The IVE Group Ltd (ASX: IGL) share price is on the rise during morning trade.

This follows the release of the print communications company’s business update and earnings guidance for the 2021 financial year.

At the time of writing, IVE Group shares are swapping hands for $1.38, up 11.29%.

How is IVE Group performing?

According to this morning’s release, IVE Group advised ongoing business momentum is continuing its run into the second-half of 2021.

In particular, the 5-year Australian Community Media contract is expected to be fully transitioned into the business by the end of next month. It’s worth around $20 million per year for IVE Group.

As well, the Spotlight Retail Group has now become a significant letterbox distribution client across Australia and New Zealand.

IVE Group’s customer retention also delivered a robust performance, with healthy contract renewals. The most significant deals of note included L’Oréal and Westpac Banking Corp (ASX: WBC). The latter signed on for another 5 years with an estimated contract value of $20 million per annum.

The company revealed its other revenue sectors, such as travel, catalogues, exhibitions and events, are consistent with H1 FY21.

For the end of April, IVE Group declared a cash balance of $95.1 million. This is after the company’s share buyback program ($5.2 million) and interim dividend payout ($10.3 million).

Projected net debt for the upcoming end of this financial year is anticipated to come in at between $90 million and $100 million.

Investors are seemingly upbeat about the company’s performance, sending IVE Group shares significantly higher during Wednesday’s session.

Outlook for FY21

In response to the impacts COVID-19 had on the business, management focused on streamlining its cost base.

As a result, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast to be in the range of $98 million to $100 million.

IVE Group share price snapshot

Over the last 12 months, IVE Group shares have lifted by more than 38%. However, year-to-date performance has gone in reverse, with the company’s shares down by around 4% so far in 2021.

Based on today’s share price, IVE Group has a market capitalisation of roughly $200 million, with approximately 144 million shares outstanding.

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

While crypto assets rose to new heights earlier this year, and there are now meme-inspired tokens like Dogecoin (CRYPTO: DOGE) being touted by Elon Musk, the recent crash of crypto assets is not so different from the one in 2017, says one analyst.

Josh Younger, who leads interest rate derivatives strategy at JPMorgan Chase (NYSE: JPM), wrote in a recent research note that he sees similarities between the big sell-off in 2017 and the one that recently occurred in which Bitcoin (CRYPTO: BTC) fell as much as 50% from its high of around $65,000 per token.

Similar to what happened in 2017, Younger noted that investors have steered away from the popular tokens like Bitcoin and Ethereum (CRYPTO: ETH) and into riskier altcoins and stablecoins as well.

Younger wrote that this turn and the negative sentiment “should caution any view that the worst is clearly behind us.” He added that cryptocurrencies are undergoing a “sizable correction” and that he was unsure of whether the correction is done just yet.

Among the many similarities between 2017 and now, Younger certainly sees differences as well. Notably, there hasn’t been the same kind of activity around initial coin offerings as there was in 2017, and there is much more institutional interest in cryptocurrencies now as tokens like Bitcoin are much more ingrained into the traditional financial system. In his research report, Younger wrote:

We continue to see evidence of resilient microstructure in cryptocurrency markets: the volatility spike appears somewhat regionally localized, market depth is down but has not cratered despite these moves, and derivatives pricing has managed to adjust quickly enough to retain a decent fraction of the levered long base … This all argues against the view that we are in the midst [of a] self-reinforcing vicious cycle of price declines — a classic run scenario.

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

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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Nitro Software Ltd (ASX: NTO)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $3.70 price target on this document productivity software company’s shares. Morgan Stanley notes that Nitro has reiterated its guidance at a recent conference and revealed that it continues to experience strong demand for its offering. Its analysts also see opportunities for stronger returns from cross selling and upselling to enterprises. The Nitro share price is currently fetching $2.79.

Rio Tinto Limited (ASX: RIO)

A note out of Macquarie reveals that its analysts have retained their outperform rating and $140.00 price target on this mining giant’s shares. According to the note, the broker acknowledges that iron ore prices have pulled back meaningfully over the last couple of weeks. Despite this, Macquarie remains very positive on miners with exposure to iron ore and is expecting strong free cash flow yields thanks to high prices. This bodes well for dividends in the near future. The Rio Tinto share price is trading at $119.55.

TechnologyOne Ltd (ASX: TNE)

Analysts at Morgans have retained their add rating and lifted their price target on the enterprise software company’s shares slightly to $10.00. This follows the release of TechnologyOne’s half year results earlier this week. Morgans notes that the company delivered a strong result and full year guidance in line with its expectations. In addition to this, based on new customer addition rates and current average spending, it believes TechnologyOne is on a path to achieving its $500 million annualised recurring revenue (ARR) target by FY 2026. The TechnologyOne share price is trading at $9.17 on Wednesday morning.

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There are ASX shares that have kept growing the dividend in recent years and may have the potential to keep increasing the payment.

The below businesses managed to grow the dividend during the COVID-affected year of 2020 and are experiencing high levels of demand, which could lead to rising profit and a bigger dividend in the future.

Bapcor Ltd (ASX: BAP)

Bapcor is the biggest automotive parts business in Australia. In FY20 the business grew its annual dividend by 2.9% to 17.5 cents thanks to an increase of the interim dividend and a final dividend that was maintained. 

In the FY21 half-year result, Bapcor’s board decided to increase the interim dividend by a further 12.5% to 9 cents per share.

The latest dividend increase was funded by a large increase in profitability. Half-year net profit after tax (NPAT) grew by 49.7% to $67.7 million and pro forma earnings per share (EPS) went up 28.9% to 20.7 cents.

Bapcor said that result was driven by growth in revenue, operating leverage and profitability in all business segments. It’s also continuing to progress major projects that will underpin the company’s future success.

One of those projects by the ASX share is the construction of a new large distribution centre in Victoria which will see 13 locations consolidate into one. The retail segment has already successfully transitioned there. It’s expecting an operating expenditure benefit of $10 million in FY23 and a reduction in working capital of $8 million thanks to this change.

The warehouse is 50,000m2 in size and uses ‘goods to person (GTP) technology’. GTP picks 600 lines per hour, compared to 600 lines per day previously. It also comes with improved freight efficiencies, carbon emission reductions and energy utilisation.

It’s looking at the potential to do this type of consolidation in Queensland as well.

Growth in Asia is another promising area. It recently acquired a 25% stake of Tye Soon which has auto parts operations in a number of countries including Singapore, Malaysia, Australia, South Korea, Thailand and Hong Kong.

It currently has a grossed-up dividend yield of 3.4%.  

Brickworks Limited (ASX: BKW)

Brickworks is a diversified property business. It has a number of building products businesses, as well as a 50% stake in an industrial property trust and it owns almost 40% of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

It’s the property trust and Soul Patts shares that drive the Brickworks dividend higher, as the payout is funded from the distributions and dividends from those two assets.

In FY20 Brickworks increased its dividend by 4% to $0.59 per share. That included a 3% increase of the final dividend to $0.39 per share.

In the FY21 interim result, the ASX share increased the half-year dividend by a further 5% to $0.21 per share.

The industrial property trust is benefiting from the significant increase in demand for logistics.

Brickworks managing director Lindsay Partridge said:

The COVID-19 pandemic has only accelerated industry trends towards online shopping and this is fuelling demand for our prime industrial property. We are seeing increasing interest from our customers for more advanced, high-value facilities. An example of this trend is the state-of-the-art Amazon facility, currently under construction and due to be completed in September.

The business is seeing a recovery in both the Australian and US construction markets.

Brickworks is expecting further cashflow growth as property trust facilities are completed that results in gross rent within the trust increasing by over 40%, with significant further land remaining for development.

At the current Brickworks share price, it has a grossed-up dividend yield of 4.1%.

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Shares in ALS Ltd (ASX: ALQ) are in rocketing this morning after the company released its full-year results . At the time of writing, the ALS share price is trading for $11.80, up 8.26%.

ALS’ results for the year ending 31 March 2021 show a drop in both revenue and expenses, landing the company in the green.

ALS is a global testing, inspection, and certification company. It works within a number of sectors including agriculture, pharmaceuticals, and construction.

Let’s take a look at the results released by ALS this morning.

Full year results

For the year ending 31 March 2021, ALS recorded earnings before interest, tax, depreciation, and amortisation (EBITDA) of $421.1 million. That’s 25% more than last year’s EBITDA of $326.1 million.

ALS also announced a fully franked interim dividend of 8.5 cents per share and a final, 70% franked, dividend of 14.6 cents. Shareholders will have their dividend distributed on 5 July.

The year saw a drop in both revenue and expenses for ALS. The company’s revenue was $92.5 million less than the previous comparable period – it brought in around $1.76 billion. ALS said the fall in revenue was mainly due to the Australian dollar gaining value against other currencies.  

ALS’ expenses for the period came to around $1.37 billion, down from approximately $1.53 billion it forked out through the previous 12-months.

Combined, its revenue and expenses saw ALS finish the year with a $174.1 million profit.

Its earnings per share through the period was 35.78 cents – 35% better than last year.

ALS now has $611.1 million worth of assets, including $168.6 million of cash in the bank.

The company currently has $243.6 million in bills that need to be paid, as well as holding a group net debt of $613.6 million. It’s spent the last 12 months paying off a substantial portion of that debt – $186.5 million worth.

ALS also refinanced it debt earlier this month. Now, it uses a range of “geographically diverse” financial institutions to hold its multi-currency debt facilities.

Finally, ALS stated it’s committed to repaying COVID-19 related subsidies given to it from governments in countries where such payments exist.

Commentary from management

ALS’ chair Bruce Phillips commented on the company’s results, saying:

This is a very strong performance given the heavy impact of the COVID-19 pandemic. The swift actions from management to align the cost base with client demand and strengthen the balance sheet prepared the Group well to capitalise on the improved trading conditions in the second half of the year and advance our strategic objectives.

ALS share price snapshot

The ALS share price is having a great year so far on the ASX.

Currently, it’s gained 11.45% year to date. It’s also 54.61% higher than it was this time last year.

The company has a market capitalisation of around $5.2 billion, with approximately 482 million shares outstanding.

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

Amazon (NASDAQ: AMZN) is coming under fire from a well-armed legal figure. Karl Racine, the attorney general for Washington, D.C., has sued the company for engaging in anticompetitive behavior. This marks the first time that the massive retailer has been hit by an antitrust lawsuit in the U.S.

It’s part of a pattern, though. Amazon and other tech giants have lately come under increased scrutiny by lawmakers, which has led to a raft of antitrust suits being brought against them. 

The attorney general claims in the suit that the policies that govern Amazon’s relationships with third-party merchants prohibit those sellers from offering lower prices on non-Amazon sites. This makes the prices artificially high and helps the big retailer amass monopoly power. 

“Amazon is increasing its dominant stronghold on the market and illegally reducing the ability of other platforms to compete for market share,” Racine told Bloomberg.

Amazon fired back, with an unnamed spokesperson saying in a statement, “The D.C. Attorney General has it exactly backwards — sellers set their own prices for the products they offer in our store.”

Amazon added, “like any store we reserve the right not to highlight offers to customers that are not priced competitively.”

As reported by Bloomberg, Racine said he was unaware if other attorneys general would join the lawsuit — a common practice with suits against high-profile companies. He also said his case isn’t being coordinated with the Federal Trade Commission, the federal agency tasked with enforcing antitrust law.

Investors don’t seem too spooked by the lawsuit. On Tuesday, they pushed Amazon’s shares up by 0.4% while the S&P 500 slumped by 0.2%.

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

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The Aristocrat Leisure Limited (ASX: ALL) share price has been a strong performer in May.

Since the start of the month, the gaming technology company’s shares have risen just under 11%.

This means the Aristocrat Leisure share price is now up an impressive 31% year to date.

Why is the Aristocrat Leisure share price on form?

Investors have been bidding the Aristocrat Leisure share price higher this month following the release of its first half update.

For the six months ended 31 March, the company reported a 1% decline in revenue to $2,229.7 million but an 18.4% increase in net profit to $362.2 million.

Management advised that the company’s growth continues to be underpinned by a sustained investment in game design, development and technology.

Aristocrat made a $242.7 million investment in Design & Development (D&D) in the period, representing 10.9% of group revenue. It notes that this is in line with its refreshed growth strategy and commitment to exceptional market-leading product portfolios, customer engagement, people, talent and culture.

Is it too late to invest?

One leading broker that still sees value in the Aristocrat Leisure share price is Citi.

According to a note this week, the broker has retained its buy rating and lifted its price target to $46.60.

Based on the current Aristocrat Leisure share price of $41.02, this implies potential upside of 13.5% over the next 12 months.

What did the broker say?

Citi was pleased with its performance during the first half and particularly its Digital margins.

It commented: “Aristocrat is gaining share and seeing improving rates of profitability in both the land-based and digital markets. Our earnings outlook is largely unchanged, with small downgrades to FY21e (-1.7%) and FY22e (-1.1%) on higher rates of reinvestment in D&D and UA but upgrade the longer-term outlook (FY23e +2.3%).”

“Digital margins are the key source of upside surprise vs. consensus in our view, given the monetisation of RAID and the shift to Plarium Play. Aristocrat’s balance sheet remains undervalued given the capacity it provides for acquisitions and reinvestment. We increase our target price to $46.60 given the improving outlook for Digital margins and the pace of the North American and ANZ land based recovery,” Citi concluded.

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The post Top broker sees value in Aristocrat Leisure (ASX:ALL) share price appeared first on The Motley Fool Australia.

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The Australian Ethical Investment Ltd (ASX: AEF) share price has fallen in opening trade today after the company announced an earnings guidance and business update for FY21.

At the time of writing, the Australian Ethical share price is trading at $9.60, down 2%.

What might move the Australian Ethical share price today?

Earnings guidance for FY21

In today’s release, the wealth management company advised it expected to deliver an underlying profit after tax before performance fees for the year ending 30 June 2021 between $8.8 million and $9.3 million. This compares to the $7 million full-year underlying profit after tax delivered in FY20 on an equivalent basis. The expected profits for FY21 represent an increase between 25.7% and 32.8%.

Australian Ethical has seen a solid increase in funds under management (FUM), with $5.68 billion as at 30 April 2021. This represents a 5% increase from the $5.41 billion in March this year, and a 40% increase from 30 June 2020.

The company said that increases in April was driven by $0.17 billion in investment performances and continued solid netflows of $0.1 billion.

Australian Ethical highlighted its commitment to making ethical investing as accessible as possible for all Australian, and advised that it will reduce fees across targeted super options and managed fund products from 1 June 2021 onwards.

From a revenue perspective, the reductions will reduce the average revenue margin by approximately 0.04% pa. The company’s revenue margins at 31 December 2020 was 1.05% pa. Despite the margin reductions, the company believes it could improve the competitiveness of its products and contribute to long-term growth in FUM.

Business update

The company said it was seeing “great momentum” as its strategy delivered a number of positive outcomes in terms of FUM growth, investment performance and other key performance indicators. Its strong business performance could be a catalyst behind the 100% year-to-date surge in the Australian Ethical share price.

Its business update observed continued strong investment returns with its Australian Shares super option ranked first over 1 year, 5, 7 and 10 years. Its Australian Shares Fund and Emerging Companies Fund have delivered above benchmark returns, returning 15.1% and 18.6% above their benchmarks respectively.

Another area of growth for Australian Ethical is its adviser channel, which saw flows up 177% on the same period last year, reaching a significant milestone of $1 billion in advised FUM.

Outlook

The Australian Ethical share price has outperformed the broader market and is standing strong against recent market volatility.

Australian Ethical CEO John McMurdo commented:.

We are seeing unprecedented interest and demand for ethical investing as Australians open their eyes to how our products deliver attractive investment returns and make a positive difference in the world. Looking ahead, we expect this growth in ethical investing to accelerate

Mr McMurdo said the company was already reaping the benefits of strategic investments to strengthen its operating platform, diversify acquisition channels and improve customer experience.

We recognise the opportunity to extend our market leadership position through future investment in deepening our investment expertise, brand and marketing to improve brand awareness, technology to enhance customer experience and expanding our product offering to meet demand and further our positive impact.

In the medium to longer term, we expect higher levels of profitability as we realise the anticipated benefits of investing in our business and operating leverage from achieving greater scale.

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The Fletcher Building Limited (ASX: FBU) share price is on the move on Wednesday.

At the time of writing, the building products company’s shares are up 4.5% to a 52-week high of $7.02.

Why is the Fletcher Building share price rising?

Investors have been buying the company’s shares this morning after it provided an update on its guidance for FY 2021 and revealed plans to return funds to shareholders.

According to the release, Fletcher Building is expecting to achieve earnings before interest and tax (EBIT) of NZ$650 million to NZ$665 million in FY 2021. This is at the top end of its previous guidance range.

CEO Ross Taylor commented: “We continue to make material progress on executing our strategy and achieving key financial targets. We are seeing a broadly stable market environment with trading conditions in the second half of FY21 largely consistent with the first.”

“Despite some supply chain constraints and input cost pressures, we continue to see good margin performance from the business. Forward indicators for market activity are pointing to ongoing robust volumes in New Zealand and Australia, with our businesses focused on delivering above market growth and improved profitability in this environment.”

Share buyback

In light of its positive form and its strong balance sheet, Fletcher Building has announced that it will undertake a capital return to shareholders of up to NZ$300 million. This will be achieved through an on-market share buyback, commencing in June.

Mr Taylor commented: “Fletcher Building’s balance sheet is in a strong position, with leverage expected to remain below our target range in the medium term. This position provides us with capacity to recommence capital management and distribute up to NZ$300 million to shareholders, with the most effective method being an on-market share buyback.”

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

Amazon (NASDAQ: AMZN) and MercadoLibre (NASDAQ: MELI) exist as similar businesses targeting different markets. While Amazon might have become the king of e-commerce in the developed world, MercadoLibre’s approach has effectively made it the Amazon of Latin America.

The question now comes down to which company has better positioned itself for stockholders. Let’s take a closer look to see which consumer discretionary stock will likely offer higher investor returns.

Similarities and differences

As most know, both Amazon and MercadoLibre emerged as e-commerce pioneers, working to make e-retailing a viable shopping option for many of the world’s consumers.

Amazon brought these benefits first to North America and later to other countries. The company has also moved into the Latin American market. However, it has faced a key competitive disadvantage in this region. Most Latin American consumers use cash regularly, and a large percentage of them hold neither a bank account nor a credit card. This presents a challenge to e-retailers who rely on cashless payment.

MercadoLibre has addressed this through its payment system, Mercado Pago. On the Q1 2021 earnings call, CFO Pedro Arnt emphasized the company’s role to “democratize money and access to financial services” within its ecosystem. To this end, Mercado Pago offers fintech options so consumers can pay for items on the site. Moreover, the company has since expanded Mercado Pago to help other companies facilitate cashless commerce. Not only does this give MercadoLibre a competitive advantage in its home region, but it also makes MercadoLibre a fintech company.

Still, investors should remember that Amazon also operates a nonretail business with its cloud infrastructure service, Amazon Web Services (AWS). AWS not only pioneered the cloud industry, but it also delivered much higher margins than retailing and, at least until recently, accounted for a majority of company profits. These profits have sometimes subsidized Amazon’s retail arm. One example is the shift from two-day to one-day shipping in 2019, when Amazon sacrificed short-term profit growth to widen its competitive advantage.

How the financials compare

Amazon supports a market cap of more than $1.6 trillion, one exponentially larger than the $70 billion market cap for MercadoLibre. However, this means that MercadoLibre can achieve higher growth percentages than Amazon on lower volumes.

In the first quarter, MercadoLibre’s revenue of $1.4 billion surged by 111% compared with year-ago levels. The company also logged a $34 million loss, more than the loss of $21 million in the same quarter last year. Still, investors should remember that while the company did lose money in the first quarter of last year, that did not prevent MercadoLibre from turning a profit in fiscal 2020.

In contrast, Amazon’s $108.5 billion in net sales amounted to a 44% increase compared to the same quarter last year. Thanks largely to noncore income sources, net income surged 220% to $8.1 billion. That income led to a free cash flow of $26.4 billion over the last year, compared with about $691 million for MercadoLibre’s previous four quarters.

Additionally, of the two companies, only Amazon published forward guidance, but neither would commit to a full-year outlook. Companies and analysts alike have expressed concerns that e-commerce growth will temporarily slow as countries emerge from the pandemic. However, with COVID-19 cases still on the rise in MercadoLibre’s home region, that company faces more uncertainty on this front.

MercadoLibre’s stock has also outperformed Amazon’s over the last year. MercadoLibre increased by just under 65% over the previous 12 months versus Amazon’s 33% increase during that period. Nonetheless, Amazon investors will pay less for growth. MercadoLibre sells for about 15 times sales, while Amazon’s P/S ratio has fallen to about 4.

Data by YCharts.

MercadoLibre or Amazon?

Despite the higher expense, I believe MercadoLibre holds an edge for the long-term investor. This decision comes down to size. Amazon has already realized much of its potential, while MercadoLibre remains in an earlier stage of its development, meaning it can more easily log faster revenue growth.

Admittedly, Amazon might remain the superior company, and MercadoLibre might never match Amazon’s size. Also, given its current growth rates and strong cash flows, Amazon could remain a more suitable choice for risk-averse investors. Nonetheless, given MercadoLibre’s much faster increases in revenue, those with a higher risk tolerance should benefit more from its stock in the long term.

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

More reading

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• Amazon could skyrocket 83% by 2023, analyst says

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

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