The start of February 2021 is another opportunity to look into some ASX shares.

It has already been an interesting year in the global stock market with everything that’s going on relating to Gamestop.

These ASX shares could be ones to think about:

Pacific Current Group Ltd (ASX: PAC)

Pacific Current is a business that invests in leading global investment managers around the world.

If the investment managers manage to grow their funds under management (FUM), then Pacific Current benefits as well.

On Friday, the ASX share announced its FUM update for the three months to 31 December 2020. Pacific Current said that its FUM rose by a further 8.3% to $112.8 billion.

The company said that GQG’s assets once again posted significant increases. GQG saw its FUM rise by more than US$35 billion over the 12 months to December 2020.

In native currencies US dollar orientated fund managers saw FUM increase by 16.9%. When converting to Australian dollar, the increase was partly offset by the appreciation of the Australian dollar against the US dollar.

Pacific Current management said that in local dollars, all nine of the portfolio companies with FUM grew during the quarter, but when translated into Australian dollars only four of the nine did. Pacific’s FUM and revenue is heavily skewed towards the US dollar.

Dean Fremder of Perpetual Limited (ASX: PPT) said when Pacific Current shares were a bit lower: “The stock’s really cheap. It is on nine times earnings. It’s growing earnings at double digits, so more than 10% a year. It’s paying a 6.5% fully franked yield. And most excitingly, we think they can pay out a much larger portion of their earnings as dividends. We see no reason, given the surplus franking credits they have on the balance sheet, they can’t be paying a 10 or 11% fully franked yield in the next 12 months. So, really excited about that one.”

According to Commsec, the Pacific Current share price is valued at 10x FY22’s estimated earnings.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is another ASX share that’s involved with the funds management business.

Dr Peter Gardner from Plato Investment Management said about the ASX share and its FY20 result: “Magellan had a really good result. Their profit was up 20%. That final dividend was 10% higher than last year. What bodes well for future earnings for Magellan is that their average funds under management was up by 26% over the year. They’re actually doing really well in the current market environment. The growth stocks in the US, which they’re exposed to are doing really well.”

Not only does the fund manager have over $100 billion of FUM, which generates high levels of management fees, but it is also seeking growth in other areas.

Magellan’s own investment called Barrenjoey, a new investment bank, has just hired its latest members of the team according to reporting by the Australian Financial Review. Barrenjoey has hired two of JPMorgan’s top Australian investment bankers to run its equity capital markets unit.

Magellan has been making investments in operating businesses to make returns and provide greater levels of information to the funds management business. Barrenjoey is one investment and Guzman y Gomez is another, which is a fast food Mexican chain.

According to Commsec, the Magellan share price is valued at 16x FY23’s estimated earnings. It also has a projected partially franked dividend yield of 4.6% for FY21.

More reading

• 3 small ASX dividend shares with big yields
• Top brokers name 3 ASX shares to sell next week
• Got money to invest for dividends? Here are 3 ASX shares
• 3 little-known ASX dividend shares offering big income
• Got money to invest? Here are 3 ASX shares to buy

Motley Fool contributor Tristan Harrison 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 2 ASX shares to buy in February 2021 appeared first on The Motley Fool Australia.

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Due to the way they give investors easy access to a large and diverse range of shares, exchange traded funds (ETFs) can be a great way to balance out your portfolio.

If you’re interested in adding one or two to your portfolio in February, you might want to take a look at the ones listed below. Here’s what you need to know about them:

BetaShares Global Cybersecurity ETF (ASX: HACK)

The first ETF to look at is the BetaShares Global Cybersecurity ETF. It aims to track the performance of an index that provides investors with exposure to the leaders in the global cybersecurity sector. This is a sector tipped to grow strongly in the future due to the increasing threat of cyberattacks on governments and businesses.

The BetaShares Global Cybersecurity ETF includes a number of cybersecurity giants and emerging players. This includes the likes of Cisco, Cloudflare, Crowdstrike, Okta, and Accenture.

In respect to the latter, Accenture is an American-Irish multinational professional services company and a member of the Fortune Global 500. It uses advanced cyber defence, applied cyber solutions, and managed security services to provide the end-to-end protection agencies demand.

It also leverages artificial intelligence, machine learning, advanced analytics, and real-time threat intelligence to ensure a proactive defence posture.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

Another option to consider is the Vanguard MSCI Index International Shares ETF. This ETF provides investors with exposure to 1,532 of the world’s largest listed companies from major developed countries.

Vanguard notes that the ETF provides low-cost access to a broadly diversified range of securities that allow investors to participate in the long-term growth potential of international economies.

Included in the fund are some of the highest quality companies in the world such as Apple, Johnson & Johnson, Nestle, NVIDIA, Pfizer, Procter & Gamble, Tesla, United Health, and Walt Disney.

In respect to Apple, last week the tech giant released its first quarter results and delivered a 21% increase in revenue to a record US$111 billion. Apple revealed that the iPhone, wearables, and services segments each delivered record sales.

More reading

• 2 quality ETFs to buy that are making big returns
• 2 high quality ETFs for ASX investors to buy today
• 3 exciting ASX tech shares to buy
• 2 top ETFs delivering solid returns
• 2 outstanding ASX ETFs to buy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are some ASX growth shares that could be worth looking at during February 2021.

We’re already entering the second month of the year. Opportunities are always changing. 

Here are three ASX growth shares to consider:

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an electronic donation business. It predominately helps facilitate digital payments to large and medium US churches.

The company has major goals for the long-term in the faith sector. It’s aiming for a 50% market share whilst trying to reach US$1 billion of annual revenue.

The payments business recently announced that it had allocated an initial investment of resources into developing and enhancing the customer proposition for the Catholic segment of the US faith sector. Management said that this represented a significant milestone as Pushpay continues to execute on its strategy to become the preferred provider of mission critical software to the US faith sector.

COVID-19 has seen an acceleration of growth for the ASX share as people look for alternative ways to continue to give money to their church.

Pushpay also offers many tools to help with the church’s administration. It also has a livestreaming option for the congregation for people that can’t attend the church, perhaps because of COVID-19 restrictions.

The company recently increased its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) guidance for FY21 to a range of US$56 million to US$60 million.

According to Commsec, the Pushpay share price is valued at 28x FY22’s estimated earnings.

Bubs Australia Ltd (ASX: BUB)

The Bubs share price dropped back to Earth on Friday, reversing some of the gains made on Thursday in response to the company’s trading update which showed a lot of growth in the second quarter of FY21.

Bubs generated quarterly gross revenue of $12.8 million, an increase of 36% over the first quarter of FY21, though it was down 12% on the prior year.

China cross border e-commerce (CBEC) sales were up 27% quarter on quarter and up 34% compared to the prior corresponding period.

Adult goat dairy gross revenue was up 45% quarter on quarter and up 25% against the prior corresponding period.

The Bubs infant nutrition portfolio, which represented 57% of the ASX growth share’s second quarter’s revenue, grew 27% compared to the FY21 first quarter.

Bubs said it was the fastest growing infant formula manufacturer across Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Chemist Warehouse, with combined retail scan sales at the checkout up 41% quarter on quarter and up 67% compared to the prior corresponding period.

Bubs also said that export sales to markets outside of China continued to get better, with sales rising 194% quarter on quarter and up 138% against the prior corresponding period.

On the corporate daigou trade channel front, it was still softer than pre-COVID levels, but it was up 122% compared to the first quarter of FY21.

Time will tell whether this is the start of a turnaround or not for Bubs.

Redbubble Ltd (ASX: RBL)

Redbubble is an e-commerce business that sells artist-produced products like wall art, phone cases, apparel, stationery and masks.

Joseph Kim from Montgomery Investment Management said: “While Redbubble has clearly been a “stay-at-home” trade, we believe the business has the opportunity to emerge a longer-term structural winner from COVID-19 should it capitalise in the recent spike in user and customer interest as a result of recent lockdown measures.”

The ASX share’s growth has continued into FY21. It reported that normalised marketplace revenue grew by 98% to $139.3 million, helping gross profit increase by 118% to $59.6 million and it generated $17.2 million of earnings before interest and tax (EBIT).

Mr Kim isn’t the only person who believes in Redbubble’s future. Redbubble CEO Martin Hosking said: “The strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in the customer experience to improve loyalty and retention and ensure long-term higher levels of growth. The company has the resources to undertake the anticipated investments and margin structure to ensure it can do so while remaining profitable.”

More reading

• Why Bubs, Kogan, Lake Resources, & Western Areas shares are sinking lower
• 3 reasons why the Bubs (ASX:BUB) share price could be a buy
• ASX 200 drops 2%, IOOF and Afterpay shares sink, Bubs jumps
• Why Bigtincan, Bubs, LiveTiles, & Treasury Wine shares are storming higher
• Here’s why the Bubs (ASX:BUB) share price is surging 10% higher

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO and PUSHPAY FPO NZX. 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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In many cases, companies fall into one of two categories: value shares or growth shares. The former is often made up of stocks priced at low levels relative to their peers or historic averages. Their appeal often centres on their potential to deliver share price recoveries as operating conditions improve.

Meanwhile, growth stocks are those businesses that are expected to deliver an impressive rise in earnings over the long run. They can trade at high prices because of investor optimism.

Investors often focus on buying one type of stock or the other. However, given the uncertain economic outlook, which type of stock will outperform the other over the long run?

Growth shares or value shares?

While it is possible to separate growth shares from value shares based on factors such as their price and forecasts, combining the two could prove to be a profitable move. In other words, where growth stocks are priced at cheap levels they could be a very appealing investment opportunity. Similarly, where value shares have improving earnings prospects, they too could deliver high capital appreciation over the long run.

Of course, growth stocks are rarely priced at low levels. However, many of them appear to offer wide margins of safety at the present time. This may be because of short-term disruption that masks their long-term growth potential. Or, it could be because they are experiencing industry changes that are causing investors to demand wide discounts to their intrinsic values.

Similarly, many value shares seem to be cheap based on their long-term prospects. In some cases, investors may be underestimating their capacity to recover from present difficulties. Where value stocks have sound finances and the right strategies to adapt to changing operating conditions, they could prove to be very attractive investments.

A starting point when investing money

As such, instead of automatically categorising a company as a growth share or a value share, it could be prudent to approach it with an open mind. For example, this may entail an analysis of its financial position, competitive advantage, strategy and historic performance to determine how much it may be worth given current levels of risk. Should it be trading at a discount to its intrinsic value, there could be a buying opportunity on offer.

This strategy may enable an investor to find the best stocks through which to earn a return that beats the stock market over the long run. Some may be growth shares when they are trading at cheap prices, while some may be value shares when they have more attractive financial prospects than the market is currently anticipating. Through owning a diverse mix of businesses in a variety of sectors, it is possible to build a resilient portfolio with relatively low risks that can provide high returns in the long run.

More reading

• Two of the best ASX dividend shares to buy in February
• These were the best performing ASX 200 shares last week
• 3 reasons why the Kogan.com (ASX:KGN) share price could be an opportunity
• These were the worst performing ASX 200 shares last week
• Is the Westpac (ASX:WBC) share price a buy?

Motley Fool contributor Peter Stephens 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 Are value or growth shares best to buy for 2021? appeared first on The Motley Fool Australia.

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Are you looking to buy some dividend shares next week? Then listed below are two shares that might be worth considering.

Here’s why they are being tipped as dividend shares to buy:

Bravura Solutions Ltd (ASX: BVS)

The first share to look at is Bravura Solutions. This leading provider of software products and services to the wealth management and funds administration industries isn’t normally regarded as a dividend share, but a significant pullback in the Bravura share price has made it one.

That share price weakness has been driven by concerns over the impact that the pandemic and Brexit have been having on its performance. While a weak result is expected in FY 2021 for these reasons, management appears confident that demand will bounce back once these headwinds ease.

Goldman Sachs remains positive on the company and thinks investors should deal with this short term pain due to the potential long term gains.

It believes Bravura is well positioned due to its strong market position, high degree of recurring revenue, and its emerging microservices ecosystem strategy. It has a buy rating and $5.00 price target on its shares.

It is also forecasting a ~10.6 cents per share dividend in FY 2021. Based on the current Bravura share price, this represents a 3.5% dividend yield.

Fortescue Metals Group Limited (ASX: FMG)

The second ASX dividend share to look at is Fortescue. It is one of the world’s leading iron ore producers and a company that has been rewarding its shareholders handsomely with dividends in recent years.

This has been underpinned by its strong free cash flow generation thanks to significant cost reductions, an increase in its grades, production and shipment growth, and favourable iron ore prices.

In respect to the latter, the spot iron ore price was trading at US$168 a tonne late last week. This compares very favourably to Fortescue’s C1 costs of just US$12.74 per wet metric tonne.

Unsurprisingly, with margins as strong as that, Fortescue has been tipped to reward shareholders with bumper dividends again in FY 2021.

One broker that certainly expects this to be the case is Macquarie. It is forecasting a fully franked $2.04 per share dividend over the next 12 months. Based on the current Fortescue share price, this equates to a sizeable 9.4% dividend yield.

Macquarie has an outperform rating and $26.50 price target on Fortescue’s shares.

More reading

• 5 things to watch on the ASX 200 on Friday
• Why the Fortescue (ASX:FMG) share price sank 4% lower today
• Why the IGO (ASX:IGO) share price is tanking today
• Why Beach, Fortescue, Iluka, & Temple & Webster shares are dropping lower
• ASX 200 down 0.7%: BHP & Fortescue tumble, Reliance rockets, CSL downgraded

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Two of the best ASX dividend shares to buy in February appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) was well and truly out of form last week following a chaotic few days of trade. The benchmark index fell 2.8% over the week to end at 6,607.4 points.

Fortunately, not all ASX 200 shares sank lower with the market last week. Here’s why these were the best performers on the index over the period:

Unibail-Rodamco-Westfield CDI (ASX: URW)

The Unibail-Rodamco-Westfield share price was the best performer on the ASX 200 last week with a 22.4% gain. The shopping centre operator’s shares charged higher following GameStop’s meteoric rise. Unibail-Rodamco-Westfield had a decent amount of short interest, so the Reddit-GameStop development appears to have spooked short sellers into closing positions in a hurry, driving its shares higher.

IDP Education Ltd (ASX: IEL)

The IDP Education share price was on form and charged 12.6% higher of the five days. Investors were buying the student placement and language testing company’s shares following the release of a bullish broker note out of UBS. Its analysts retained their buy rating and lifted the price target on IDP Education’s shares to $23.00. According to the note, UBS believes that trading conditions are improving. Looking further ahead, it believes the company is well-placed to deliver strong earnings growth over the medium term.

Domain Holdings Australia Ltd (ASX: DHG)

The Domain share price wasn’t far behind with a gain of 8% last week. This also appears to have been driven by a positive broker note. Analysts at Credit Suisse upgraded the property listings company’s shares to an outperform rating with an improved price target of $5.10. It believes the company’s overweight exposure to NSW will be a positive if stamp duty reforms in the state proceed.

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine share price was a positive performer and climbed 7.8% over the week. As with Unibail-Rodamco-Westfield, this appears to have been driven by short sellers buying shares in a hurry to close their positions amid fears traders may do a “GameStop” with the wine company’s shares.

More reading

• These were the worst performing ASX 200 shares last week
• ASX 200 ends 0.6% down, Kogan falls 8.5%, Service Stream soars 10%
• Brace for an IPO resurgence as new floats beat the ASX 200 by ~50%
• The latest ASX stocks to be hit by broker downgrades
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400

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 Idp Education Pty Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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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There are some interesting reasons why investors may be interested in the Kogan.com Ltd (ASX: KGN) share price.

What is Kogan.com?

Kogan.com is an e-commerce business that sells a variety of products on its website including TVs, phones, appliances, furniture, garden supplies, cars, energy, mobile plans, insurance and NBN internet.

Kogan.com update

Kogan.com released a trading update for the FY21 first half.

Across the Kogan Group, which includes Kogan.com and Mighty Ape, it said that gross sales went up 96% and gross profit grew 120%.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew by more than 175% and EBITDA went up by more than 140%.

The company said it finished with cash of AU$78.9 million with AU$1.4 million of the group’s debt facility drawn within Mighty Ape.

In terms of active customers, Mighty Ape finished the half-year with 719,000 and Kogan.com finished with 3,003,000.

The company said it had its first week of $30 million, $40 million and $50 million of gross sales in the same week. Gross sales were greater than $50 million for the Black Friday week of 23 November to 29 November.

Gross sales on Black Friday, being 27 November 2020, were greater than $15 million for the day, the biggest day in the history of the business. Kogan Marketplace had its first $10 million week of gross sales in Black Friday week. Matt Blatt had it first week of more than $1 million gross sales.

Kogan.com’s founder and CEO Ruslan Kogan said: “We are proud to have delivered another record half while undertaking significant investments into the future of the business. I am so proud of how our team is navigating extreme growth within our core business, and responding to the fast-changing economic, health and supply-chain environment.

“We delivered our largest acquisition to date in Mighty Ape and expanded the Kogan.com community of members to more than 3 million active customers. We are investing into building strong customer relationships by expanding our logistics capability, our marketing reach and our systems and infrastructure – giving us the foundation to continue delighting customers as the business further scales.”

3 reasons why the Kogan.com share price might be interesting

1: Expanding product lines and margins – Kogan continues to expand its product lines. Each time it adds a new product line it increases the total addressable market. Being able to service more of the customers’ needs makes the relationship more valuable for both the customer and the company.

Its margins have continued to rise over the years. In FY17 the EBITDA margin was 4.3%, it rose to 6.3% in FY18, 6.9% in FY19 and 9.3% in FY20. The EBITDA margin appears to have risen further with EBITDA growing by 140% whilst gross sales went up 96% in this half-year update.

2: New Zealand growth – Kogan recently bought Mighty Ape which is a leader in gaming, toys and other entertainment categories.

In FY20, Mighty Ape is expecting to make $137.7 million of revenue, gross profit of $45.7 million and EBITDA of $14.3 million, representing year on year growth of 43.7%, 58.1% and 254.1% respectively.

This acquisitions open up growth potential for the business in another country. Kogan can expand Mighty Ape’s product lines and help it grow. Mighty Ape can help Kogan in any areas that it has better expertise than the parent business.

3: Growing shareholder returns – Kogan.com has been delivering profit growth and this has resulted in market outperformance over the various time periods.

Over the last year the Kogan.com share price has gone up around 240%. Since the start of 2017, Kogan.com shares have risen by approximately 1,250%.

Not only has the share price been rising, but the dividend has been going up too. In FY20 Kogan.com increased its annual dividend by 46.9% to 21 cents.

More reading

• These were the worst performing ASX 200 shares last week
• ASX 200 ends 0.6% down, Kogan falls 8.5%, Service Stream soars 10%
• Why Bubs, Kogan, Lake Resources, & Western Areas shares are sinking lower
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400
• Here’s why the Kogan (ASX:KGN) share price is sinking 5% lower

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.

The post 3 reasons why the Kogan.com (ASX:KGN) share price could be an opportunity appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has just had its worst week in almost three months following a market selloff on Thursday. The benchmark index fell 2.8% to end at 6,607.4 points

While a good number of shares dropped lower last week, some fell more than most. Here’s why these were the worst ASX 200 performers over the period:

IOOF Holdings Limited (ASX: IFL)

The IOOF share price was the worst performer last week with a decline of 16.6%. Investors sold the financial services company’s shares following the release of its second quarter update. That update revealed that IOOF’s Funds Under Management, Advice and Administration (FUMA) fell $0.4 billion to $202.4 billion during the quarter. This was despite the company recording positive market movements of $12.7 billion during the three months.

Ampol Ltd (ASX: ALD)

The Ampol share price wasn’t far behind with a decline of 14.9% over the five days. Last week the fuel retailer announced the completion of its $300 million off-market buyback. Ampol revealed that it bought the shares back at $26.34, which represents a 14% discount. The company advised that it expects $24.33 of the buyback price to be treated as a fully franked dividend for Australian capital gains tax purposes.

Lynas Rare Earths Ltd (ASX: LYC)

The Lynas share price was out of form and dropped 14% lower last week. This appears to have been driven by market volatility and profit taking after a strong gain earlier this month. Not even an impressive second quarter update could take its shares higher. According to the release, Lynas delivered second quarter production of 1,367 tonnes, which was in line with its guidance. This led to the company posting record quarterly sales revenue of $119.4 million. This was up from $87.3 million in the first quarter.

Kogan.com Ltd (ASX: KGN)

The Kogan share price was a very poor performer and dropped 13.8% over the period. The catalyst for this was the release of a first half trading update. Kogan revealed that it achieved a 96% increase in gross sales and a 140%+ jump in earnings before interest, tax, depreciation and amortisation (EBITDA) for the half. While this is strong growth by ordinary standards, it is a reasonably sharp slowdown compared to earlier in the half. After the first four months of the financial year, Kogan’s sales were up 99.8% and its operating earnings were up 268.8%.

More reading

• ASX 200 ends 0.6% down, Kogan falls 8.5%, Service Stream soars 10%
• Brace for an IPO resurgence as new floats beat the ASX 200 by ~50%
• The latest ASX stocks to be hit by broker downgrades
• Why Bubs, Kogan, Lake Resources, & Western Areas shares are sinking lower
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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Is the Westpac Banking Corp (ASX: WBC) share price a buy? Some brokers like Morgan Stanley and Credit Suisse have had their say. 

A lot has happened to the Westpac share price over the last 12 months. During the COVID-19 crash to 23 March 2020 it fell by just over 45% to $14.10. Since then it has risen by over 50%.

FY20 result

The FY20 report was released in November 2020 and it showed a large profit decline partly because of the effects of COVID-19.

Westpac’s cash earnings were down 62% to $2.61 billion and cash earnings per share (EPS) fell 63% to 72.5 cents. Statutory net profit fell by 66% to $2.29 billion.

Westpac attributed the large drop of profit to a number of one-off items including provisions and costs for the AUSTRAC proceedings ($1.3 billion), provisions for estimated refunds, payments, costs and litigation relating to the royal commission, write-downs relating to intangible items and asset sales and revaluations.

Excluding notable items, cash earnings still declined 34% because of the difficult operating conditions.

Westpac noted that more than two thirds of Westpac’s home loan customers on deferral packages had started making repayments again. At the time of the report, $16.6 billion of Australian home loans were in deferral, down from $54.7 billion. There were also $1 billion of Australian small business loans, down from $10.1 billion.

The big bank said it had a CET1 capital ratio of 11.13% at the end of FY20.

The board decided to pay a final, fully franked dividend of 31 cents per share. The total dividend to be paid represented 49% of Westpac’s statutory profit which was in line with the current APRA guidance.

Westpac’s CEO, Peter King, said at the time that while Westpac expects the economy to grow in the rest of 2021 and 2022, unemployment would remain elevated for some time.

What’s happening now?

The Australian Prudential Regulation Authority (APRA) has lifted the limit about how much of a dividend that banks could pay. Previously, banks had to hold onto half of their statutory earnings. However, APRA does still expect banks to take a prudent approach.

As broker Credit Suisse has pointed out, this could allow the major banks to feel more comfortable to pay higher dividends in FY21 and beyond.

Other brokers, like Morgan Stanley, think the economy is in a better position and this will benefit Westpac as it’s leveraged to a recovery, the big bank also has a healthy balance sheet and there’s an ongoing sector rotation. The broker thinks that Westpac will outperform the S&P/ASX 200 Index (ASX: XJO) in 2021.

Valuation estimates

According to Commsec, the Westpac share price is valued at 17x FY21’s estimated earnings. After a projected recovery of earnings, Westpac shares are priced at 12x FY23’s estimated earnings.

Westpac also has a projected grossed-up dividend yield of 5.7% for FY21.

The West[ac share price targets of Morgan Stanley and Credit Suisse (which means where they think the Westpac share price will be in 12 months) combines for an average of $23.55, which suggests a potential capital gain of approximately 10% over a year.

More reading

• Jailing of NAB exec a scary déjà vu for NAB (ASX:NAB) share price
• 2 top ASX dividend shares to buy in February
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• These ASX shares are falling after being hit by broker downgrades today
• ASX dividends will be up 30% this year: fundie

Motley Fool contributor Tristan Harrison 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 S&P/ASX 200 Index (ASX: XJO) dropped by 0.6% today to 6,607 points.

Here are some of the highlights from the ASX:

Kogan.com Ltd (ASX: KGN)

Kogan.com released a trading update for the FY21 first half. The Kogan.com share price fell 8.5% in response.

Across the Kogan Group, which includes Kogan.com and Mighty Ape, it said that gross sales went up 96% and gross profit grew 120%.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew by more than 175% and EBITDA went up by more than 140%.

The company said it finished with cash of AU$78.9 million with AU$1.4 million of the group’s debt facility drawn within Mighty Ape.

In terms of active customers, Mighty Ape finished the half-year with 719,000 and Kogan.com finished with 3,003,000.

Kogan.com said the business had its first week of $30 million, $40 million and $50 million of gross sales in the same week. Gross sales were greater than $50 million for the Black Friday week of 23 November to 29 November.

Gross sales on Black Friday, being 27 November 2020, were greater than $15 million for the day, the biggest day in the history of the business. Kogan Marketplace had its first $10 million week of gross sales in Black Friday week. Matt Blatt had it first week of more than $1 million gross sales.

Kogan.com’s founder and CEO Ruslan Kogan said: “We are proud to have delivered another record half while undertaking significant investments into the future of the business. I am so proud of how our team is navigating extreme growth within our core business, and responding to the fast-changing economic, health and supply-chain environment.

“We delivered our largest acquisition to date, in Mighty Ape and expanded the Kogan.com community of members to more than 3 million active customers. We are investing into building strong customer relationships by expanding our logistics capability, our marketing reach and our systems and infrastructure – giving us the foundation to continue delighting customers as the business further scales.”

Service Stream Limited (ASX: SSM)

The Service Stream share price jumped 10% today after the company announced a multi-year agreement with Telstra Corporation Ltd (ASX: TLS).

The ASX 200 business said that the contract is for design and construction services.

Under Telstra’s new commercial framework, Service Stream will be a key deliver partner responsible for performing design, construction and maintenance activities associated with its wireless and fixed-line infrastructure networks.

The five-year agreement is for an initial period of three years, with two one-year extension options, at Telstra’s election. The agreement is expected to transition on or around April 2021.

Whilst the agreement does not provide guaranteed volumes, Service Stream has historically delivered approximately $70 million of wireless and $30 million in fixed-line infrastructure works per annum to Telstra under similar agreements, with a larger pool of delivery partners historically operating across allocated regions.

National Australia Bank Ltd (ASX: NAB)

NAB announced today it has agreed to acquire 100% of the shares in 86 400.

The major ASX 200 bank explained that 86 400 was founded by Cuscal Ltd and led by CEO Robert Bell. It was granted an authorised deposit-taking institution licence in July 2019. As at 15 January 2021, 86 400 had more than 85,000 customers, $375 million of deposits, $270 million in approved residential mortgages and 2,500 accredited brokers.

NAB disclosed that it commenced discussions with 86 400 in late 2020. To support 86 400’s growth, NAB bought a minority stake in 86 400 and currently holds an approximate shareholding of 18.3% of the neobank.

The ASX 200 bank wants to acquire the rest of the business for $220 million, including other upfront transaction related expenses up to $220 million.

In April 2020, NAB announced plans to prioritise UBank to deliver a market-leading digital experience and new product propositions to customers. The acquisition of 86 400 will accelerate UBank’s growth by combining its established customer base, brand and colleagues with 86 400’s experience and technology platform.

The NAB share price dropped 1.6% today.

More reading

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• Brace for an IPO resurgence as new floats beat the ASX 200 by ~50%
• The latest ASX stocks to be hit by broker downgrades
• Why Bubs, Kogan, Lake Resources, & Western Areas shares are sinking lower
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and Telstra Limited. The Motley Fool Australia has recommended Service Stream Limited. 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 ends 0.6% down, Kogan falls 8.5%, Service Stream soars 10% appeared first on The Motley Fool Australia.

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