price up on earnings jump

• Revenue up 8.5% from prior corresponding period to $965.1 million
• Statutory net profit up 31.7% to $321.3 million
• Cash earnings after tax increased by 18.7% to $260.7 million
• Net interest margin compressed by 14 basis points (2.1%) from previous half year
• Cash earnings per share (EPS) up 13.5% to 47 cents per share
• Declared fully franked interim dividend of 26.5 cents per share, up 12.8%

What else happened during the half year?

Bendigo Bank said it was another half dominated by residential lending growth, cementing its sixth consecutive half of above system home loan growth. The period saw residential lending grow by 8.4% as settlements rose 4.3% from the previous half.

The bank experienced below system growth for its overall lending. This was put down to weakness in its agribusiness lending due to seasonal factors and softness in business lending. However, Bendigo Bank still grew its overall lending by 4.3% compared to system growth of 8.3% — playing into the Bendigo Bank share price strength today.

A milestone for the bank during the December ending half was the acquisition of Ferocia Pty Ltd. Importantly, this gives Bendigo Bank full ownership of the mobile-only digital bank Up. The acquisition was announced in August of last year and adds 460,000 customers to the Aussie bank.

Additionally, the bank’s interest margin compression is said to be a reflection of its increase in liquidity. The move is a result of “fierce competition” across the lending market and a preference for fixed-rate loans.

What did management say?

Commenting on the interim result, managing director and CEO Marnie Baker said:

This strong result would not be possible without our strategy and our focus on execution. We are committed to removing complexity, keeping cost growth low and, above all, remaining a customer-centric organisation.

Barker added:

We have made significant progress over the half with the acquisition of financial technology company Ferocia and digital bank Up accelerating our strategy. Capital levels are again higher and support our strong balance sheet, and our return on equity is above 8 percent.

Regarding the impacts of the Omicron variant on bank customers, Baker stated:

Pleasingly, the onset of Omicron has only seen 25 new retail customers require some form of assistance, underscoring the resilience of our customers and their financial position.

What’s next?

There are a few key points for Bendigo Bank during the second half of FY22. Firstly, the lender expects to see a continuation in outperforming residential loan growth. Although, net interest income will be negatively affected by margin pressures.

Secondly, the bank earmarked $170 million to $180 million across investment spending in FY22. For comparison, FY21 racked up $165 million.

Lastly, Bendigo Bank considers a rising interest rate environment as a positive for its “deposit-heavy” funding mix.

Bendigo Bank share price snapshot

It is a subdued start to the year for the Bendigo Bank share price with its shares up 2% so far in 2022. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 5.3% since the start of the year.

Over the last 12 months, Bendigo shares are down 2.11% compared to the ASX 200’s 4.6% gain.

The post Bendigo Bank (ASX:BEN) share price lifts amid 32% jump in profits 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. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Bendigo and Adelaide Bank 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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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.

I had been on a wait list to purchase my very first non-fungible token (NFT). The wait list was randomized, so I didn’t know when or if my number would be called. And as the people ahead of me in line snapped them up, I experienced a surprising jolt of adrenaline and anxiety. But once the final NFT from the collection was purchased, I started calming back down, assuming I missed out. I felt my heart rate slowly coming back down to normal. 

I assumed wrong. Checking my email later that day, the adrenaline came rushing right back. The launchpad where I bought my NFT allowed people to prefund their accounts, automatically purchasing a NFT if your number got called. I had taken advantage of this feature, so that’s how the purchase went through without me knowing it. 

Let me explain why I’m scared of the NFT space as I reflect on my emotionally charged experience. If you want to buy a NFT, I believe it’s crucial to have a healthy dose of self-awareness to prevent you from falling headfirst down a dangerous hole.

Why I bought an NFT in the first place

Simply put, a NFT is digital property with verifiable ownership. Often this is an image, but it could be other things, like trading cards, music, and more.

And I won’t beat around the bush: I became curious about NFTs because I’ve seen people make money in the space — in some cases, a lot of money.

The most extreme example is the Bored Ape Yacht Club. You could have purchased one of these images new in April 2021 for 0.08 Ether, the native token of the Ethereum blockchain. As of this writing, the cheapest Bored Ape for sale is 97 Ether (roughly $300,000) — a 1,200-bagger in under a year.

Finding a NFT project that enjoys even just a fraction of the Bored Ape Yacht Club’s success could result in a 100-bagger — a life-changing-caliber investment. It might sound shallow. But let’s be honest: You probably wouldn’t be reading this article if there weren’t money in NFTs.

That said, I’m not naive enough to believe that all NFT projects will have the same potential — they don’t. 

Therefore, I began my journey with cautious curiosity. I found a NFT project that looked differentiated enough to have potential. But it was one that I wouldn’t feel terrible if the value plummeted and I was stuck with the picture I bought. Moreover, it was cheap enough to dip my toes in the water but expensive enough to teach me a financial lesson if needed.

The NFT lesson I’m learning

After spending time in online NFT communities, I’m convinced most people are simply trying to get rich quickly. This is reflected by the oft-repeated motto of NFT investors, WAGMI — “we’re all gonna make it.” 

Most people are approaching NFT as a trade. And a trade is intrinsically short term and based on greater fool theory — simply trying to offload something onto someone else for a higher price. The way many traders do it, it’s not much different than a pump-and-dump scheme. NFT projects are hyped on social media until the floor price rises significantly and early buyers cash out.

However, I found the entire process of buying my first NFT to be exhilarating. Adrenaline and dopamine were flowing freely as I imagined the possibility of lightning-fast profits. This short-term mindset is dangerous and can cause people to abandon sound financial decision-making, myself included.

Investing great Charlie Munger said, “If you take the modern world where people are trying to teach you how to come in and trade actively in stocks, well, I regard that as roughly the equivalent to trying to induce a bunch of young people to start off on heroin.”  

Illicit drugs both impair judgment and create addictions. I believe investors would be wise to heed Munger’s warning here when it comes to trading anything, including NFTs.

What now?

Don’t misunderstand: Some NFT projects have A-list creators with detailed roadmaps, creating communities committed to holding their NFTs for the long term. And the NFT space may scare me, but that doesn’t mean I’m avoiding it — I’ve since purchased my second NFT.

I’m simply advocating for a healthy investing mindset. Nothing can derail your investing journey faster than nurturing bad investing behavior. As Munger also says, “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

Left unchecked, buying NFTs can induce feelings that motivate bad investing behavior. If you’re buying a NFT, it’s important to have a good, established investing mentality and a healthy dose of self-awareness to make sure you’re, as Munger put it, “consistently not stupid.” 

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

The post Here’s what scared me about buying my first NFT appeared first on The Motley Fool Australia.

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Jon Quast owns Ethereum.  The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Ethereum. The Motley Fool Australia owns and recommends Ethereum. 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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In morning trade, the Beach Energy Ltd (ASX: BPT) share price is charging higher following the release of its half year results and a solid rise in oil prices on Friday night.

At the time of writing, the energy producer’s shares are up over 4% to $1.55.

Beach share price higher following strong profit growth

• First half production of 11.02 MMboe
• EBITDA margin of 65%
• EBITDA up 26% to $513 million
• Net profit after tax (NPAT) up 66% to $213 million
• Fully franked interim dividend of 1 cent per share
• Net cash position of $73 million and availability liquidity $673 million

What happened during the first half?

For the six months ended 31 December, Beach reported a 26% increase in EBITDA to $513 million. This was driven by production of 11.02 MMboe and a realised oil price of $113.6 per barrel.

Beach also made a lot of progress operationally during the half, particularly in respect to its growth projects.

This includes the connection of Geographe 4 and 5 into the Otway Gas Plant to deliver an uplift in gas production. In addition, the first of four Thylacine wells has been drilled, with the offshore drilling program scheduled for completion mid-2022.

Another development is the LNG heads of agreement with BP for Beach’s 3.75 million tonnes from Waitsia Stage 2 from 2023. And finally, the Kupe Compression Project is online and delivering a production boost, with the plant now running at full capacity.

Management commentary

Beach’s Acting Chief Executive Officer, Morné Engelbrecht, commented: “Delivering on this phase of our growth means we are making progress towards our production target of 28 MMboe in FY24.”

“We had previously stated FY22 was going to be a pivotal year in Beach’s transformation, and I’m proud of what we have achieved so far. This includes our historic LNG agreement with BP and connecting our first Otway offshore wells to the East Coast market.”

“Our balance sheet remains in great shape as we retain a net cash position, and we are well placed to deliver on the next stage of our growth agenda.”

Outlook

Management has retained its guidance for FY 2022. It continues to guide to production of 21 to 23 MMboe, capital expenditure of $900 million to $1,100 million, and unit operating costs of $11.50 to $12.50 per barrel of oil equivalent.

Mr Engelbrecht commented: “Despite the challenges in 2021, it is important to point out that Beach executed a significant portion of its organic growth platform, allowing us to enter 2022 with a solid base to keep delivering and reach our target of 28MMboe in FY24.”

“The second half of FY22 remains a busy period with activity across the portfolio, and we are looking forward to the forthcoming Western Flank oil exploration campaign – in which any success would sit above our base-case target,” he added.

The post Beach (ASX:BPT) share price charges higher after delivering rapid profit growth 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. 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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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

Positive momentum is reshaping the discussion around the crypto sector, once again. For meme projects such as Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE), this has materialized into some rather impressive gains. As of 11 a.m. ET, these two meme coins had appreciated 9% and 6.5%, respectively, over the past 24 hours.

Forced liquidations of these meme tokens have driven most of the incredible volatility with Shiba Inu and Dogecoin in recent days. For Shiba Inu in particular, liquidations of the SHIB, 1000SHIB, and SHIB1000 contracts have been more than 80% on the short end of this trade, according to the website Coinglass, which tracks this data. This means that those shorting this meme token are increasingly having their positions liquidated, forcing the price of SHIB higher, in a similar fashion as short-covering in the stock market. 

For XRP (CRYPTO: XRP), today’s gain is slightly more muted than its meme token peers. As of 11 a.m. ET, XRP shot 3.2% higher over the past 24 hours, as this token maintains positive momentum following news last week that the project’s parent company Ripple may be close to concluding its ongoing litigation with the SEC that’s spanned more than a year.

So what

Forced liquidations continue to drive a significant percentage of the overall volatility in the market. At 11 a.m. ET, over the past four hours, Shiba Inu, Dogecoin, and XRP took 3rd, 4th, and 5th place in terms of forced liquidations (mostly short-related), after Bitcoin and Ethereum. This signifies, among many things, that these three tokens are among the most-traded in the market, and investors appear to be most bullish on the near-term prospects of these projects.

For XRP, investors appear to be banking on some sort of litigation resolution or near-term even that could drive short-term volatility with this token. In general, the market has viewed recent news that the judge overseeing the SEC vs. Ripple case has allowed for documents to be unsealed a small victory for the XRP camp. While the outcome remains uncertain, crypto investors (like all investors) like certainty. Thus, a resolution (good or bad) to this saga is being priced into the coin with positive effects right now.

Now what

Interestingly, these three tokens are among the highest-flyers in the crypto market over the past week. Unlike previous rallies, which saw these tokens give up a majority, if not all, of their gains in short order, this week has provided somewhat “stickier” returns for investors. Accordingly, outside investors may be wondering whether the near-term catalysts driving these tokens higher can be maintained for an extended period of time. 

I think the jury is still out on with respect to this idea. However, given the macro environment we’re in now, it’s likely the crypto market will continue to see volatility from here. Accordingly, investors should fasten their seatbelts — this ride may get a lot bumpier from here. 

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

The post 2 reasons Shiba Inu and Dogecoin are soaring this weekend appeared first on The Motley Fool Australia.

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Chris MacDonald owns Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Bitcoin and Ethereum. The Motley Fool Australia owns and recommends Bitcoin and Ethereum. 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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If you’re a fan of growth shares, then you may want to look at the two ASX shares listed below.

These growth shares have been rated as buys and tipped to climb materially higher from current levels. Here’s what you need to know:

Allkem Ltd (ASX: AKE)

If you don’t mind investing in the resources sector, then the first ASX growth share to consider is Allkem. It was formed following the merger of two leading lithium miners – Galaxy Resources and Orocobre.

This merger made the company a top five global lithium miner with a collection of world class operations including Olaroz, Mt Cattlin, and the Sal de Vida brine project.

As Mt Cattlin and Olaroz are already operating, Allkem is currently benefiting greatly from the sky high lithium prices being underpinned by the decarbonisation trend and the rise of electric vehicles. These operations look likely to be added to in the near future as decisions are made on its other projects. This bodes well for its growth in the coming years, particularly given the outlook for lithium supply and demand.

Morgans is very bullish on Allkem and recently named it as its top pick in the lithium sector. The broker currently has an add rating and $13.25 price target on its shares. This implies potential upside of 40% for the Allkem share price from current levels.

Life360 Inc (ASX: 360)

Another ASX growth share to look at is Life360. It operates in the digital consumer subscription services market with a focus on products and services for digitally native families.

The team at Bell Potter is very positive on the company due to its freemium model and opportunity to convert its 30 million+ user base into paying subscribers.

The broker expects the latter to be boosted by its acquisitions of wearables company Jiobit and items tracking company Tile. Overall, Bell Potter believes the company is well placed to disrupt the safety and security market and achieve strong top line growth for many years.

Bell Potter has a buy rating and $13.51 price target. This is almost 80% higher than the current Life360 share price of $7.56.

The post Analyst say these ASX growth shares have at least 40% upside potential appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns Life360, Inc. and Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Life360, Inc. 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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Brokers have named some interesting ASX dividend shares as buys. They could be leading options for income in the coming years.

Sometimes share prices can be quite volatile, but dividends may be able to offset some of the fear factor by paying a regular stream of income to investors.

With that in mind, here are two to consider, according to brokers:

Inghams Group Ltd (ASX: ING)

Inghams is one of the country’s largest poultry businesses, supplying a huge amount of chicken to Aussies every year.

The Inghams share price has seen some volatility in recent months as COVID impacts bite. Two of the main impacts have been a higher price of feed for the poultry and staff shortages due to COVID (and isolating).

However, the ASX dividend share noted that just over a month ago that changes to the isolation rules for close contacts in the food sector were assisting with the staff shortages. As operating conditions normalised, it was expecting production capacity to recover quickly to meet customer and consumer demand.

In terms of the dividend, Inghams aims to pay reliable dividends to shareholders, with a dividend payout ratio of between 60% to 80% of underlying net profit after tax (NPAT).

FY21 saw an annual dividend of 16.5 cents per share from the poultry company, reflecting a payout ratio of 70.8% of underlying net profit.

Citi is expecting Inghams to pay a grossed-up dividend yield of 6% in FY22 and 7.8% in FY23.

Centuria Capital Group (ASX: CNI)

Centuria is an investment manager with over $20 billion of assets under management (AUM). The business is centred around property funds management and investment bonds.

The business is rated as a buy by the broker Morgan Stanley, with a price target of $3.45. This offers upside of close to 20%.

This ASX dividend share recently announced its FY22 half-year result which showed a 16% increase of AUM growth. It also delivered a 73% rise in operating profit after tax to $56.7 million.

It’s expecting to deliver operating earnings per security (EPS) of 14.5 cents, which would be an increase of 20.8%. It has also provided guidance of a distribution of 11 cents per security. This income guidance translates into a yield of 3.75%.

Broker Morgan Stanley is wary of what effect the prospect of higher interest rates will have on the real estate sector and net flows. The broker likes that Centuria offers exposure to attractive ’emerging’ sectors like agriculture and healthcare.

The real estate business says it’s focused on generating long-term income and potential performance fees for investors.

The post 2 ASX dividend shares that brokers say are buys appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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 JB Hi-Fi Limited (ASX: JBH) share price will be on watch this morning.

This follows the release of the retail giant’s half year results.

JB Hi-Fi share price on watch after announcing share buyback

• Total sales down 1.6% to $4.86 billion,
• Online sales up 62.6% to $1.1 billion
• EBIT down 9.1% to $420.5 million
• Net profit after tax down 9.4% to $287.9 million
• Interim dividend of 163 cents per share
• Capital return of up to $250 million to shareholders by way of an off-market buyback

What happened during the first half?

For the six months ended 31 December, JB Hi-Fi reported a 1.6% decline in total sales to $4.86 billion and a 9.4% reduction in net profit after tax to $287.9 million. However, these numbers won’t come as a surprise to investors as they were pre-released to the market in January.

What will come as a pleasant surprise, though, is that management is planning to return all of this profit and more back to shareholders via its interim dividend and an off-market $250 million share buyback. A total of up to $437 million will be returned to shareholders.

In respect to its dividend, JB Hi-Fi is paying investors a fully franked 163 cents per share dividend. This is down 9.4% year on year, which is in line with its earnings decline. Though, as with its sales and earnings, this dividend is up meaningfully on a two-year basis.

JB Hi-Fi Group CEO, Terry Smart, commented: “We are pleased to report strong sales and earnings for HY22. We continued to see elevated demand across all of our sales channels, particularly online which our customers seamlessly transitioned to during the various lockdowns demonstrating the strength and trust in our brands.”

Outlook

JB Hi-Fi has started the second half positively, delivering year on year growth across its key businesses during January. This was thanks to heightened customer demand and comes despite battling supply chain and operational disruption as a result of COVID-19.

The release explains that total sales were up 4.3% for JB Hi-Fi Australia and 2.5% for The Good Guys during the month. The performance of the JB Hi-Fi New Zealand business is improving, but its sales still remained down 1.5% year on year in January.

No guidance has been given for the remainder of the second half due to COVID uncertainty.

Mr Smart concluded: “While it remains an uncertain retail environment, we will continue to stay focused on what we can control. Our highly engaging in-store and online shopping experiences delivered by our passionate and knowledgeable team members, and our continued focus on leveraging our scale to deliver great value will ensure we meet our customers’ needs during these challenging times.”

The post JB Hi-Fi (ASX:JBH) share price on watch after announcing results and $250m buyback 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. 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 Webjet Limited (ASX: WEB) share price is an attractively undervalued ASX share according to one leading broker.

For readers that don’t know exactly what Webjet does, there are three divisions to this business.

The first is the Webjet online travel agency (OTA) business which most of the public would know the ASX share for. Next, is the segment that services business travellers called WebBeds. Finally, there is a car and campervan hire business called Go-See.

Why is the Webjet share price undervalued?

The broker Ord Minnett believes that the Webjet share price has a 20% upside this year with a price target of $7.31.

Ord Minnett thinks that Webjet will do well, or is doing well, when it comes to the rebound of travel after all of the COVID impacts.

One of the key elements that the broker likes about Webjet’s potential when it comes to WebBeds is the idea of being more profitable at scale.

When the ASX travel share released its FY22 half-year result, it said that WebBeds has an increased market opportunity due to an expansion with the business-to-customer (B2C) channel. WebBeds is also targeting previously untapped domestic markets and increasing the North American market penetration.

WebBeds is targeting a greater share of a larger market opportunity, with the business-to-business (B2B) total transaction value (TTV) now being worth more than A$70 billion. Webjet is targeting a 14% share of this.

Webjet has streamlined its technology, enhanced Rezchain (blockchain) efficiencies, it’s leveraging data analytics and it is simplifying processes across the business.

WebBeds is on track to be 20% more cost efficient when at scale. This is one of the main reasons that Ord Minnett likes the current Webjet share price. Before COVID-19, WebBeds had a target of ‘8/4/4’. This meant that revenue would be 8% of TTV, costs would be 4% of TTV and earnings before interest, tax, depreciation and amortisation (EBITDA) would be 4% of TTV. That translated to the EBITDA margin target being 50%.

But now, WebBeds is targeting ‘8/3/5’. That means that the EBITDA margin is 5% of TTV, but it would be an EBITDA margin of 62.5% when compared to revenue.

WebBeds has been profitable since July thanks to domestic sales in North America and Europe. November 2021 TTV was tracking at 63% of pre-COVID, with bookings tracking at 69%. Many larger markets were yet to open.

The Webjet OTA returned to a positive EBITDA thanks to domestic border openings and a highly scalable cost base. It can scale key costs in line with demand.

Valuation

Ord Minnett is expecting the business to return to profitability in FY23. Based on the projected numbers, the Webjet share price is valued at 26x FY23’s estimated earnings.

UBS, which also rates Webjet as a buy, is even more optimistic about the profit potential. This broker puts the Webhet share price at 20x FY23’s estimated earnings.

The post Why the Webjet (ASX:WEB) share price is a seriously undervalued ASX share: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet 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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The iron ore price has continued to rise, could this mean that the Rio Tinto Limited (ASX: RIO) share price is an opportunity?

Well, the market has certainly noticed. Since the start of 2022, Rio Tinto shares have gone up by around 23%.

Does a higher iron ore price make Rio Tinto shares a buy?

Commodity businesses are very dependent on the price of the commodity. If the price goes up then it can add to profitability. But if prices fall then it can be very detrimental to profit because it still costs around the same to extract that commodity from the ground.

But at the moment, iron ore is going up. On Friday, Commsec noted that iron ore had gone up 4.8% to US$153.75 per tonne. In the middle of November 2021, the iron ore price had fallen below US$90 per tonne.

Rio Tinto is expected to report a strong result for FY21 after revealing triple-digit profit growth in the half-year result.  Those half-yearly numbers saw free cash flow rise 262% to US$10.2 billion, underlying earnings grew by 156% to US$12.2 billion and the total dividend jumped by 262% to US$5.61 per share.

It recently released its fourth-quarter production result, showing that 2021 iron ore production was down 4% to 319.7 mt. Aluminium production was down 1% to 3,151 kt and mined copper production was down 7%.

But FY21 is the past. Share prices are normally forward looking. Is the Rio Tinto share price an opportunity for FY22?

Expectations for 2022

Commsec numbers currently suggest that Rio Tinto is going to generate $12.88 of earnings per share (EPS) in 2022. With that, the mining giant is expected to pay a dividend of $9.79 per share, which translates into a grossed-up dividend yield of 11.4% at the current Rio Tinto share price.

It’s hard to say what the iron ore price is going to do next. Some analysts like UBS were expecting the iron ore price to languish at around US$80 by now, or at least get there in the shorter-term.

But the iron ore price has soared.

Price targets

UBS still rates the Rio Tinto share price as a sell, with a price target of $90. Plenty of other brokers’ ratings are currently a buy like Macquarie’s and Morgan Stanley’s.

But Rio Tinto shares have actually run ahead of some price targets, like Morgan Stanley’s target of $109. Macquarie has a price target of $130 on Rio Tinto, suggesting a single-digit upside for capital growth over the next year.

Lithium expansion?

Analysts have noted the disappointing news that the Serbian government has blocked Rio Tinto’s exploration licences for the lithium project for Jadar because of environmental concerns.

However, it has diversified its lithium diversification attempt by buying the Rincon lithium project in Argentina for $825 million, which is a large undeveloped lithium brine project in the Salta Province of Argentina.

The post The iron ore price is rising, time to jump on the Rio Tinto share price? appeared first on The Motley Fool Australia.

More reading

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• Why IAG, Rio Tinto, Unibail, and Westpac shares are pushing higher
• Here’s what Rio Tinto (ASX:RIO) boss says is ‘causing some challenges’ right now
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• Are these the best ASX 200 blue chips to buy right now?

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 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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