The Openpay Group Ltd (ASX: OPY) share price has been a strong performer on Thursday morning.

At the time of writing, the buy now pay later (BNPL) provider’s shares are up 13% to $1.44.

Why is the Openpay share price pushing higher?

Investors have been bidding the Openpay share price higher today following the release of an update on its US operations.

According to the release, the company has entered into a US$271.4 million asset-backed revolving debt facility with Goldman Sachs and mezzanine financing provided by Atalaya Capital Management.

The release notes that this warehouse facility will enable Openpay to fuel its expansion into the enormous US market. Management believes it represents a key milestone for the company as it looks to facilitate transactions for merchants and consumers in the country.

As part of the deal, Openpay will issue 1,022,271 warrants to Goldman Sachs. Each warrant is exercisable into one fully paid ordinary Openpay share at a subscription price of ~$1.30 per warrant. This represents the 30-day volume weighted average price on 5 October.

Management commentary

Openpay’s US CEO and Global Chief Strategy Officer, Brian Shniderman, was delighted with the news.

He commented: “We are thrilled to work with Goldman Sachs and Atalaya who will now deliver the funding to enable our growth in the US at scale. We will begin distributing BNPL in large volumes through major ecosystem partnerships like payments processors, and merchant aggregators requiring significant funding.”

“This is precisely what we shared as our plan with investors, and all part of our six Pillar Strategy. This facility is now set to grow our US business at a greater scale for the global company through this exciting US launch going live this month.”

This sentiment was echoed by Openpay’s US CFO, Efrat Yellin.

He added: “We are excited and honored for Goldman Sachs and Atalaya to serve as our foundational funding financial institutions. Working with these funders complements our solid balance sheet setting us up for our US launch. This facility will allow us to scale quickly and provide US consumers with funding for their various needs.”

Despite today’s decent gain, the Openpay share price is down a disappointing 40% since the start of the year.

Shareholders will no doubt be hoping this news is an inflection point for the Openpay share price.

The post Openpay (ASX:OPY) share price jumps 13% on US update appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX BNPL shares in September
• Openpay (ASX:OPY) share price up 5% on Kogan and Nissan deals

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 Altium Limited (ASX: ALU) share price has been a disappointing performer in 2021.

Since the start of the year, the electronic design software company’s shares are down 4.5%.

Why is the Altium share price underperforming?

The weakness in the Altium share price this year has been driven largely by its mixed performance in FY 2021.

Although Altium achieved its full year revenue guidance with a 1% lift to US$191.1 million, its earnings fell short of expectations due to weaker margins.

In addition to this, while management is confident on the company’s prospects in FY 2022 and is guiding to revenue growth of 16% to 20%, it has pushed back its US$500 million aspirational revenue target by a year to FY 2026.

Also weighing on Altium’s shares was its rejection of a takeover approach from Autodesk. The software giant tabled an offer believed to be around $40.00, but management wasn’t interested. It believed it significantly undervalued Altium’s prospects.

Is this a buying opportunity?

One leading broker appears to believe the underperformance of the Altium share price could be a buying opportunity.

According to a note out of Citi from last week, its analysts have a buy rating and $35.40 price target on the company’s shares.

Based on the current Altium share price of $32.98, this implies potential upside of 7.3% over the next 12 months.

Citi was pleased with the company’s guidance for FY 2022, particularly given the headwinds it is facing from its shift to subscriptions from perpetual licenses.

In addition to this, the broker is positive on Altium’s longer term growth potential. It expects this to be underpinned by the monetisation of its Altium 365 and Nexar platforms.

This could make it a tech share to consider in October.

The post Top broker names Altium (ASX:ALU) share price as a buy appeared first on The Motley Fool Australia.

More reading

• These were the best performing ASX tech shares in September
• 3 fantastic ASX growth shares to buy in October
• How have the WAAAX shares performed so far this year?
• ASX 200 tech correction? 5 of the worst-hit shares
• Why ASX tech shares are crashing on Wednesday

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 shares of and has recommended Altium. The Motley Fool Australia owns shares of and has recommended Altium. 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 Wesfarmers Ltd (ASX: WES) dividend will finally hit the accounts of shareholders on Friday. This might be one of the few bright spots for Wesfarmers in recent months as its share price has plunged back down to 4-month lows.

The Wesfarmers share price closed at $54.07 on Wednesday, down almost 20% since its all-time high of $57.20 on 20 August.

What happened to the Wesfarmers share price?

The S&P/ASX 200 Index (ASX: XJO) topped out in mid-August after reaching all-time highs of 7,633.

The decline of Wesfarmers was consistent with that of the broader market.

The company’s FY21 full-year results was another major driver of its recent underperformance.

At face value, Wesfarmers had a standout year, delivering a 10% increase in revenue to $33,941 million, net profit after tax increased 16.2% to $2,421 million, as well as a final dividend of 90 cents per share.

The overall Wesfarmer dividend for FY21 came in at 178 cents, up 17.1% on FY20.

But looking ahead, Wesfarmers management flagged the prospect of weaker near-term earnings as a result of recent lockdowns and the cycling of elevated sales.

“Given the impact of lockdowns in recent months and the prospect of continued trading restrictions, earnings in the Group’s retail businesses during the first half of the 2022 financial year may be below the prior corresponding period,” management said.

What else do investors need to know about the Wesfarmers dividend?

Last week, Wesfarmers announced that $57.06 will be the allocation price for shares issued through the dividend investment plan for its final dividend.

According to the release, shareholders representing 11.72% of Wesfarmers shares on issue had a valid election to participate in the dividend investment plan for the period.

Shares are expected to be issued to participants of the dividend investment plan on 7 October.

But wait there’s more …

Wesfarmers’ FY21 results also revealed a significant capital return to shareholders in the form of a 200 cents per share payment on top of its final dividend.

The proposed capital return is subject to shareholder approval at the company’s 2021 annual general meeting.

If all goes to plan, the capital return date is expected to have a record date of 19 November 2021 and payable by 2 December 2021.

The post The final Wesfarmers (ASX:WES) dividend will be paid out today. Here’s what you need to know appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Here’s what happened to the Wesfarmers (ASX:WES) share price in September
• Here’s why the Wesfarmers (ASX:WES) share price is down 4% in a week
• 2 beaten-up ASX shares now ready to rally: expert
• Wesfarmers (ASX:WES) share price gains as ACCC approves Bunnings acquisition

Motley Fool contributor Kerry Sun 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 shares of 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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Investors might have a chance at making back some of yesterday’s losses on Thursday. ASX futures are indicating an upwards move in Australian shares this morning. This follows a reasonably green night on the US market overnight.

Ahead of the market open, S&P/ASX 200 Index (ASX: XJO) futures are suggesting a 0.53% increase in the benchmark index.

What happened overnight?

Although it was a shaky start to trading on Wall Street last night, sentiment shifted as the market moved closer to the closing bell. In turn, all three major US indices finished above their previous close. Specifically, the Dow Jones Industrial Average added 0.3%. Meanwhile, the S&P 500 and Nasdaq composite gained 0.4% and 0.5% respectively.

Some standout performers on the US market overnight included Mastercard Inc (NYSE: MA), Paypal Holdings Inc (NASDAQ: PYPL), PepsiCo, Inc. (NASDAQ: PEP), and Microsoft Corporation (NASDAQ: MSFT). These companies gained 1.6%, 1.5%, 2.6%, and 1.5% respectively.

The late rally in markets overnight comes amid signs the US senate is nearing a temporary agreement to allow an extension of the federal debt ceiling into December. This would at least avoid tarnishing the United States reputation for never missing a debt repayment.

Additionally, ASX futures are pointing higher as analysts at National Australia Bank Ltd. (ASX: NAB) suggest that Europe’s gas crisis is “far from over”. While this could be met with optimism in ASX-listed energy producers today, it is also balanced out with the US energy secretary revealing considerations of selling strategic oil reserves to dampen oil prices.

Moving ASX futures today

Oil prices dropped 2.35% to US$77.09 a barrel last night. However, oil and gas shares will likely still be in focus as concerns of energy supply linger.

Furthermore, gold producers will be at the top of some watchlists today following strength in the precious metal. The spot price of gold inched 0.2% higher to US$1,765 an ounce. As a result, big-name ASX-listed gold miners such as Northern Star Resources Ltd (ASX: NST) and Evolution Mining Ltd (ASX: EVN) could benefit from the price lift.

Finally, ASX futures could be boosted higher as a large swathe of Aussie companies dish out dividends to shareholders today. Such companies include Breville Group Ltd (ASX: BRG), South32 Ltd (ASX: S32), and Wesfarmers Ltd (ASX: WES).

The post Here’s what ASX futures are pointing towards on Thursday appeared first on The Motley Fool Australia.

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• What is the BHP (ASX:BHP) share price outlook?
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares this Wednesday
• Technology shares lead the battle to lift the ASX 200 on Wednesday

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. 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 shares of and has recommended Mastercard, Microsoft, and PayPal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Mastercard and PayPal Holdings. 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 Woodside Petroleum Limited (ASX: WPL) share price has been a strong performer in recent weeks.

For example, since the end of August, the energy producer’s shares have risen a sizeable 28%.

Why is the Woodside share price up 28% in five weeks?

There have been a couple of catalysts for the rise in the Woodside share price over the last five weeks.

Chief among them is a rise in oil prices. Due partly to supply disruptions following Hurricane Ida in the Gulf of Mexico, oil prices hit multi-year highs this week.

Also giving the Woodside share price a boost was news that it will be merging with the petroleum assets of BHP Group Ltd (ASX: BHP).

Can its shares keep rising?

The good news is that one leading broker believes Woodside’s shares can keep rising from here.

According to a note out of Morgans, its analysts have an add rating and $29.00 price target on its shares.

Based on the current Woodside share price of $25.04, this implies potential upside of 16% over the next 12 months.

Why is the broker bullish?

Morgans is bullish on the Woodside share price due largely to its merger with BHP’s petroleum assets.

It notes that this transforms Woodside and makes it a top 10 global energy producer.

The broker commented: “We believe WPL has benefited from being in the right place, at the right time. With: 1) BHP/WPL having an existing relationship, 2) BHP eager to boost its ESG profile, and 3) WPL being a quality operator (safe hands which is important for BHP). From an economic standpoint we think WPL is clearly getting the better of the deal, with synergies not baked into deal metrics and BHP willing to accept a discount. The deal is transformative, lifting WPL into being a top 10 global E&P with +2 billion barrels of 2P reserves, with EBITDA of US$4.7bnpa and growth options.”

The post Top broker sees 16% upside for the Woodside (ASX:WPL) share price appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Top broker names 2 of the best ASX shares to buy in October
• ASX 200 (ASX:XJO) midday update: A2 Milk class action, tech shares rebound
• What’s driving oil prices higher and which ASX shares are benefitting?
• Here’s why the Woodside (ASX:WPL) share price is climbing 3% today

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 ASX shares in this article could be two of the leading opportunities to think about for the long-term.

Some businesses are taking advantage of growing demand for certain services or products, particularly in this era of increasing digitalisation.

Share prices are always changing and profit is (hopefully) growing, which can mean different ASX shares can opportunities at different times:

Betashares Global Cybersecurity ETF (ASX: HACK)

This is an exchange-traded fund (ETF) that provides investors exposure to the global cybersecurity industry. There is a mixture of businesses in this portfolio, ones that are worldwide leaders and ones that are emerging players.

There are a total of 36 positions in the portfolio. Some of the biggest holdings are: Palo Alto Networks, Accenture, Cisco Systems, Crowdstrike, Okta and Tenable. The smallest positions are: Zix, Tufin Software Technologies, Ribbon Communications, OneSpan and A10 Networks.

Is this industry growing? It is. The global cybersecurity market was $137.63 billion in 2017. It’s expected to grow to $248.26 billion by 2023.

BetaShares notes that Australian investors currently have few local options for getting exposure to this fast-growing cybersecurity sector. With cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future.

In terms of geographic diversification, a vast majority (90.7%) of the portfolio is invested in businesses that are listed in the US, though the underlying earnings are geographically diverse. Another four countries have an allocation of more than 1%: Israel (3.4%), the UK (2.7%), Japan (1.5%) and France (1.2%).

Past performance is not an indicator of future performance. However, after including the management costs of 0.67% per annum, the ASX share has returned an average of 23.26% per annum since inception in August 2016.

Adairs Ltd (ASX: ADH)

Adairs sells bedding, homewares and furniture. It operates under two brands, Mocka and Adairs.

Looking at the valuation on Commsec, the Adairs share price is valued at just under 10x FY23’s estimated earnings.

It’s true that in the first seven weeks of FY22, Adairs saw a decrease in sales – it was down 11.7% on the same period in FY21. However, the sales were up 13.5% compared to FY20. Lockdowns are impacting store sales, though online sales continue to increase.

In the first seven weeks of FY22, Adairs online sales were up 12.9% and Mocka sales were up 16.1%.

FY21 saw total online sales of $187 million, which was 37.4% of the total. Total Adairs sales went up 28.5% for the year, with net profit rising 80.7% to $63.7 million.

The ASX share is expecting the gross profit margin to moderate in FY22 from the record highs achieved in FY21, though it’s still much higher than FY20. There are supplier cost increases and increased cost of sea freight.

One thing that is expected to help Adairs become more efficient and reduce costs is the new DHL-operated national distribution centre, which was scheduled to be completed at the end of September 2021. This is a “key component” of its omni-channel strategy to help customers shop how they want to with Adairs. It’s expected to result in annual savings of $3.5 million per annum.

The Adairs managing director and CEO, Mark Ronan, said:

The Adairs and Mocka teams are focused on developing and delivering exclusive products through our vertical supply chains supported by a great customer experience via our integrated omni-channel model. This focus on customer and product, together with our loyal Linen Lovers [membership] and our amazing teams, provide strong mitigants in these conditions and put us in a position to be able to continue to take market share. We have a very large addressable market and being omni-channel means the entire market is open to us.

The post Potential buys: 2 compelling ASX shares 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. owns shares of and has recommended ADAIRS FPO and BETA CYBER ETF UNITS. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO and BETA CYBER ETF UNITS. 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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There are a number of quality options for investors to choose from in the tech sector.

Two that are highly rated right now are listed below. Here’s why they have been tipped for big things:

Audinate Group Limited (ASX: AD8)

The first ASX tech share to look at is Audinate. It is a digital audio-visual networking technologies provider and the company behind the industry-leading Dante audio over IP networking solution. This solution is used widely across a number of industries and is currently dominating the competition.

Dante replaces traditional analogue audio cables by transmitting perfectly synchronised audio signals across large distances to multiple locations at once, using just an Ethernet cable.

In FY 2021, the number of Dante-enabled products increased to 3,255. This is now 19x the number of products of the next closest digital audio networking technology.

The team at Shaw and Partners were pleased with its performance in FY 2021. In response, the broker put a buy rating and $12.00 price target on the company’s shares.

Life360 Inc (ASX: 360)

Another ASX tech share to look at is San Francisco-based app maker Life360. It provides families with a market leading app which includes features such as real-time location sharing, notifications, crash detection, and roadside assistance.

The Life360 app has been growing in popularity over the last few years and has a staggering 32 million users globally. Management is now aiming to monetise this user base with upselling and cross-selling initiatives.

In fact, it was for this reason that Life360 acquired wearable location device provider Jiobit for US$37 million earlier this year. But it is unlikely to stop there. The team at Bell Potter see plenty of monetisation opportunities.

It commented: “Life360 has the potential to leverage its large and growing user base to enter new markets and disrupt the legacy incumbents. An example is roadside assistance where Life360 launched a subscription-based product called Driver Protect which disrupted the market and helped enable monetisation of its user base.”

In light of this, the broker has a buy rating and $10.75 price target on the company’s shares.

The post Analysts name 2 high quality ASX tech shares to buy in October appeared first on The Motley Fool Australia.

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• Why the Audinate (ASX:AD8) share price is rated as a buy

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 shares of and has recommended AUDINATEGL FPO and Life360, Inc. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO. 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 BHP Group Ltd (ASX: BHP) share price has fallen by approximately 30% over the last two months. But that’s the past. What is the outlook for the company?

What is happening to the BHP share price?

Resource businesses are dependent on their respective commodity prices to generate higher profit. When the resource price falls, it can lead to the prospective profit falling.

BHP is diversified compared to other large S&P/ASX 200 Index (ASX: XJO) resource businesses like Woodside Petroleum Limited (ASX: WPL) and Fortescue Metals Group Ltd (ASX: FMG).

It’s operating across a number of different commodities including iron ore, petroleum (for now), copper, nickel and metallurgical (steelmaking) coal.

In FY21, the business generated an outsized level of profit from iron ore. Looking at the underlying earnings before interest and tax (EBIT), the iron ore division generated US$24.3 billion of the total US$30.3 billion of underlying EBIT. Copper was the only other major contributor, with US$6.8 billion of underlying EBIT.

That means that iron ore generated around 80% of the business’ underlying EBIT, it plays a very important part.

However, the iron ore price has fallen significantly over the last few months. In May 2021, it was well above US$200 per tonne. It is now around US$118 per tonne.

That would suggest that BHP isn’t likely to earn as much profit from its iron ore division over the next 12 months as the last 12 months. The BHP share price can be affected by investor’s expectations for future profit.

BHP’s outlook

The resources business outlined a number of thoughts for its outlook in its FY21 report.

BHP said that it remains positive in its outlook for long-term global economic growth and commodity demand. It expects population growth, the infrastructure of decarbonisation and rising living standards will all drive demand for energy, metals and fertilisers for decades to come.

Regarding steel, BHP said it expects that Chinese production will grow by around 5% in the 2021 calendar year. It also said it anticipates a continuation of strong end-use demand conditions in China and an ongoing recovery in the rest of the world over FY22.

However, BHP did say in the medium-term that Chinese demand for iron ore is expected to be lower as crude steel production levels out and the scrap-to-steel ratio rises. In the long-term, prices are expected to be determined by high cost production from Australia and Brazil. Over time, the direction of the iron ore price could have an important impact on the BHP share price.

Copper prices have been strong, the rest of the world demand is recovering and BHP said the Chinese economy continues to perform well. Management believe the short-term outlook demand remains constructive. In the longer-term, both demand and supply factors indicate to the miner that copper is an attractive avenue for future growth.

Potash is a new focus for BHP. The resources giant notes that potash prices have increased sharply over the last 12 months, despite ongoing excess production capacity. Over the longer-term, the company believes that potash will benefit from a number of global trends including: rising population, changing diets and the need for sustainable intensification of agriculture. That’s why it has approved spending US$5.7 billion of capital on the Jansen Stage 1 potash project in Canada. This project is expected to produce approximately 4.35 million tonnes of potash per annum. First ore is targeted in 2027.

Broker thoughts on the BHP share price

One of the latest thoughts on BHP is from Morgans, which has a hold rating on the business, though the price target is $45.20. The broker is expecting continued weakness for iron, however the strength for coal can make up some of the difference.

According to Morgans, BHP could pay a grossed-up dividend yield of 9.2% in FY23.

The post What is the BHP (ASX:BHP) share price outlook? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX shares today
• Here are the 3 most heavily traded ASX 200 shares this Wednesday
• Technology shares lead the battle to lift the ASX 200 on Wednesday
• ASX 200 (ASX:XJO) midday update: A2 Milk class action, tech shares rebound

Motley Fool contributor Tristan Harrison owns shares of 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.

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Are you looking for some dividend shares to boost your income portfolio? If you are, then you might want to look at the ones listed below.

Here’s why these ASX dividend shares could be in the buy zone:

Scentre Group (ASX: SCG)

The first ASX dividend share to look at is this shopping centre operator.

Scentre owns and operates the pre-eminent living centre portfolio in the ANZ market with $50 billion of retail real estate assets under management. This comprises 42 Westfield living centres.

It certainly has been a tough 18 months for Scentre because of the pandemic. However, with Australia on the verge of reopening again, foot traffic through its centres looks set to rebound.

In addition, with inflation expectations at high levels, Scentre looks well-placed to benefit. This is because the company is positively leveraged to inflation with an estimated 70%+ of its base rental income subject to inflation-linked escalation.

It is largely for this reason that Goldman Sachs is so positive on Scentre. It currently has a buy rating and $3.32 price target on its shares.

As for dividends, the broker is forecasting a 16 cents per share dividend in FY 2022. Based on the latest Scentre share price of $2.99, this will mean a 5.3% yield.

Westpac Banking Corp (ASX: WBC)

Goldman Sachs is also positive on Australia’s oldest bank. It likes Westpac due to its belief that the earnings risks are skewed to the upside thanks to its bold cost reduction plans. It notes that management is aiming to reduce its cost base down to $8 billion by FY 2024.

Although Westpac’s shares have stormed higher this year, the broker believes they can still go higher. It has a buy rating and $29.83 price target on its shares.

In addition, its analysts believe the bank’s shares will provide investors with a generous yield in FY 2022. Goldman has pencilled in a fully franked $1.28 per share dividend. Based on the current Westpac share price of $25.65, this will mean a 5% yield for investors.

The post 2 buy-rated ASX dividend shares with 5% yields appeared first on The Motley Fool Australia.

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• ASX 200 bank shares fall flat amid flurry of new regulations
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• How does the Westpac (ASX:WBC) dividend compare to the banking sector?
• These were the best performing ASX bank shares in September

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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Is the National Australia Bank Ltd (ASX: NAB) share price worth looking at right now? It’s currently at above $27.

Over the last month the NAB share price has fallen by 4%, though it had fallen below $27 a couple of weeks ago.

What do brokers think of NAB?

Brokers had been positive on the big four ASX banks for quite a while. NAB shares have risen by 47% over the last 12 months, showing that the market appeared to agree.

However, after the strong run, brokers are reducing their expectations for the next 12 months.

For example, a few weeks ago the broker Credit Suisse reduced its rating on the bank from a buy to hold/neutral. Credit Suisse thinks the positive direction that the bank is heading in is now reflected in the valuation.

Credit Suisse’s price target for NAB is $28.50, suggesting a slight increase over the next 12 months. Based on the broker’s numbers, the NAB share price is valued at more than 14x FY22’s estimated earnings with a forward grossed-up dividend yield of 6.9%.

However, the broker Ord Minnett still rates NAB as a buy, thinking it can increase its revenue. Interestingly, Ord Minnett thinks that NAB shares are valued at 15x FY23’s estimated earnings.

How good was the NAB result in reporting season?

NAB said that in the third quarter of FY21, it generated $1.65 billion of statutory net profit. The bank also made $1.7 billion of cash earnings. The cash earnings represented growth of 10.3% year on year.

At the time, the bank said that it was pleasing that it was seeing strong momentum across its business. In Australia, housing lending rose 2% and small and medium business lending grew by 4.3%, both outpacing the overall lending market in recent months. In New Zealand, its business also saw growth of lending of 2.7%. NAB attributed this growth to the decisions and investments it’s making, which are having a positive impact on the business and for customers.

Management said it’s focused on where and how it will grow. Growth can be an important factor that impacts the NAB share price.

NAB noted it has exited MLC Wealth and that the acquisitions of 86 400 and Citigroup’s Australian consumer business will help accelerate its growth strategy.

Citigroup acquisition

The big four bank is going to pay Citigroup a cash amount for the net assets of the consumer business, plus a premium of $250 million. It was expecting to pay approximately $1.2 billion for the business, which implies a multiple of 8x time Citigroup consumer business pro forma net profit after tax (NPAT) of $145 million for the 12 months to June 2021.

NAB said this deal will bring scale and deep expertise in unsecured lending, particularly credit cards, which it believes is still an important way for customers to make payments and manage their cashflows.

The NAB share price has risen 2% since announcing this acquisition.

The post Is the NAB (ASX:NAB) share price a buy? appeared first on The Motley Fool Australia.

More reading

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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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