Last year, the Kogan.com Ltd (ASX: KGN) share price was a bellwether of Australia’s consumption habits throughout the pandemic.

Leading into 2020’s reporting season, shares in the online retailer had bolted more than 167% for the year.

Let’s take a look at how the Kogan share price responded last reporting season.

Kogan share price catapults after FY20 results

The Kogan share price actually dropped lower after the company released its results for FY20.

However, as investors digested the company’s results, shares in the online retailer bolted to record highs in the following days.

For the 12 months ending 30 June 2020, Kogan reported blockbuster growth as consumers flocked online.

Highlights from the company’s performance in FY20 included;

• Gross sales of  $768.9 million, up 39.3% on the prior corresponding period (pcp)
• Reveune of $497.9 million, up 13.5% year on year
• 35.7% increase in its active customer base to 2,183,000 
• Gross profit of $126.5 million, a up 39.6% on pcp
• 57.6% increase in adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $49.7 million
• Net profit after tax of $26.8 million, up 55.9% on pcp.  

Kogan shared the wealth with investors, declaring a fully franked final dividend of 13.5 cents per share.

Kogan’s management highlighted the changing nature of retail consumption and noted the company planned on continuing investment in increasing its active customer base.

Snapshot of shares in Kogan

Leading into this year’s reporting season, the Kogan share price has bolted more than 24% since the start of August.

However, despite its stellar performance this month, shares in the online retailer have struggled this year.

In fact, Kogan shares have nearly halved since surging to all-time highs of around $25 per in October last year.

There have been several catalysts that are likely to have caused the Kogan share price to plunge in 2021.

The initial catalyst can be traced back to late January when the company released a business update for the first half of FY21.

In the update, Kogan flagged a slower rate of growth than expected.

The second catalyst prompting investors to sell their Kogan shares was another update from the company in late May.

In that update, Kogan informed shareholders that it expected to report adjusted EBITDA of $58 million to $63 million in FY 2021.

In comparison, market consensus estimated Kogan’s EBITDA for FY21 to be around $70 million.

Investors will be keeping a keen eye on the Kogan share price with the eCommerce company scheduled to report its results for the full year tomorrow.

The post Here’s how the Kogan (ASX:KGN) share price responded last reporting season appeared first on The Motley Fool Australia.

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Motley Fool contributor Nikhil Gangaram owns shares of Kogan.com ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com 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 prospect of chronic post-COVID inflation dominated discussion and behaviour in share markets for months earlier this year.

But now that the nasty delta variant of the virus is ravaging Australia, there is very little talk or anxiety about it. The Reserve Bank even hinted this month that the resurgence of the pandemic could force it to extend support rather than withdraw it.

One expert warns though that “anyone feeling sceptical about inflation would be wise to tune in to the final week of the August reporting season”.

“If the first 3 weeks are any guide, inflation is no longer on the horizon,” said Yarra Capital Management head of Australian equities Dion Hershan.

“It’s here.”

ASX reporting season shows inflation not temporary

According to Hershan, it was easy enough to label the current inflation as ‘transitory’ when it popped up in a few specific products like timber and airfreight.

“But company results confirm just how far-reaching it appears to have become,” he said in a memo to clients.

“This has significant implications for rates and the margins of public companies. As one company reprices to recover input cost inflation, it can become self-perpetuating.”

Hershan is nervous that the market is not aware of this.

“Our strong sense is most investors are either complacent or dismissive of the issue, and only when they start to see margins and earnings decline will the issue come into sharper focus,” he said.

“Although COVID and lockdowns — quite rightly — dominate headlines and short-term thinking, inflation and the consequent margin pressure it can create will be an important issue in the years ahead.”

Some signs of chronic cost rises

Hershan cited some examples that tipped him off to the likelihood that inflation was here to stay.

Firstly, mining and construction companies like BHP Group Ltd (ASX: BHP), Bluescope Steel Limited (ASX: BSL), Mineral Resources Limited (ASX: MIN) and Oz Minerals Limited (ASX: OZL) were feeling the pinch.

“BHP, best-in-class in cost containment, cited production costs would be going up by 17% in iron ore, 21% in coal and 11% in oil,” said Hershan.

“Cost blowouts have been reported so far by Bluescope Steel (+5-10% to accelerate its North Star expansion), Mineral Resources (+24% across its business) and Oz Minerals (+13% relating to growth capex).”

Insurance companies revealed they were raising premiums like there was no tomorrow.

“Surging pricing evidenced by premium rate rises. QBE Insurance Group Ltd (ASX: QBE) delivered +10%, Suncorp Group Ltd (ASX: SUN) passed through +7% in home and +6% in motor, and Insurance Australia Group Ltd (ASX: IAG) announced +8%.”

And despite lockdowns affecting so much of the nation, the labour market seems to be tightening. This could lead to inflation from higher wages.

“Labour shortages were a theme across a number of results, including Domino’s Pizza Enterprises Ltd (ASX: DMP), Downer EDI Limited (ASX: DOW), Brambles Limited (ASX: BXB), ARB Corporation Limited (ASX: ARB), BHP Group and Commonwealth Bank of Australia (ASX: CBA) (referring to Construction),” said Hershan.

“Even CSL Limited (ASX: CSL) saw blood collection costs skyrocket by over 30%, with rising employment and lingering COVID hesitancy forcing it to move its donor incentive fees higher.”

How do investors combat persistent inflation?

So if inflation is whacking public companies, where do investors put their money?

“The issue only reinforces our preference to skew our portfolios towards high-quality companies, in attractive industry structures with strong pricing power such as Ansell Limited (ASX: ANN), James Hardie Industries PLC (ASX: JHX), Aristocrat Leisure Limited (ASX: ALL) and Resmed CDI (ASX: RMD).”

The advantage of pricing power has already been witnessed this year.

For example, Microsoft Corporation (NASDAQ: MSFT) announced last week that it would raise prices for its popular Office 365 business subscriptions.

The hike is the first major change in price structure since the launch of the cloud productivity suite in 2011, according to CNBC.

The post Revealed: The biggest shocker from results season appeared first on The Motley Fool Australia.

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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo owns shares of CSL Ltd. and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia owns shares of and has recommended Insurance Australia Group Limited. The Motley Fool Australia has recommended ARB Corporation Limited, Ansell Ltd., Dominos Pizza Enterprises Limited, and ResMed Inc. 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 Super Retail Group Ltd (ASX: SUL) share price has crept into the red during Monday’s session.

Super Retail shares are now exchanging hands at $12.21, a 4.39% drop into the red. At one point today, the company’s share price hit an intraday low of $11.76, a 7% drop from the open.

Let’s investigate further.

What’s in front of the Super Retail Group share price on Monday?

Although there has been no market-sensitive information released today, Super Retail shares have been on a downturn since the sports and outdoors retailer reported its FY21 earnings on 19 August.

In its report, the company recognised several investment highlights, including:

• Sales growth of 22% year on year
• Segment EBIT growth of 80% from the year prior to $476 million
• Normalised profit before income tax (PBIT) also grew 108% year on year
• Net profit after tax (NPAT) of $306 million, up 107% on the year.

Moreover, the company also increased its dividend, bringing the final payment to 88 cents per share – a staggering 450% increase over the year.

Given these notable performance strengths, why is it that the Super Retail Group share price has struggled on Monday?

Well, there are three possible explanations. Firstly, when a company announces a dividend, it will eventually trade “ex-dividend” a short time afterwards. Secondly, the drop could be a result of investor behaviour in selling shares to realise profits. Finally, there’s the ubiquitous variable of possible ongoing COVID-related fears.

Let’s peel back the layers on these a little more.

What does this mean for Super Retail Group shares?

You see, when a company announces a dividend, it also announces a record date. This is the cutoff time in which investors can purchase the company’s shares to qualify for the dividend payment. This is known as the ex-dividend date.

The term “ex-dividend” is also used to describe the date on which a company’s shares begin to trade without the value of the next dividend payment.

Investors must purchase a dividend-paying stock at least one day before the record date, as it takes one day for a trade to settle. However, an important consideration is that the company’s stock price always drops by about the same value as the dividend.

Super’s ex-dividend date is Monday 23 August, which may help explain the downward pressures on the charts today. Thus, on this basis, we can expect a 55 cent decline in the Super Retail Group share price on Monday.

Moreover, investors, for many a reason, will choose to take profits on their investment in a company’s shares.

For instance, investors who are satisfied with their gains in a Super Retail position may opt to take profits to realise their paper gains in cash. Equally, investors may also sell from fear-related decisions.

This results in selling pressure on the Super Retail Group share price. If done in enough volume, the result is significant selling pressure on the charts, fuelling downward moves further into the red.

Given the company’s FY21 performance, plus the uncertainties with coming out of the pandemic – specifically, when retail locations will be allowed to open again – it stands to reason that these selling pressures could be integral in driving Super Retail’s share price lower on Monday.

Super Retail Group share price snapshot

The Super Retail Group share price has posted a year to date return of 15.67%, extending the previous 12 months’ gain of about 15.89%.

Super Retail shares have lagged the S&P/ASX 200 Index (ASX: XJO)’s return of about 25% over the past year.

The post 3 reasons why the Super Retail (ASX:SUL) share price may be down 7% on Monday 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 owns shares of and has recommended Super Retail 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 Virtus Health Ltd (ASX: VRT) share price remains frozen at the time of writing at the company’s request. Shares will resume trading tomorrow.

The ASX healthcare share’s offerings include fertility, medical day procedure, and medical diagnostic services.

Virtus Health’s share price was put into a trading halt pending the company’s acquisition announcement, which it released today. It also released its full-year results for the 2021 financial year.

First, a look at the acquisition.

The Virtus Health share price frozen on acquisition announcement

Virtus reported that it has entered into a share sale agreement to acquire Adora Fertility and 3 Day Hospitals from Healius Ltd (ASX: HLS) for $45 million.

The company will fund the acquisition with an underwritten $35 million institutional placement along with existing cash reserves. It will issue new shares at a fixed price of $6.80 per share. The Virtus share price closed at $7.19 on Friday.

Management expects the acquisition to be completed in the second quarter of the 2022 financial year. That is, subject to the customary conditions.

Commenting on the deal, Virtus CEO Kate Munnings said:

This acquisition supports our ambition to increase consumer choice by offering diverse models of care across new locations. It also takes our day hospital network to ten facilities and represents our entry into WA.

What did Virtus report for FY21?

• Revenue of $324.6 million, up from $258.9 million in FY20
• Reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $93.4 million, up from $46.2 million in FY20
• Reported net profit after taxes (NPAT) attributable to shareholders of $43.1 million, up from $500,000 in FY20
• Declared a final dividend of 12 cents per share, fully franked

What happened during the reporting period for Virtus?

The company’s Australian segment saw revenue increase 24.4% compared to the prior corresponding period (pcp), while EBITDA increased by 30.1%.

Virtus said it was able to make the most of the “buoyancy in market activity” during the financial year. It did this via detailed planning for the restart of elective surgery, with doctors and staff available for the reopening.

The company said a greater focus on home and family during the COVID-19 pandemic saw more new patients commencing with its assisted reproductive services (ARS).

Revenue in the company’s day hospitals increased by 41.4%. That was partly driven by the increase in demand for IVF procedures. However, demand for non-IVF procedures grew to account for 45% of total day hospital revenue.

What did management say?

Commenting on the results, Munnings said:

It was a very strong performance across all our services globally, in the face of the ongoing COVID-19 impacts of border closures, lockdowns and heightened infection control requirements.

The challenges of providing essential services in the current conditions should not be underestimated and the strong results are a testament to all Virtus Health staff and specialists who have worked extremely hard throughout the year.

She added, “What was also pleasing was the growth in revenue across our day hospitals which was driven by improved utilisation, including an increase in non-IVF revenue.”

What’s next for Virtus shares?

Looking ahead, Munnings said:

Our FY21 results have positioned Virtus to invest in future growth including by developing new clinics in Nepean, Copenhagen & Brisbane; enhancing our capability in Fertility Diagnostics & Reproductive Genetics and by developing the Precision Fertility Digital Platform to enable innovation and efficiency.

While its ARS services are currently continuing to operate across all states, the company cautioned that the Delta variant poses a risk that some treatments may need to be deferred.

The Virtus Health share price is up 111% over the past 12 months.

The post Virtus Health (ASX:VRT) share price remains halted after profit boost and acquisition appeared first on The Motley Fool Australia.

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• Just how dependent is Fortescue Metals (ASX:FMG) on China?
• What’s moving the ASX 200 Index (ASX:XJO) on Monday?
• How does the Woolworths (ASX:WOW) dividend compare to its sector?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Virtus Health Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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A tumbling iron ore price has weighed on the Fortescue Metals Group Limited (ASX: FMG) share price in recent weeks. Waning China imports for the metallic material have sent the commodity’s price downwards from ~US$220 per tonne to a current price of US$160.54.

Similarly, shares in Fortescue have taken a ride to the downside to the tune of 24% over the course of a few weeks. Analysts have warned that the downward trend for iron prices might continue as China experiences a softening in its economic rebound.

So, what level of exposure does Fortescue Metals Group have to the world’s largest iron ore importer? Let’s take a closer look.

China’s hand in Fortescue’s ASX success

Much like Australia’s export relationship with China more broadly, Fortescue can be at the peril of its import partners. Unfortunately for shareholders, China’s directive to reduce emissions by cutting steel output has been a blow to the Aussie company.

Last year, China’s insatiable iron ore demand helped the Fortescue share price cement a 118% gain. Meanwhile, this year hasn’t been as peachy for the mining giant as the country’s imports slim down.

The question is, how reliant is ASX-listed Fortescue on China for its iron ore exports and revenue? While current values are not available, we can look at a few historical metrics to gain a sense of the country’s impact.

According to Statista, China accounted for roughly 75% of global iron ore imports based on the value in 2020. Luckily for Australia, the lion’s share of those imports is sourced from the land of green and gold – with 60% of China’s iron ore coming from Australia.

However, as the People’s Republic steel production ramped up over the past year, so did the demand for iron ore. It is likely China’s share of the import pie has only grown larger in 2021.

Furthermore, The AFR has quoted that 94.5% of Fortescue’s revenue was derived from China last year. The company’s more recent reliance will become clearer after it releases its FY21 full-year results next week.

Though, Fortescue is not alone in its reliance on China when it comes to iron ore exports. Late last year, CEO Elizabeth Gaines stated, “[China] accounted for 87 per cent of all iron ore exported from Australia in financial year 2020.”

June quarterly production report

At the end of July, ASX-listed Fortescue reported record iron ore shipments of 49.3 million tonnes for the quarter. This brought the financial year total to 182.2 million tonnes. Additionally, the average revenue per dry tonne came to US$168, representing a gross margin of roughly 84%.

Unfortunately for us, the update didn’t indicate what percentage of those exports were China-bound. Recently, Gaines said, “Australia must not lose sight of its trade relationship with China.” If those comments are anything to go by, it is likely still a large portion.

Finally, while a correction in iron ore prices had been anticipated by analysts following China’s steel mill restrictions, the ferocity at which it fell left some shocked. For instance, senior commodity strategist at ANZ Daniel Hynes said, “This move goes against the Chinese data we’ve seen so far. While soft, it doesn’t warrant this reaction in prices.”

The post Just how dependent is Fortescue Metals (ASX:FMG) on China? 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 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 Monday, the S&P/ASX 200 Index (ASX: XJO) is having a nice start to the trading week following the five days of red in a row that we saw last week.

At the time of writing, the ASX 200 is up a healthy 0.3% to 7,483.5 points. At this level, we are a little less than 2% off of the ASX 200’s all-time high of 7,632.8 points that we saw earlier in the month.

So what’s moving the ASX 200 today?

Well, since the ASX 200 (like almost all indexes) is a market capitalisation-weighted one, it’s not too hard to find out.

If an index is weighted by market capitalisation, its largest constituents will have the greatest effect on the index itself. And since the ASX 200 is dominated by the big four banks, BHP Group Ltd (ASX: BHP) and CSL Limited (ASX: CSL), we’ll start with those companies.

According to BlackRock, together the 6 companies make up around 33.5% of the entire index’s present weighting.

Which ASX 200 shares are moving the markets this Monday?

So, the ASX banks are having a pretty mixed day today.

Commonwealth Bank of Australia (ASX: CBA) is currently up 0.62% to $99.89 a share at the time of writing. Westpac Banking Corp (ASX: WBC) has gone backwards, losing 0.06% so far to 25.74 a share. National Australia Bank Ltd (ASX: NAB) is also down, having lost 0.33% so far to $27.32 a share. Meanwhile, Australia and New Zealand Banking GrpLtd (ASX: ANZ) is pretty flat, up 0.11% so far today.

CBA is far larger than any of the other banks. As such, its gains alone may wipe out the malaise from the other ASX 200 bank shares today.

Moving on, and BHP shares are also in the green today, up 0.68% so far to $44.64 a share. This follows the disastrous week BHP had last week. It saw the mining giant lose a nasty 16% of its value. Since BHP is the ASX 200’s second-largest share by market cap, this would be helping push the index higher today.

And finally, we have CSL. The healthcare giant is also in the green today, up 0.14% at the time of writing to $306.52 a share.

So, in conclusion, we can say with some confidence that the ASX 200 is being pushed higher this Monday by CBA, CSL, and BHP, albeit tempered by the other ASX banks.

The post What’s moving the ASX 200 Index (ASX:XJO) on Monday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. 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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As a major S&P/ASX 200 Index (ASX: XJO) blue chip share, Woolworths Group Ltd (ASX: WOW) shares have long held a reputation for being an ASX 200 heavyweight when it comes to dividends. But how does this reputation hold up today?

At the time of writing, the Woolworths share price has lost 0.69% this Monday and is going for $41.70 a share. That’s still pretty close to the company’s all-time high of ~$42 that we saw last week. That figure takes into account the recent demerger of Endeavor Group Ltd (ASX: EDV) of course.

So at this current share price, Woolworths offers a headline dividend yield of 2.43%.

Where does this come from? Well, Woolworths’ past 2 dividends. The grocery giant paid out an interim dividend of 53 cents per share in March of this year. Before that, its previous dividend payment was the final dividend of 48 cents per share that the company paid out in September last year.

Putting those two payments against the current Woolworths share price, and we get a yield of 2.43%. That yield grosses-up to 3.47% if we include the value of Woolworths’ full franking credits.

So how dies this yield compare to Woolies’ peers?

Well, let’s take a look.

WOW, look at that dividend!

So Woolworths’ most obvious peers are its rivals in the grocery space – Coles Group Ltd (ASX: COL) and Metcash Ltd (ASX: MTS). Coles competes with Woolworths with its own chain of grocery supermarkets, while Metcash is another competitor with its network of IGA-branded stores across the country.

So at the current pricing, Coles currently offers a dividend yield of 3.24%., or 4.63% grossed-up with full franking.

That comes from Coles’ two most recent dividends: an interim payout of 33 cents per share in March 2021, and a final dividend of 28 cents per share that shareholders will see hit their bank accounts in September.

In Metcash’s case, this company offers a current yield of 4.22% on current pricing, or 6.03% grossed-up. That comes from Metcash’s past two dividends of 8 cents and 9.5 cents per share respectively.

Why is the Woolworths dividend so low?

So you might notice that the Woolworths dividend seems to be a lot lower than its peers in its sector. 2.43% against 3.24% or 4.22%. So what’s going on here?

Well, in these three companies’ case, it seems to be related to the earnings multiple investors are currently willing to pay. Take the price-to-earnings (P/E) ratio of Woolworths. It’s currently sitting at 37.12. Compare that to Coles’ current P/E ratio of 25.01 or Metcash’s 17.77.

This tells us that investors are currently willing to pay a higher share price relative to earnings for Woolworths than Coles or Metcash. That means that investors are also willing to accept a lower dividend yield for Woolworths shares as a result.

The post How does the Woolworths (ASX:WOW) dividend compare to its sector? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 COLESGROUP DEF SET. 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 Woolworths Group Ltd (ASX: WOW) share price is edging lower today despite the company announcing a new Uber Eats trial.

At the time of writing, the retail conglomerate’s shares are swapping hands for $41.61, down 0.90%. It’s worth noting that its shares touched an all-time high of $42.66 last Friday before profit-takers swopped in.

Let’s take a closer look at what the company provided on its website.

Why is Woolworths partnering with Uber Eats?

According to the latest news, Woolworths is teaming up with Uber Eats to offer same hour grocery delivery across Australia.

Woolworths Metro (a chain of convenience stores launched in 2013) will feature in the Uber Eats app. This undoubtedly will have a positive effect on shoppers needing groceries, fruits and vegetables on short notice.

From next week, the trial is available for a dozen of Woolworths locations in Sydney and Melbourne. However, this will be extended to the eastern seaboard of Australia within the coming weeks.

Each delivery placed on the platform will be packed by Woolworths personal shoppers, before being passed on to Uber Eats. There is expected to be about 1,200 products available to consumers via the Uber Eats app.

The launch stores include Balaclava, Hadfield and Hawthorn in Melbourne. For Sydney, the stores include Bondi, Maroubra Beach, Padstow, Park Sydney (Erskineville), Pyrmont, Randwick, Redfern, Rose Bay and Rozelle.

Woolworths Metro General Manager, Justin Nolan commented:

At Woolworths, we’re always looking to make it easier for our customers to shop in ways that work for them.

This partnership will give our customers a fast, reliable and effortless way to get groceries delivered to their door within an hour. It will be ideal option for those smaller top up or last-minute shopping needs, and complement our existing eCommerce offer.

Importantly, it will also help us meet the needs of customers seeking to limit their community outings during the pandemic.

Woolworths share price snapshot

It’s been a fantastic year for Woolworths shareholders, with the company’s shares accelerating to new all-time highs.

Over the past 12 months, Woolworths shares have pushed 19% higher, mostly coming from year-to-date gains, up 20%.

On valuation grounds, Woolworths commands a market capitalisation of roughly $52.7 billion, with approximately 1.2 billion shares on its books.

The post Woolworths (ASX:WOW) share price slides despite new Uber Eats trial appeared first on The Motley Fool Australia.

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• Is now a good time to buy Woolworths (ASX:WOW) shares?

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 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 TPG Telecom Ltd (ASX: TPG) share price is out of form on Monday.

In afternoon trade, the telco giant’s shares are down 6.5% to $6.15.

This means the TPG share price is now down 25% over the last 12 months.

Why is the TPG share price under pressure today?

The weakness in the TPG share price may have been driven by a lukewarm response to its half year results from a leading broker.

According to a note out of Goldman Sachs, its analysts have retained their neutral rating but cut their price target on the company’s shares to $6.10.

This price target represented potential downside of ~7.5% for the TPG share price prior to today’s decline.

What did the broker say?

Goldman Sachs was disappointed with TPG’s half year results, noting that it fell short of its expectations for sales and net profit by 2% and 37%, respectively.

It commented: “The key weakness was i) continued postpaid mobile headwinds (subs -65k, ARPU -5%); and ii) a -7% decline in the corporate segment revenues; offset by iii) greater cost reductions, with SG&A -15% yoy.”

Goldman doesn’t appear to be expecting much better in the second half and was concerned by management’s decision not to provide guidance for the full year.

Its analysts explained: “Looking forward, although TPG is benefiting from its recent mobile price rises ($3-4 ARPU tailwind) and sub trends should improve as its 5G network reaches scale, we are concerned that earnings are yet to stabilize, forecasting 2H21 EBITDA -$35mn sequentially. This uncertainty is exacerbated by the lack of FY21 guidance, which we thought should have been provided (with covid uncertainty captured within the 1H21 earnings base).”

One positive, though, is that the broker believes TPG will benefit from the reopening of international borders, when that finally happens.

But for now, the broker sees more value in the Telstra Corporation Ltd (ASX: TLS) share price than the TPG share price. It currently has a buy rating and $4.30 price target on Telstra’s shares.

It concluded: “We revise TPG FY21-23 EBITDA -1% to on lower revenue, while EPS is -14% to -45% on higher D&A/Tax. We prefer TLS over TPG, given superior infrastructure, earnings recovery is underway, and multiples that are in-line.”

The post TPG (ASX:TPG) share price sinks on broker note 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 Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom 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 Sezzle Inc (ASX: SZL) share price is bouncing off year-to-date lows on Monday. This is after news the company has filed a confidential registration for a proposed initial public offering (IPO) in the United States.

At the time of writing, shares in the US-based buy now, pay later are up 0.76% to $6.64. That’s after an intra-day high of $6.77 which it reached mid-morning.

Sezzle eyes US listing

Sezzle announced this morning that it has confidentially submitted a draft Registration Statement for a proposed IPO. The registration is lodged with the US Securities and Exchange Commission (SEC).

The company advised that the number of shares to be offered has not yet been determined. Nor have they determined the price range for the IPO.

Sezzle aims for the IPO to take place after the SEC completes its review process. Timing will also depend on market and other conditions.

According to the Australian Financial Review, Sezzle shares might list on the US market before the end of the year.

Why seek a dual listing?

Sezzle is still a loss-making company. February full-year results cite a net loss of US$31.89 million with US$89 million in cash and cash equivalents.

The loss-making nature of the business continued into its latest second-quarter update in addition to US$60.95 million in cash and cash equivalents.

Looking ahead, Sezzle is targeting a number of existing and new international growth opportunities, including Canada, Brazil, Europe and India.

A dual listing could improve the company’s liquidity position and enable it to diversify its capital raising activities.

In addition, Sezzle is a US-based business compared to most ASX-listed BNPL companies with headquarters in Australia.

Sezzle share price snapshot

2021 has been a dull year for the Sezzle share price, up 7.02% year to date.

Recent quarterly results pulled down the company’s share price performance, which witnessed a 14.86% tumble to $7 on Tuesday 17 August.

The post Sezzle (ASX:SZL) eyes US market, share price jumps 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. 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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