The Sigma Healthcare Ltd (ASX: SIG) share price is out of form on Tuesday. This follows the release of its half year results this morning.

In early trade, the pharmacy chain operator and distributor’s shares dropped as much as 7% to 58.5 cents.

The Sigma share price has recovered a touch since then and is now down 3% to 61 cents.

Sigma share price tumbles on guidance downgrade

• Revenue up 5.5% to $1.73 billion
• Like for like pharmacy sales up 8.7%
• Underlying EBITDA up 14.7% to $39.2 million
• Underlying net profit after tax up 23.7% to $14.1 million
• Fully franked interim dividend of 1 cent per share
• Net debt of $82 million
• Outlook: FY 2022 underlying EBITDA guidance now 5% (from ~10% previously)

What happened during the first half?

For the six months ended 31 July, Sigma reported a 5.5% increase in revenue to $1.73 billion. Management advised that this was driven by a combination of above market organic growth across its pharmacy brands and independent network, a full run rate of sales to Chemist Warehouse, and the incremental on-boarding of a number of new customers.

PBS sales were up 14% for the half, with over the counter sales up 32%. However, excluding Chemist Warehouse, over the counter sales were down 5.4%. This reflects general market conditions including the softer cold and flu category.

On the bottom line, the company’s underlying net profit after tax increased 23.7% to $14.1 million. Management advised that this reflects its positive sales performance and operational platform efficiency.

What did management say?

Sigma’s CEO and Managing Director, Mark Hooper, was pleased with the half.

He commented: “It is pleasing to navigate a challenging operating environment and still deliver a strong set of results for the half. Our community pharmacy brands have again delivered industry leading like-for-like growth of 8.7%, with our upgraded infrastructure easily absorbing a 13% increase in wholesale volumes for the half.”

“Just as pleasing, we are now emerging from a period of significant investment and transformation which has set the business up for the next wave of growth, including the pursuit of acquisition opportunities,” he added.

Outlook

While management is confident on the medium and long term, it has warned that near term trading conditions remain tough due to COVID-19 restrictions.

As a result, underlying EBITDA is only expected to grow 5% in FY 2022. This is a sharp slowdown on its first half growth and means it is behind on its two-year growth target. That target is for a CAGR of 10% for underlying EBITDA growth in FY 2022 and FY 2023.

Mr Hooper concluded: “We have emerged from the challenges of the last 18 months to deliver a strong first half result and have the business in good shape. However, with the increased impact of COVID-19 restrictions that are expected to stretch well into the 2H22, we are now expecting FY22 Underlying EBITDA growth to be closer to 5%.”

The post Sigma (ASX:SIG) share price sinks 7% on half year update and guidance downgrade 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 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 IGO Ltd (ASX: IGO) share price is in the green today amid rumours the company is scouring Western Areas Ltd‘s (ASX: WSA) books as it considers posing a new acquisition offer.

The mining company responded to the rumours in an ASX announcement earlier today, noting it has entered due diligence with Western Areas in recent days. However, it declined to comment further.  

The companies announced they were in takeover talks in August. The market hasn’t received any updates on their discussions since.

At the time of writing, the IGO share price is $9.11, 0.89% higher than its previous close.

Let’s take a closer look at the rumours regarding the nickel and copper miner’s reported potential takeover of Western Areas.

IGO confirms some truth to takeover rumours

The IGO share price is gaining amid reports its been given access to Western Area’s books.

The reported access is apparently part of the recently unveiled due diligence between the 2 companies. The due diligence period reportedly follows an acquisition offer of around $1 billion.

According to reporting by the Australian Financial Review (AFR), Western Areas has allowed IGO access to its books so it can pose a more serious offer.

The publication believes IGO is most interested in Western Area’s Odysseus Mine, an up-and-coming nickel mine.

In August, the AFR reported IGO posed a $1 billion mostly scrip offer to Western Areas which was, assumably, rebutted.

Now, it’s expected the IGO will take the next 4 weeks to analyse the true value of Western Areas before deciding whether to offer the nickel producer a bid it’s more likely to accept.

While the market might be getting excited over the potential acquisition, IGO has warned investors to keep their cool.

The company noted the “potential change of control transaction” is far from certain and, at this point, it’s only in discussions with Western Areas.

IGO share price snapshot

The IGO share price has been performing exceptionally well on the ASX lately.

It has gained 42% since the start of 2021. It is also 102% higher than it was this time last year.

For comparison, the Western Areas share price has gained 13% year to date and 31.8% over the last 12 months

The post IGO (ASX:IGO) share price lifts amid Western Areas rumours 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 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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Motley Fool Australia Chief Investment Officer Scott Phillips joined Nine’s Late News on Monday night to discuss the 2% slump on the ASX, the ongoing fall of the iron ore price, and the private appetite for listed infrastructure assets.

The post Iron ore, ASX 200 get nailed. Infrastructure on the menu. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips 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 Insurance Australia Group Ltd (ASX: IAG) share price may be flat today, but that hasn’t been the case for September. The insurance giant has encountered some heavy selling of its shares, falling the past 6 consecutive trading days.

At the time of writing, IAG shares remain unchanged at $5 apiece. In comparison, the S&P/ASX 200 Index (ASX: XJO) is down 0.08% to 7,242 points.

What’s affecting the IAG share price

There are two main catalysts that have been weighing down the IAG shares this month.

The first is the broader market weakness on the ASX 200, which has fallen almost 4% in the last 3 weeks. Yesterday, the index plunged to its biggest one-day fall in more than 6 months, shedding 2.1%.

This had a knock-on effect for IAG shares, dropping 0.99% on Monday to a monthly low of $5.

Rising COVID-19 cases in Australia, along with the iron ore rout impacting the economy are being blamed for the fall. Furthermore, overseas losses are being felt as investors eagerly await the United States’ Federal Reserve policy meeting later this week.

While the macro factors appear to unsettle IAG shareholders, the company has been facing its own internal issues.

IAG recently announced that CMC Hospitality filed an application starting a representative proceeding in the Federal Court.

The company said it has not been served with the application and isn’t aware of the detailed nature of the application. Although, it appears to relate to insureds who hold policies with CGU and business interruption losses related to COVID-19.

In addition, IAG’s chief risk officer, David Watts announced his resignation from the company. No reason was given for the departure, and Mr Watts will leave the company sometime in the new calendar year.

IAG will conduct an executive search to replace its chief risk officer.

IAG share price summary

Despite being significantly lower this month, IAG shares are posting a 10% gain since this time last year. However, when looking at the last 2 years, its shares are down almost 40%.

Based on today’s price, IAG presides a market capitalisation of roughly $12.3 billion and has approximately 2.4 billion shares outstanding.

The post Here’s what has been moving the IAG (ASX:IAG) share price in September 2021 appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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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The Whitehaven Coal Ltd (ASX: WHC) share price is a rare bright spot on a tough day for ASX shares.

Shares in the Aussie coal miner have jumped 4.4% higher at the time of writing to $2.87 per share while the S&P/ASX 200 Index (ASX: XJO) has edged 0.2% lower.

Why the Whitehaven share price is lifting on Tuesday

Whitehaven is actually one of the biggest gainers in the ASX 200 this morning. That’s despite no news from the Aussie coal miner to start the day.

However, as always with resources shares, movements in underlying commodity prices could provide some insight. Coking coal prices have been tearing higher in recent weeks and continued to make strong gains overnight.

According to data from S&P Global Platts, cited in the Australian Financial Review, premium hard coking coal from Queensland sold for US$379 per tonne on Friday, setting a new record price.

That underlying strength in coal prices has helped boost the Whitehaven share price higher on Tuesday morning. The Aussie coal miner has been making strong gains today even as many ASX 200 shares experience a second straight day in the red.

According to Trading Economics data, coal prices are now trading at a new 10-year high having climbed 238.42% in the past year.

The Whitehaven share price has reflected those commodity price gains over that same period. Shares in the Aussie coal miner are up nearly 200% in the last 12 months. That means the company now boasts a $2.9 billion market capitalisation.

It represents a huge turnaround in fortunes from early September 2020. As the COVID-19 pandemic crimped demand for energy, Whitehaven shares were changing hands for as little as $0.85 per share.

Foolish takeaway

The Whitehaven share price is climbing higher on Tuesday even as many other ASX 200 shares are in the red. Strong coal prices are persisting and helping support the company’s current valuation in 2021.

The post Why the Whitehaven (ASX:WHC) share price is lifting on Tuesday appeared first on The Motley Fool Australia.

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Motley Fool contributor Ken Hall 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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Motley Fool Australia Chief Investment Officer Scott Phillips joined Weekend Sunrise on Sunday to discuss the recent unemployment numbers — which were wonderful on the surface, but hid a lot of the bad news. No, it’s not a conspiracy, just a result of the way the numbers are counted. And some other stats might be more useful…

The post A fall in unemployment during a pandemic? What do the numbers really mean? Scott Phillips on Weekend Sunrise appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips 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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At lunch on Monday, the S&P/ASX 200 Index (ASX: XJO) has fought back from a heavy decline at the open. The benchmark index is currently trading broadly flat at 7,243.6 points.

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

APA starts bidding war for AusNet

This morning APA Group (ASX: APA) announced that it has made a takeover approach for electricity distributor AusNet Services Ltd (ASX: AST). APA has made a non-binding indicative proposal of $2.60 per share in cash and scrip. This compares to the $2.50 per share offer made by Brookfield Asset Management on Monday. Management believes it would create a listed flagship Australian company with the scale and capability to accelerate the $20 billion growth in electricity transmission infrastructure needed to support the decarbonisation of Australia’s economy.

New Hope results

The New Hope Corporation Limited (ASX: NHC) share price is charging higher today after it reported a big turnaround in its full year profits. The coal miner revealed a net profit after tax (NAPT) of $79 million for FY 2021. This compares favourably to a loss of $157 million in the previous year. Strong coal prices and improved costs helped drive the profit rebound.

Domino’s shares downgraded

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is pushing higher on Tuesday despite being downgraded. According to a note out of Bell Potter, the broker has downgraded the pizza chain operator’s shares to a hold rating with a $155.00 price target. While Bell Potter is very positive on its outlook, its analysts believe its valuation is stretched. The broker notes that Domino’s shares trade at 40x estimated FY 2023 earnings.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Tuesday has been the Champion Iron Ltd (ASX: CIA) share price with a 4% gain. This appears to have been driven by hopes that the iron ore selloff has ended. The worst performer has been the APA share price with a 4% decline. Investors have responded poorly to its bid for AusNet.

The post ASX 200 (ASX:XJO) midday update: APA makes AusNet bid, New Hope results impress 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 owns shares of and has recommended APA Group. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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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Australian markets awoke to turbulence this morning as the S&P 500 Index, a benchmark for the US stock exchange, closed well into the red on Monday.

Over 99% of the S&P 500’s members closed in negative territory, the highest number since June last year.

Geopolitical tensions between the US and China, a reset in investor confidence and fears of contagion — or flow-on effects — from the Evergrande debt crisis have woven into US equity markets.

This turbulence has got Australian investors talking about ASX SPI Futures today. Here we will discuss exactly what ASX SPI Futures are and why they are making the rounds in investor conversations.

What are ASX SPI Futures?

To answer this question, we first have to quickly cover what a Futures contract is.

Put plainly and simply, a futures contract is an agreement to buy or sell a particular asset (or commodity) at a predetermined price, at a set date in the future.

Doing it this way means you can “lock in” what price you will buy (or sell) your asset for and at what point in the “future” this will occur. Some even liken futures to a kind of insurance that covers major market events.

Companies and investors alike use futures contracts to protect their assets against price fluctuations or to speculate on these fluctuations for profit.

They’ve actually been around for hundreds of years and are an integral part of the global financial system.

Each futures contract has an expiry date and certain stipulations on the underlying asset, which could be commodities, share market indices, bonds and so on.

ASX SPI Futures contracts are the benchmark share market index futures contracts in Australia. They are based on Australian indices such as the S&P/ASX 200 Index (ASX: XJO).

For instance, the ASX SPI 200 Futures contract covers approximately 87% of the market capitalisation of listed securities in Australia.

It sounds fancy but you can buy and sell futures contracts on an exchange, just like you would with shares for instance. There are specific risks involved though, like leverage and margin.

How do they work?

Let’s set up a hypothetical scenario to understand how it works – it’s quite simple.

Let’s say we own shares in an exchange traded fund (ETF) that tracks the S&P/ASX 200 Index (ASX: XJO).

A good example is the BetaShares Australia 200 ETF (ASX: A200) which currently trades at $124 and change.

That means the ETF, which trades just like a share, fluctuates with movements of the broad index.

So if the S&P/ASX 200 Index takes a hit so too will the Australia 200 ETF, which isn’t ideal. Hence, we need something to protect, or “hedge”, against this impact.

Enter futures contracts. We can “lock in” what price we are able to buy and/or sell for beforehand to prepare for this event.

Ideally, we want something in place that gives us cover if the Australia 200 ETF takes a nosedive.

So we would buy futures contracts that guarantee the price we can sell our ETF into the future – say at $120 for instance. It’s a small cost for a big gain in cover — and here’s why.

If the broad index does take a hit and sends the Australia 200 ETF from $124 to $90, we are covered as our futures contract allows us to sell our shares at $120.

So whilst everyone else is feeling the pain of seeing their investment dwindle, the ASX SPI futures contracts protected ours. That’s the basic premise but there are obviously many more intricacies involved in derivatives markets, where futures trade.

So why again is everyone talking about ASX SPI Futures?

Traditionally, in times of financial market distress, or even expectations of distress, activity in the futures markets increases substantially.

So from explanations that futures are a “hedging” or protective-style instrument, it starts to make sense why ASX SPI Futures are a hot topic of conversation today.

Investors are looking to protect their ASX listed investments from any flow-on effects generated by global events.

To do so, they would have to head to the futures markets and purchase ASX futures that give them some assurance and cover over their equity investments.

As explained earlier, investors seeking to hedge against their shares depreciating in value would purchase ASX SPI Futures contracts that lock in a price they can sell for at some time in the future.

With this kind of uncertainty in global equity markets, it seems ASX SPI Futures are to stay in fashion.

The post Why is everyone talking about ASX SPI Futures? appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions 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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There are some ASX retail shares that could be strong contenders to consider at the current prices.

Businesses in the retail sector have the potential deliver attractive profit growth but may come with a lower price/earnings ratio.

Companies that are growing in size, particularly with their digital sales, could be ones to think about:

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is a leading retailer of products for babies, toddlers and families. Think of items like clothes, toys, prams and furniture.

In FY21, the ASX retail share delivered sales growth of 15.6% and pro forma net profit growth of 34.8% to $26 million.

It currently has a national store network of 60 Baby Bunting stores in Australia. The plan is to grow the network to around 100 stores around Australia in various formats.

Baby Bunting recently commissioned a new national distribution centre and store support centre in the second half of FY21, doubling its distribution capability and reducing the reliance on third party logistics. Supply chain capability is a key driver of continued gross profit margin growth.

Digital sales increased by 54.2% to $90.8 million, making up around 20% of the ASX retail share’s total sales. Private label and exclusive product sales grew 31.1% to be 41.4% of overall total sales in FY21 – it’s aiming for 50% in the longer-term.

It’s expecting to open three new stores in Australia in the first half of FY22, with another two in New Zealand.

Baby Bunting’s profit margins continue to increase. In FY21, its pro forma cost of doing business ratio improved by 14 basis points to 27.8%. The gross profit margin also went up 83 basis points to 37.1%.

It’s currently rated as a buy by Morgan Stanley, with a price target of $6.90. It’s valued at 23x FY23’s estimated earnings.

Wesfarmers Ltd (ASX: WES)

Wesfarmers owns a number of high-quality retailers including Officeworks, Kmart Group and Bunnings.

All three divisions had a strong year in FY21. Officeworks earnings before tax (EBT) rose 7.6% to $212 million, Kmart Group EBIT increased 69% to $693 million and Bunnings EBT went up 19.7% to almost $2.2 billion.

In FY21, looking at continuing operations, excluding significant items, revenue rose 10% and net profit after tax grew 16.2%.

Each of Wesfarmers’ divisions continue to invest for the customer experience, make the supply chain more efficient and improve the digital offering.

The ASX retail share is expecting to spend around $100 million over FY22 which is aimed to accelerate the development of a data and digital ecosystem, which aims to provide customers a more seamless and personalised digital experience across the retail businesses.

Trading is currently being impacted by lockdowns in Sydney and Melbourne, however the retail divisions are “well positioned” for the resumption of normal trading as lockdowns and restrictions ease.

Wesfarmers says that its current portfolio of businesses are cash-generative businesses with market-leading positions, making it well positioned to withstand a range of economic conditions and “deliver satisfactory shareholder returns over the long-term”.

The ASX retail share is also looking to continue to develop and enhance its portfolio by pursuing investments and transactions that will create value for shareholders over the long-term. For example, it’s currently trying to take over Australian Pharmaceutical Industries Ltd (ASX: API) for $1.55 per share. This will form the start of a new healthcare division which will focus on health, wellbeing and beauty.

At the current Wesfarmers share price, it is valued at 27x FY23’s estimated earnings.

The post 2 strong ASX retail shares that could be 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 owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Baby Bunting. 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 Premier Investments Limited (ASX: PMV) share price has been a steady mover this year, up around 17% year-to-date to $27.98.

Shares in the retail conglomerate have held up relatively well, especially taking into consideration the recent lockdown extensions and broader market volatility.

The Premier Investments share price remains just 5% away from its recent all-time high of $29.35.

In a recent interview by Livewire, Nathan Hughes from Perpetual Limited (ASX: PPT) and Mike Murray from Australian Ethical Investment Limited (ASX: AEF) talked about their selection criteria for uncovering “the next small-cap champions”. In doing so, Hughes also highlighted some more mature opportunities in the retail space.

Characteristics for being a ‘small-cap champion’

Hughes said the first thing he looks for is a “long growth runway”.

“It’s not about having an enormous potential market or a lot of excitement around it, it’s about being in an industry that’s growing and looking for a sustainable runway for continued growth,” he said.

“And that may be through new products, the rollout of an existing store footprint, new verticals, or even sensible bolt-on M&As.”

He also talked about a company’s effective use of funds to bolster growth, saying:

“The other thing we look for is attractive returns on capital. Companies that can deploy capital well and generate really high rates of return can really accelerate their growth and become quite exciting investments.”

But the Premier Investments share price isn’t a small cap?

Premier Investments is far from being a small cap, boasting a market capitalisation of about $4.4 billion.

Despite sitting at the larger end of town, Hughes believes the company still has plenty of room to grow.

“It’s [Premier Investments] a company that’s done tremendously well, rolling out Smiggle and Peter Alexander, and more recently it’s had a lot of success online with huge scope for continued growth there,” he said.

“That’s both in taking those brands into additional markets and continuing to grow their online presence. Even though that’s grown nicely, we still think there’s a long runway ahead of that stock.”

At the time of writing, the Premier Investments share price is down 1.93% to $27.98.

The post Premier Investments (ASX:PMV) share price has room to grow: expert appeared first on The Motley Fool Australia.

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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. owns shares of and has recommended Australian Ethical Investment Ltd. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended Australian Ethical Investment 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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