The Zip Co Ltd (ASX: Z1P) share price has been on a downward trend over the last couple of months. This comes despite the company reporting a robust result for the third quarter (Q3) of FY21 while pushing ahead with its expansion efforts.

At Friday’s market close, Zip shares were trading hands at $8.06, down almost 10% for the week.

Below, we take a closer look at what could be weighing down the company’s share price.

What’s with the Zip share price?

Zip shares have been in the spotlight during recent times as pressure mounts on the buy now, pay later (BNPL) market.

The company recorded impressive figures across its operations in Australia, New Zealand, and the United States (Quadpay) for Q3 FY21. In its quarterly update released 13 April, Zip reported that key metrics jumped on both quarter-on-quarter and year-on-year comparisons following significant growth in all geographical markets.

Zip shares soared 16.9% on the back of its outstanding trading update, reaching a high of $10.61. However, investors were quick to take profit in the days following, sending the company’s share price on a declining trend.

Furthermore, the announcement a few days later that Zip co-founders, Larry Diamond and Peter Gray were selling up to $1.5 million and $500,000 worth of shares, respectively, did not help matters. This put a dampener on investor sentiment, which led Zip shares to plunge 6.9% on that day alone.

The company also launched a $400 million senior unsecured convertible notes offering to support its growth in the United States. Unfortunately, the news wasn’t enough to boost the Zip share price.

What are the brokers saying?

After Zip reported its third-quarter results, a number of brokers rated the company with varying price points. Analysts at Citi upgraded Zip shares to a ‘buy’ rating but trimmed its price target by 0.4% to $11.30. Boutique investment firm, Shaw and Shaw Partners raised its rating by 4.5% to a bullish $16.00. However, the latest broker note came from UBS which retained its sell rating and initiated a price of $6.75 for the BNPL company.

Foolish takeaway

While Zip shares have fallen around 10% in the last week, year-to-date performance stands above a 50% gain. It’s worth noting that the company’s shares reached an all-time high of $14.53 in mid-February, before backtracking to early 2021 levels.

On valuation grounds, Zip commands a market capitalisation of roughly $4.4 billion, with around 552.6 million shares outstanding.

More reading

• ASX 200 Weekly Wrap: Shares have average week but a great month
• The Sezzle (ASX:SZL) share price is rising on new partnership
• Why Zip (ASX:Z1P) and these ASX shares are rated as buys
• Openpay (ASX:OPY) share price slides despite positive quarterly update
• ASX 200 falls, BHP rises, Afterpay sinks

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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.

The post Why is the Zip (ASX:Z1P) share price falling on hard times? appeared first on The Motley Fool Australia.

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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part 1 of our interview, Perennial portfolio management director Stephen Bruce tells how value managers like him are loving the world right now.

Investment style

The Motley Fool: What’s your fund’s philosophy?

Stephen Bruce: I’m the portfolio manager of the Perennial Value Australian Shares Trust. And that fund is an Australian equities fund. It’s a value style ESG-aware broad cap fund. 

We’ve been around for over 20 years. We run a moderate value style investment process. We’re not an ESG fund per se, but we do have a high level of ESG sub-integration through our research and portfolio construction — and we’re broad cap focused. 

We’ve got a team of effectively 19 people looking at Australian equities across large cap, mid cap, small caps and micro caps. So we’re pretty well equipped to go wherever the alpha opportunities are.

MF: To give our readers an idea, what are your two biggest holdings?

SB: Two biggest holdings at the moment are Westpac Banking Corp (ASX: WBC) and Healius Ltd (ASX: HLS). 

In the case of Westpac, we’re pretty positive on the banks. The banks had a tough 5 years pre-COVID with the Royal Commission. 

But if we look forward, a lot of the things that were headwinds for the banks are now starting to turn into tailwinds. Credit growths are starting to pick up. They’re well provisioned, the bad debts outcomes are going to be far better than expected. There’s a good opportunity with costs. The capital positions are really strong, so dividends will be good. And there’s the potential for capital returns to top that up a bit. The valuations are pretty reasonable compared to the overall market. 

So we’re keen on banks, and clearly Westpac has been beleaguered, having some issues probably more recently than the other banks — but it’ll work through those. And the valuation is looking pretty attractive.

The second-biggest holding is Healius. Now Healius, being a healthcare stock, brings a degree of defensiveness to the portfolio — because overall our portfolio is quite cyclically skewed and they’re participating in the value recovery pretty well. 

But we do like to have some defensives in there. And I think with Healius, as healthcare stocks go, it’s on a pretty reasonable valuation. It gives you some good protection in the sense that, being a pathology company, it does benefit from COVID. So COVID hangs around a bit longer, there’s some upside there. But importantly, internally there’s a turnaround story within the business [and] the balance sheets — they’re geared. 

It’s also in a sector where there’s been a reasonable degree of corporate activity going on, particularly at the smaller end. And [private company] Healthscope plus our Healius may be able to participate in that, in some way or other down the track.

MF: Running a value-orientated portfolio, I gather your team has enjoyed themselves the last 6 months or so?

SB: Yeah, well it’s really the last 12 months, or in fact ever since the market bottomed [in March 2020]. 

When we look at things following the typical pattern during periods of economic expansion, where growth’s broadening out, the opportunity set of stocks that will provide earnings growth is much broader. Your more cyclical stocks and sectors, which is typically where value investors find themselves hunting, they participate really well in those sort of recoveries. 

Probably also when we think about the market, we think there’s been a fairly significant change as policies moved from being focused around monetary easing to turning on the fiscal taps as well. A bit like monetary policy, once started in [quantitative easing] it’s pretty hard to turn it off. 

Now the governments have gone down this fiscal path and it seems to be working, seems to be making people happy. It’s pretty popular. It’ll be hard to wind it back immediately. There’s probably some positives to it being targeted and you can start to address some of the important social issues. 

We think monetary policy, to the extent it’s gone, asset price inflation [and] all of those problems are starting to appear. So maybe it’s time for something a bit new, but yeah, but who knows, if we go down that path, then what are we going to see? Better growth, increasing inclination for rates ticking up, which is all kinds of good stuff for value, really.

Buying and selling 

MF: What do you look at closely when considering buying a stock?

SB: Naturally, being a value manager, the first thing we look at is the valuation — what you’re paying. But then, of course, just as important to the equation, is what you’re getting. 

At its simplest level, we’re looking for companies who have sustainable businesses, which are actually going to be able to grow their earnings over time, that aren’t just going backwards for some structural reason. Also, importantly, are able to generally generate an adequate return on their investor capital, which is what you need to do to be a sustainable business over time. 

We have a conservative attitude to debt. So a strong balance sheet is an important starting point. And then the other usual thing of looking for companies with good management.

MF: Is the price-to-earnings (PE) ratio itself important to you or is it more about the rate of change of PE?

SB: A PE ratio is just a single input into something and obviously you’d like it to be lower, but it’s in no way the be-all and end-all. You’re balancing off what the PE is today versus what a reasonable expectation is for… the PE in the future. 

But the differentiating feature that, say ourselves and probably every other value manager would have, is our willingness to believe about the future. We’re less likely to ascribe a value to companies that are promising enormous earnings growth and asking you to accept an astronomical PE now. 

It is always a trade-off, what you pay versus what you get. And if there’s one thing that you learn very quickly is just buying the cheapest thing is usually not a very good investment strategy.

MF: What triggers you to sell a share?

SB: Sometimes things go wrong with a stock and you realise that it has issues that you weren’t counting on, so you’ll sell. 

But hopefully, more often you’re selling because you bought something, it’s performed well, and the share price’s run ahead of its fundamentals. You made good money and it’s no longer offering attractive value. 

Knowing when to sell is just as important as knowing when to buy. 

Having a fairly disciplined sell process is really important because we’re all human and we all have a tendency to fall in love with stocks. You can be sort of swept up and lose sight of the fundamentals and hang on for things too long. 

So typically we’ll have a valuation on a stock in a relative sense. And if that’s stopped, runs through a point where it’s no longer stacking up quantitatively as good value, that’ll trigger us to start exiting the position. In a measured way — we don’t have to sell things on day one. You start to wind the position back and lock in profits and hopefully have opportunities to reinvest them into better value opportunities.

MF: In addition to that, do you also have a standard horizon in mind?

SB: When we’re looking at stocks, the valuation basis we’re looking at is typically the next 2 to 3 years. So when you see a stock has got to a valuation based on the forecast in that period where it’s no longer comparing relative or attractive relative to the rest of the market, that’ll be the trigger to move on.

Tomorrow in part 2 of our interview, Bruce tells how, even as a value manager, he’s made money from growth stocks.

More reading

• ASX 200 Weekly Wrap: Shares have average week but a great month
• Westpac (ASX:WBC) share price on watch after posting $3.5 billion cash profit
• 5 things to watch on the ASX 200 on Monday
• 7 ASX 200 shares with emission reduction strategies
• Why ASX bank shares may be facing a big sell-off in the next few weeks

Motley Fool contributor Tony Yoo 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.

The post This is the best of the big ASX banks: fundie appeared first on The Motley Fool Australia.

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The Redbubble Ltd (ASX: RBL) share price was well and truly out of form in April.

The ecommerce company’s shares dropped 18.2% over the 30 days.

This means the Redbubble share price is now down almost 26% since the start of the year.

Why did the Redbubble share price crash lower in April?

The Redbubble share price was sold off last month following the release of its third quarter update.

Although the company’s top line continues to grow strongly, its lack of earnings growth spooked investors.

According to the release, for the three months ended 31 March, gross transaction value increased 58% (79% in constant currency) to $134 million and marketplace revenue rose 54% (76% in constant currency) to $103 million.

However, from this, it only reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.2 million. This compares to its first half EBITDA of $48.8 million, which averages out to $24.4 million per quarter.

This was driven by management’s decision to sacrifice profit margins over the coming years to deliver its medium term aspirational marketplace revenue of $1.5 billion.

Is this a buying opportunity?

The market doesn’t appear overly convinced by management’s decision, nor do brokers.

One of those is Morgans. In response to the company’s update, the broker downgraded Redbubble’s shares to a hold rating and cut the price target on them to $4.88 from $6.64.

Though, with the Redbubble share price now trading at $4.10, this price target still implies potential upside of 19%. Which certainly isn’t bad for a hold rating.

Morgans notes that management’s aspirational target implies growth rates well above those that its analysts currently are factoring in. This appears to hint that Morgans is somewhat sceptical that Redbubble will be able to deliver on these targets.

More reading

• Is there still upside to the JB Hi-Fi (ASX:JBH) share price?
• Could the Resmed (ASX:RMD) share price face a similar selloff to Kogan?
• This broker thinks you should buy the Kogan (ASX:KGN) share price dip
• 2 excellent ASX growth shares that are rated highly
• Broker weighs in on the Redbubble (ASX:RBL) share price after its 20% dive

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.

The post Why the Redbubble (ASX:RBL) share price sank 18% lower in April appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) closed last week essentially flat, losing 0.5% since Monday, but still finishing the week well over 7,000 points. However, with April now in the rearview mirror, we can now say that the ASX just finished a top month, enjoying a ~3.5% boost. It was the seventh month of gains in a row for the ASX 200, a streak not seen since 2019.

We saw some reshuffling of the big ASX blue chips over the week. Gold miners had a shocker, with big names like Newcrest Mining Ltd (ASX: NCM) falling 6.5%. Tech shares were also on the nose, with sector leaders Afterpay Ltd (ASX: APT)  and Zip Co Ltd (ASX: Z1P) leading the way.

But in other sectors, the losses were more mixed. Wesfarmers Ltd (ASX: WES) fell over the week, as did Woolworth Group Ltd (ASX: WOW) after a poorly received quarterly update. But Coles Group Ltd (ASX: COL) was a solid ASX 200 performer, rising close to 4% over the week.

Another notable loser was JB Hi-Fi Limited (ASX: JBH), which had its CEO poached by Solomon Lew’s Premier Investments Limited (ASX: PMV). Clearly, the market thinks this is JB’s loss and Solly’s gain, given the former shed more than 7% last week.

The banks were more or less flat, while the big miners like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) had pretty decent weeks on the back of strong iron ore prices (which recently hit US$200 a tonne). Of those miners, Fortescue was the standout performer with a gain of more than 4%. It also managed to add 13% over the month of April.

It’s worth mentioning that we also saw some blockbuster results across the Pacific last week, with some of the world’s biggest companies delivering expectation-smashing results. Most prominently, these included Apple Inc (NASDAQ: AAPL), Tesla Inc (NASDAQ: TSLA) and Amazon.com Inc (NASDAQ: AMZN).

How did the markets end the week?

As we flagged earlier, the ASX 200 had a fairly flat week, dropping 0.49% from 7,060.7 points to 7,025.8 points over the week. Monday and Tuesday got things off on the wrong foot, with back-to-back losses of 0.21% and 0.17% respectively. Wednesday reversed this trend with a 0.44% gain, which was supplemented by another 0.25% gain on Thursday. But Friday’s 0.49% loss cemented the week’s overall trend and ensured the ASX 200 finished in the red.

Meanwhile, the All Ordinaries Index (ASX: XAO) also had a fairly lousy week overall. The All Ords started out at 7,320.7 points and finished up at 7,290.7 points, a loss of 0.41%.

Which ASX 200 shares were the biggest winners and losers?

Time now for our most salacious segment, where we indulge in some gossip over the ASX 200’s winners and losers. So boil the kettle on as we start with the losers:

Worst ASX 200 losers	% loss for the week
Beach Energy Ltd (ASX: BPT)	(23.7%)
St Barbara Ltd (ASX: SBM)	(11.3%)
Nickel Mines Ltd (ASX: NIC)	(10.2%)
Nuix Ltd (ASX: NXL)	(10.2%)

The ASX 200’s wooden spooner last week was oil company Beach Energy. Beach had a clanger, losing close to a quarter of its entire market capitalisation. This was sparked by a quarterly update on Friday, which flagged major production issues at one of its oil-producing facilities. Investors were evidently not impressed.

St Barbara was the ASX gold miner which copped the worst of last week’s selloff in the sector. In addition to a falling gold price, which was behind the weakness in the entire sector last week, St Barbara was also hit by another poorly received quarterly update last week. With costs rising and output falling at the gold miner, investors couldn’t find much to like.

Nickel Mines was also hit by a very similar issue, also reporting a quarterly update that revealed lower nickel production.

And finally, habitual loser Nuix hit yet another new record low last week, despite no major news out of the company. Nuix shares are now down almost 50% from their December initial public offering (IPO) levels.

With all of that gloom out of the way, let’s now take a look at last week’s winning ASX 200 shares:

Best ASX 200 gainers	% gain for the week
NIB Holdings Limited (ASX: NHF)	14.7%
Cleanaway Waste Management Ltd (ASX: CWY)	9.6%
Cimic Group Ltd (ASX: CIM)	8.9%
Viva Energy Group Ltd (ASX: VEA)	8.6%

The best ASX 200 share last week was health insurance giant NIB Holdings. NIB impressed investors mightily with a trading update last week, which outlined an improved outlook for the second half of the financial year than what the company had previously flagged. Investors do like these things to be under promised and over delivered, so no surprise NIB was rewarded with a healthy jump of almost 15%.

Cleanaway Waste also had a top week, breaking its own 52-week high in the process. That was despite news that its proposed takeover of the French waste giant Suez would mostly not go ahead. The markets didn’t seem to mind too much, since Cleanaway shares rose almost 10% for the week.

Construction company Cimic was also in the good books. It posted a raft of updates over Wednesday and Friday, which included a quarterly update and a contract win announcement. Investors liked what they saw.

Finally, once again a quarterly update was behind Viva Energy’s share price gains over the week. The fuel refiner has been enjoying rising fuel volumes in recent months, which were dominated by gains in the high-margin premium fuels market.

A wrap of the ASX 200 blue-chip shares

Before we go, here is a look at the major ASX 200 blue-chip shares as we start on yet another week in paradise:

ASX 200 company	Trailing P/E ratio	Last share price	52-week high	52-week low
CSL Limited (ASX: CSL)	36.08	$271.16	$320.42	$242
Commonwealth Bank of Australia (ASX: CBA)	19.8	$89.04	$90.59	$58.01
Westpac Banking Corp (ASX: WBC)	39.21	$24.98	$25.52	$14.91
Australia and New Zealand Banking Group Ltd (ASX: ANZ)	23.74	$28.74	$29.55	$15.07
National Australia Bank Ltd (ASX: NAB)	24.57	$26.66	$27.10	$15.11
Fortescue Metals Group Limited (ASX: FMG)	8.51	$22.59	$26.40	$10.61
Woolworths Group Ltd (ASX: WOW)	35.08	$39.30	$42.57	$33.82
Wesfarmers Ltd (ASX: WES)	32.63	$54.11	$56.40	$35.76
BHP Group Ltd (ASX: BHP)	26.95	$47.70	$50.93	$29.17
Rio Tinto Limited (ASX: RIO)	15.68	$121.15	$130.30	$80.10
Coles Group Ltd (ASX: COL)	20.75	$16.32	$19.26	$14.95
Telstra Corporation Ltd (ASX: TLS)	22.75	$3.39	$3.54	$2.66
Transurban Group (ASX: TCL)	–	$14.17	$15.64	$12.36
Sydney Airport Holdings Pty Ltd (ASX: SYD)	–	$6.19	$7.49	$4.99
Newcrest Mining Ltd (ASX: NCM)	17.19	$26.52	$38.15	$23.08
Woodside Petroleum Limited (ASX: WPL)	–	$22.86	$27.60	$16.80
Macquarie Group Ltd (ASX: MQG)	24.24	$160.49	$161.48	$93.62
Afterpay Ltd (ASX: APT)	–	$117.65	$160.05	$27.72

And finally, here is the lay of the land for some leading market indicators:

• S&P/ASX 200 Index (XJO) at 7,025.8 points.
• All Ordinaries Index (XAO) at 7,290.7 points.
• Dow Jones Industrial Average at 33,875 points after falling 0.54% on Friday night (our time).
• Bitcoin (CRYPTO: BTC) going for US$56,775 per coin.
• Gold (spot) swapping hands for US$1,769 per troy ounce.
• Iron ore asking US$184 per tonne.
• Crude oil (Brent) trading at US$66.76 per barrel.
• Australian dollar buying 77.22 US cents.
• 10-year Australian Government bonds yielding 1.69% per annum.

That’s all folks. See you next week!

More reading

• Westpac (ASX:WBC) share price on watch after posting $3.5 billion cash profit
• Here’s how the CSL (ASX:CSL) share price performed in April
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week
• Top brokers name 3 ASX shares to sell next week

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Bitcoin, National Australia Bank Limited, Newcrest Mining Limited, Telstra Limited, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Bitcoin, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd and recommends the following options: long January 2022 $1920 calls on Amazon, short March 2023 $130 calls on Apple, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Premier Investments Limited, and Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, Transurban Group, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended Amazon, Apple, NIB Holdings Limited, and Nuix Pty Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASX 200 Weekly Wrap: Shares have average week but a great month appeared first on The Motley Fool Australia.

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There are a handful of ASX growth shares that could be worth focusing on this month as they look to continue to scale their businesses.

Growth shares have the potential to outperform the market because of the compounding of the revenue and profit at a faster pace.

These two ASX growth shares could be ones to watch for the long-term:

Temple & Webster Group Ltd (ASX: TPW)

This furniture and homewares business is one of the companies that have adapted and benefited the most from the change of customer shopping preferences over the last 12 or so months. That’s why the Temple & Webster share price is up almost 200% during the last year.

The initial COVID-19 retail frenzy was one thing, but customers seem to be here to stay for the e-commerce company.

Temple & Webster’s FY21 third quarter saw revenue rise 112% and active customers reached around 750,000. Even April 2021, which was competing against the huge April 2020 month last year, saw revenue growth of more than 20%.

Management believe that this trading shows that COVID-19 has permanently accelerated the online adoption in its sector. Over 2020, the company thinks that the percentage of furniture and homewares bought online almost doubled from 5% in 2019 to around 9% in 2020.

The ASX growth share is going to pursue continuing significant online market growth and longer-term returns by investing heavily in marketing, its operational capabilities, expanding its private label and launching new products.

However, due to this investment, operating profit margins will remain low for the next few years. But after that, it thinks it will achieve higher levels of profitability because of greater scale benefits.

Kogan.com Ltd (ASX: KGN)

Kogan is another ASX growth share that has significantly scaled during the last year because of the booming e-commerce sales.

It has impressed with higher profit margins, growth of active customers and an expanding product range.

Kogan is continuing its long-term strategy of investing in technology, marketing, logistics capability, platform improvements and Kogan First membership benefits to lay the foundation for future growth and provide ongoing improvements in the customer experience.

However, that growth investment as well as inventory problems led to adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) falling by more than 24% in the third quarter of FY21.

But, the Kogan.com business continues to grow. Excluding Mighty Ape, gross sales went up 32% and revenue rose 41%.

Looking at the main revenue segments, the ASX growth share saw exclusive brands revenue rise 63.9% to $88 million, third party brands revenue grow 13.6% to $60.1 million, Kogan Marketplace revenue rise 104% to $5.1 million and Kogan Mobile revenue rise 23.8% to $3.5 million.

The Kogan board is confident about the future with growth of its active customer base, its investments in key strategic initiatives and a strong level of in-demand inventory heading into key trading periods. It noted there has been price inflation through global supply chains.

According to Commsec, the Kogan share price is valued at 22x FY22’s estimated earnings.

More reading

• Top brokers name 3 ASX shares to buy next week
• 2 excellent ASX growth shares rated as buys
• Top ASX shares to buy in May 2021
• Is there still upside to the JB Hi-Fi (ASX:JBH) share price?
• ASX 200 rises, Kogan jumps, gold miners sold off

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 ASX growth shares to buy in May 2021 appeared first on The Motley Fool Australia.

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The Westpac Banking Corp (ASX: WBC) share price will be on watch this morning.

This follows the release of the banking giant’s highly anticipated half year results.

How did Westpac perform in the first half?

For the six months ended 31 March, Westpac reported a statutory net profit after tax of $3,443 million. This was an increase of 189% over the prior corresponding period and 213% over the second half of FY 2020.

It was a similar story for its cash earnings, which came in at $3,537 million for the half. This was a 256% increase over the prior corresponding period and a 119% lift over the second half of FY 2020. This equates to cash earnings per share of 97 cents.

This comprises Consumer earnings of $1,592 million (up 8%), Business earnings of $920 million (up 92%), Institutional earnings of $230 million (up 56%), New Zealand earnings of NZ$583 million (up 98%), and Specialist earnings of $134 million (up 44%).

Positively, even if you adjust for notable items from all periods, Westpac’s earnings were strong during the half. Excluding notable items, Westpac reported cash earnings of $3,819 million, up 60% year on year and 35% on the second half of FY 2020.

Other key metrics of note were its return on equity, which increased to 10.2% from 2.9%, and its net interest margin of 2.09%. While the latter was down 4 basis points from the prior corresponding period, it was up 6 basis points from the prior half.

Overall, this allowed the Westpac board to declare a fully franked interim dividend of 58 cents per share. This represents a payout ratio of ~60%.

“Promising start”

Westpac’s CEO, Peter King, was pleased with the way the bank has started the financial year.

He said “It has been a promising start to the year with increased cash earnings, growth in mortgages and continued balance sheet strength. First half earnings were considerably higher than the prior corresponding period, mainly due to an impairment benefit reflecting improved asset quality and a better economic outlook. Notable items were also lower.”

Mr King also revealed that the bank’s balance sheet has strengthened.

He explained: “We improved balance sheet strength, with our Common Equity Tier 1 capital ratio rising 153 basis points to 12.34 per cent.”

Another positive that Mr King pointed out was the progress it has made with its new operating model.

Mr King said: “Importantly, we are beginning to see the benefits of our new operating model through improved performance. Our Australian mortgage book increased $2.6 billion over the past six months, with good growth in owner occupier loans partly offset by lower investor lending. Owner occupier loans increased 3 per cent, with first home buyers making up 13 per cent of new loans. We also managed margins well, with the margin up six basis points from Second Half 2020.”

The chief executive also gave investors an update on how the bank is faring in respect to COVID-19.

He commented: “Australia and New Zealand have managed the pandemic well and we are proud to have helped so many customers return to full repayments. Stressed exposures to total committed exposures ended the half at 1.60 per cent, compared to 1.91 per cent at 30 September 2020. While the economic outlook is more positive, there is still some uncertainty and we have remained prudent in our impairment provisioning.”

Cost cutting plan

As well as its results, the banking giant also revealed some major cost cutting plans over the coming years, which could give the Westpac share price a lift.

Westpac is targeting an $8 billion cost base by financial year 2024 to materially improve its efficiency. This compares to a ~$10.2 billion cost base in FY 2020.

Mr King explained: “A significant reset is required to ensure the business is cost competitive over the long term, particularly as we navigate the pandemic’s recovery phase and an extended low-rate environment. The main drivers are simplification and digitisation as we exit all specialist businesses and accelerate our digital transformation.”

“We need to do things differently to deliver a competitive cost base, including redesigning and digitising many of our processes. We expect costs to increase in FY21 as we deliver on our Fix priority, before starting to fall from FY22,” he added.

The Westpac share price is up 27% since the start of the year.

More reading

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• What to expect from the Westpac (ASX:WBC) half year result

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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 CSL Limited (ASX: CSL) share price had a better month during April.

Although it underperformed the S&P/ASX 200 Index (ASX: XJO), it recorded a 2.5% gain over the 30 days.

This means the CSL share price is now down just 5% year to date and up 12% from its March low.

Why did the CSL share price recover in April?

The CSL share price has come under significant pressure over the last 12 months due to concerns over plasma collections.

Plasma is a key ingredient in many of the biotherapeutics company’s therapies such as immunoglobulins and albumin.

It needs to be collected from willing donors on a regular basis via CSL’s widespread collection centres. However, the COVID-19 pandemic has made collections very difficult for a number of reasons.

Chief among them is people staying home during the pandemic to avoid catching and spreading the virus.

In addition to this, given that CSL pays for donating plasma, many donors are doing it for the extra funds. However, with government stimulus putting money into the pockets of these potential donors, there is reduced need to do so.

The problem with this is that lower supply means that the prices being offered to donors has had to increase, leading to potential pressures on margins.

What’s the latest?

The good news for shareholders and the CSL share price is that one leading broker believes this headwind could now be easing.

A note out of Citi last month reveals that it believes plasma collections will return to 2019 levels during the second half of the 2021 calendar year.

This is thanks to the progress of the US vaccine rollout, which has seen an estimated 40% of Americans now having at least one vaccination.

Can CSL’s shares climb higher?

Citi has a buy rating and $310.00 price target on the company’s shares.

Based on the current CSL share price, this implies potential upside of more than 14% over the next 12 months.

This could make it worth considering in May.

More reading

• Top ASX shares to buy in May 2021
• How to find the best ASX shares on the share market
• Only 40% of Australians want the AstraZeneca vaccine. What could this mean for CSL (ASX:CSL)?
• 4 ASX shares to boom when inflation goes up: fundie
• Should CSL (ASX:CSL) be your next dividend share?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of 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.

The post Here’s how the CSL (ASX:CSL) share price performed in April appeared first on The Motley Fool Australia.

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The two ASX dividend shares in this article provide solid income every year, including through the difficult COVID-19 times of 2020.

Not every business was able to maintain or grow the dividend during 2020. Indeed, plenty of businesses cut the dividend – Commonwealth Bank of Australia (ASX: CBA) and Transurban Group (ASX: TCL) are just two examples.

These two ASX dividend shares may be able to offer reliable income in these uncertain times:

Brickworks Limited (ASX: BKW)

Brickworks has one of the most enviable dividend records on the ASX. Shareholders haven’t seen a dividend cut in over 40 years.

Management have expertly guided the business through difficult times with a range of different assets and businesses which can support each other.

In the good times, Brickworks’ building products businesses can perform very well. Indeed, the Australian market is currently experiencing solid performance as the economy recovers from the impacts of the COVID-19 recession. Its subsidiaries are among the best in their respective sectors such as Austral Bricks and Bristle Roofing.

It has been the shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares that has been particularly useful for supporting the Brickworks dividends over the years. The investment conglomerate has a diversified portfolio of telecommunications, resources, property, financial services and agriculture. These investments generate cashflow and pay dividends.

The segment that could create a lot of value in the next few years is its industrial property trust with Goodman Group (ASX: GMG). Once two large warehouses are completed, including one for Amazon, it’s expected this will significantly increase the rental profit and capital value of the trust. This should be very beneficial for Brickworks.

Charter Hall Long WALE REIT (ASX: CLW)

This real estate investment trust (REIT) might be one of the most consistent dividend payers out of the whole sector. It’s able to be so reliable for investors because of its long-term rental agreements, hence the name. Its weighted average lease expiry (WALE) at the end of the first half of FY21 was 14.1 years. That provides a lot of long-term income visibility.

The ASX dividend share aims to pay out 100% of its distributable earnings each year. It’s currently expecting to generate at least 29.1 cents of operating earnings per security (EPS). That means it’s expecting to pay a yield of at least 6% in FY21.

Its tenants are some of the highest-quality ones that you could want to have. Australian government entities, Woolworths Group Ltd (ASX: WOW), Telstra Corporation Ltd (ASX: TLS), Coles Group Ltd (ASX: COL) and Inghams Group Ltd (ASX: ING) are some of the biggest tenants.

Charter Hall Long WALE REIT has only been listed for around four and a half years, but it has increased its distribution in each financial year since then.

It continues to diversify its portfolio. For example, it recently acquired the David Jones flagship Elizabeth Street store as well as a BP service station portfolio.

The REIT is currently rated as a buy by the broker Morgan Stanley with a price target of $5.35. The broker expects the ASX dividend share to pay a yield of 6.4% in FY22.

More reading

• Why dividend investors should love Brickworks (ASX:BKW) shares
• 2 high-quality ASX 200 shares to buy today
• 3 ASX shares that keep growing the dividend every year
• Got money to invest for dividends? Here are 3 ASX shares
• 2 ASX dividend shares to buy with yields above 4%

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Transurban Group, and Woolworths 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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Are you looking for some excellent ASX dividend shares to add to your income portfolio? 

Then you might want to take a look at the ASX dividend shares named below. Here’s what you need to know about them:

Aventus Group (ASX: AVN)

The first ASX dividend share to look at is Aventus. It is the largest fully-integrated owner, manager, and developer of large format retail centres in Australia.

Aventus owns 20 retail centres which are home to a range of high quality national retailers such as ALDI, Bunnings, and Officeworks. In fact, at the last count, national retailers represented ~87% of its total portfolio.

Unlike many other retail landlords, Aventus has performed positively during the COVID-19 pandemic. This led to the company reporting growth in both revenue and profit during the first half of FY 2021.

Macquarie is positive on the company and currently has an outperform rating and $3.15 price target on its shares. The broker is also expecting a 16.3 cents per share distribution in FY 2021. Based on the current Aventus share price, this represents a 5.5% distribution yield.

BWP Trust (ASX: BWP)

Another dividend share to look at is BWP. It is the largest owner of Bunnings Warehouse sites across Australia with 68 properties leased to the home improvement giant.

Bunnings has proven to be a great tenant to have during the pandemic. With many consumers redirecting their spending to improving their homes, Bunnings has experienced very strong sales growth. This means BWP, like Aventus, has been one of just a handful of retail landlords that has been able to collect rent largely as normal.

This and positive property revaluations led to the company’s profit climbing 6% to $144 million during the first half of FY 2021.

Furthermore, its solid form has allowed management to reaffirm its distribution guidance of ~18.3 cents per share in FY 2021. Based on the current BWP share price, this represents a generous 4.4% dividend yield.

More reading

• 2 ASX dividend shares with big yields
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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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On Friday the S&P/ASX 200 Index (ASX: XJO) finished the week on a very disappointing note. The benchmark index fell 0.8% to 7,025.8 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 futures pointing lower

The Australian share market looks set to start the week with a decline. According to the latest SPI futures, the ASX 200 is expected to open the week 7 points or 0.1% lower this morning. This follows a poor finish to the week on Wall Street, which saw the Dow Jones fall 0.55%, the S&P 500 drop 0.7%, and the Nasdaq tumble 0.85%.

Westpac half year update

The Westpac Banking Corp (ASX: WBC) share price will be on watch today when it releases its half year results. According to a note out of Goldman Sachs, its analysts have pencilled in cash earnings (before one-offs) of $3,400 million. This will be up 242% on the prior corresponding period. From this, Goldman expects the Westpac board to declare a fully franked 56 cents per share interim dividend.

Oil prices tumble

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could start the week on a disappointing note after oil prices tumbled lower. According to Bloomberg, the WTI crude oil price fell 2.2% to US$63.58 a barrel and the Brent crude oil price dropped 1.9% to US$66.76 a barrel. Concerns over demand in India weighed heavily on prices.

Gold price flat

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch today after the gold price traded flat on Friday night. According to CNBC, the spot gold price ended the week at US$1,767.0 an ounce.

PointsBet rated as a buy

The Pointsbet Holdings Ltd (ASX: PBH) share price could be great value according to one leading broker. This morning, Goldman Sachs responded to the sports betting company’s third quarter update by retaining its buy rating with a slightly trimmed price target of $17.20. This compares to the current PointsBet share price of $13.60. It said: “We view PBH’s 3Q21 update as a strong set of numbers, further validating our positive thesis on the stock.”

More reading

• Top brokers name 3 ASX shares to buy next week
• These were the worst performing ASX 200 shares in April
• These were the best performing ASX 200 shares in April
• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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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