The Charter Hall Group (ASX: CHC) share price finished the day trading 6.67% higher following the release of the group’s FY20 results.

FY20 results

Financial highlights from Charter Hall’s FY20 results included operating earnings of $322.8 million up 46.3% on the prior corresponding period (pcp). Statutory profit after tax attributable to stapled security holders was up 47% on the pcp. Additionally, the group reported distributions of 35.7 cents per share, up 6% on the pcp. 

Funds under management grew 33% to $40.5 billion at year end and $41.8 billion after the year end, representing growth of $1.3 billion.

During the period, Charter Hall was able to successfully launch new partnerships with investors and new tenant partnership funds with Telstra, BP Australia and Ampol.  

Over the last 10 years, its pre-tax operating earnings per security had a compound annual growth rate (CAGR) of 18.6% and 15.6% after tax.  However, post-tax and excluding the performance fee, Charter Hall’s CAGR comes in at 13.1% over 10 years.

Charter Hall also reported it has seen growth in its property investment portfolio, property funds management, development activity and pipeline and has maintained a strong balance sheet.

COVID-19 impact

Charter Hall’s strategy to focus on long weighted average lease expiry (WALE) assets to defensive tenants has helped limit the impact of the coronavirus pandemic.

In fact, it has seen accelerating demand for access to industrial and logistics assets which it has actively pivoted towards. Furthermore, the group is well positioned to take advantage of the opportunity to secure strategically aligned assets and portfolios.  

Outlook

Charter Hall has advised if there is no change in current market conditions, funds under management growth has already been achieved in FY21.

Assuming the COVID-19 operating environment doesn’t deteriorate, FY21 guidance is for after-tax operating earnings per security of 51 cents.

Furthermore, Charter Hall’s FY21 distribution per security guidance is for 6% growth over FY20.

The group reports momentum in sale and leaseback transactions continued to grow across corporate Australia and the group is well positioned to take advantage of this opportunity to secure strategically aligned assets and portfolios. 

About the Charter Hall share price

Charter Hall has 30 years’ experience in property investment and funds management. It has a diversified property portfolio in sectors including office, retail, industrial and logistics and social infrastructure.

The Charter Hall share price is currently trading at $12, down 3% on this time last year.

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Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Audinate Group Ltd (ASX: AD8) share price has fallen sharply after posting an underwhelming FY20 result due to COVID-19. Audinate’s share price was down 6.85% at $5.03 in closing trade today.

FY20 results are in

Audinate reported revenue of $30.3 million for the FY20, up 7.1% on the prior year.

The company saw a strong 30% increase in software revenue, largely driven by royalties from its Dante platform and retail software sales. Furthermore, gross profit margin grew to 76.6%, an increase of 2.2%.

However, a pounding from the pandemic saw Audinate slump to a net loss of $4.1 million after tax. This was a $4.8 million decline on FY19.

Major setbacks emerged in live sound equipment revenue as festivals were cancelled around the globe. This decrease was partially offset, however, by increased demand in higher education and conferencing applications.

Operating costs – primarily marketing expenses and a $3.1 million hike in staff costs – increased 15.8%.

There was also a $0.6 million one-off cost associated with the retirement of former CEO Lee Ellison. The overall impact of these factors led to a decline in EBITDA to approximately A$2.0 million. EBITDA was down by 26% compared to FY19.

However, promisingly for the Audinate share price, the company bounced back from a marked decrease in May to record consistent revenue in June and July.

Looking ahead, the company expects August revenue to maintain consistent. Nevertheless, it will need this to increase markedly if it wants to grow in FY 21.

Audinate’s balance sheet

Audinate aims to maintain its balance sheet strength after raising $40 million in an oversubscribed placement in July. With the $29.3 million already available before the equity raising, Audinate is well-positioned to deliver on its strategy and weather potential COVID-19 impacts.

The company’s cash on hand reflects an increase in operating cash flow of $4.8m and investing cash outflows of $8.8 million primarily related to software development costs. It is expected that the information tech share will continue to use the capital for research and development with potential for mergers and aquisition activities.

What’s next for the Audinate share price?

The Audinate share price may well be primed for acceleration in a post-pandemic world. This is as a result of impressive technology proliferation and huge interest in the product through online webinars.

Furthermore, despite Covid-19 headwinds, the progress of early Dante video licensees has been encouraging, suggesting that the first Dante video products will be available during FY21. This is in line with Audinate’s original expectations.

As mentioned, the company has continued to generate consistent revenue through August. However, the impacts of COVID-19 are difficult to predict with any reasonable degree of certainty. This means a wide variety of potential revenue outcomes for FY21 are possible. Accordingly, Audinate plans to update the market through FY21 in response to changes in the trading environment.

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Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO. The Motley Fool Australia has recommended AUDINATEGL FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Well, 2020 has been a tough year to hold ASX shares for both growth and income. Although many ASX share prices have recovered from the lows we saw back in March, many others haven’t. And when it comes to dividend income, the picture is even bleaker. Former dividend heavyweights from the ASX banks to Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) have slashed their payouts this year. And ASX dividend shares that cut their dividends aren’t normally rewarded with share price growth. So where to turn for growth and income in 2020?

Well, I think the 2 exchange-traded funds (ETFs) named below are a great start. ETFs have an advantage over individual shares because they hold a basket of different companies. If a company’s share price drops, it is proportionally sold out of the ETF (and vice-versa if a share price rises). In this way, an ETF can help capture a winner and reject a loser.

Growth and income ETFs:

1) Vanguard Australian Shares Index ETF (ASX: VAS)

This ETF from Vanguard simply tracks the largest 300 companies on the ASX, with weightings based on market capitalisation. The ASX is well-known for its tendency to yield relatively large dividend income, likely due to our unique franking system. As I flagged earlier, not all ASX shares are paying dividends in 2020.

But it’s (indirectly) for this reason that former dividend stalwarts like Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) don’t carry as much weight in VAS as they would have done last year and prior. Instead, companies like CSL Limited (ASX: CSL), Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) have grown to take a bigger slice of this ETF. And it so happens that all of these companies have kept their dividends intact this year.

As such, I think this diversified ETF is a great bet for both future growth and income. Currently, VAS is offering a trailing dividend yield of 4.02%, which comes partially franked as well.

2) BetaShares Nasdaq 100 ETF (ASX: NDQ)

This ETF from BetaShares looks beyond our shores, tracking the largest 100 companies in the US-based Nasdaq exchange. The Nasdaq is known to be the place where tech companies prefer to be listed on. As such, you will find most of the ‘big tech’ names at the top of its tables. Apple, Amazon.com, Microsoft, Facebook and Alphabet (owner of Google) make up the top 5 holdings.

Normally, tech shares have a reputation for being all grow, no show when it comes to growth versus income. But this ‘dot-com era’ reputation doesn’t really square with reality anymore. Apple and Microsoft are now dividend shares in their own right. And whilst Amazon, Facebook and Alphabet still don’t pay income today, other high-weighted shares in NDQ like Intel, Costco and PepsiCo do. Because of this, NDQ offers a surprisingly substantial trailing yield of 2.7% on current prices. As such, I think it’s a top investment for both growth and income right now.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Alphabet (A shares), BETANASDAQ ETF UNITS, and Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Is the CSL Limited (ASX: CSL) share price a buy?

CSL is the largest healthcare business on the ASX, it’s actually the biggest business in the S&P/ASX 200 Index (ASX: XJO).

The company recently released its FY20 result which included a number of interesting talking points.

CSL’s FY20 result

In constant currency terms, which is how CSL likes to report its result, net profit after tax (NPAT) rose by 17% to US$2.1 billion and revenue increased 9%.

CSL said this result reflected solid growth in the immunogloblin portfolio. Privigen sales grew by 20% and Hizentra sales increased by 34%. There was continued growth with high patient demand for chronic conditions.

The haemophilia portfolio has successfully evolved, driven by Idelvion with sales up by 25%.

CSL also said that the transition to its own distribution model in China has been completed. That was a drag on earnings in FY20 with albumin sales down by 36% – which was in line with guidance. This Chinese transition will improve CSL’s participation in the value chain as well as allowing the company to work directly with clinicians.

The healthcare giant also said that it delivered on its product differentiation strategy with strong profit growth for Seqirus.

So far, CSL said that there has been no material revenue impact to date resulting from the COVID-19 pandemic, though the situation is “fluid and some elements are unpredictable”.

The CSL final dividend was US$1.07 per share, equating to $1.48 in Australian dollar terms. That brings the full year dividend growth to 11% in AUD terms, a total of $2.95. At the current CSL share price it has a dividend yield of around 1%.

CSL announced that clinical trials were suspended in FY20 as a COVID-19 precaution, but these trials have now recommenced.

Investing for growth

I have always been impressed by CSL’s commitment to research and development. It is continuing to invest in its pipeline of products and it’s also involved in the global effort to tackle COVID-19 with one vaccine partnership and four therapeutic candidates under investigation and development. It’s the new products that will drive future earnings. 

What I thought was interesting this year was that the company made two bolt-on acquisitions. It acquired the license rights for a haemophilia B gene therapy program, etranacogene dezparvovec which had an upfront cash payment of US$450 million with further payments for milestones and royalties. It also acquired biotech company Vitaeris which is focused on the development of a treatment for rejection in solid organ kidney transplant patients.

Despite CSL having a market capitalisation of well over $100 billion, the company has still has plenty of growth potential – it’s investing for growth. Major capital projects are underway at all manufacturing sites to support future demand and in FY20 it opened 40 new plasma collection centres in the US.

Is the CSL share price a buy today?

In FY21 CSL is expecting net profit to be in the range of approximately US$2.1 billion to US$2.265 billion. That top end of guidance would be up to 8%. CSL tends to be a bit conservative with its guidance, so I wouldn’t be surprised to see CSL beat the guidance in FY21.

Nonetheless, CSL is looking quite pricey. It’s true that people who thought CSL was expensive at a share price of $200 have missed out on a capital gain of 50%. It’s one of the few ASX blue chips that is still growing profit during COVID-19. Its investing for growth should lead to longer-term profit growth. There’s a lot to like and I’d prefer to hold it for the long-term than a resource business or bank. 

But how much should we pay for a business that isn’t growing that fast? CSL is now a healthcare behemoth – the next decade isn’t going to be as good as the last decade.

At the current CSL share price it’s trading at 39x FY22’s estimated earnings. I think there are plenty of smaller businesses with much more growth potential like A2 Milk Company Ltd (ASX: A2M) which seem like they can produce better returns than CSL at the current prices.

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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 CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Integrated Research Limited (ASX: IRI) share price has slumped by 13.88% today after the company released its FY 2020 financial results. The fall in the Integrated Research share price came despite the company posting its 7th year in a row of profit growth.

Integrated Research is a locally based tech company that provided solutions for unified communications, payments and IT infrastructure.

Solid revenue and profit growth

Total revenue increased by 10% to $110.9 million for Integrated Research, while total license sales revenue increased by 15% during the 12 months to $72.1 million. Over 95% of all revenue was derived overseas.

The tech company reported profit after tax of $24.1 million, which was a 10% increase on the corresponding year. This result was at the top end of guidance. It was also the seventh consecutive year that Integrated Research had seen annual profit growth.

Total expenses for FY 2020 increased by 7% to $78.2 million. A significant focus was made by Integrated Research to reduce costs in the fourth quarter as a result of the coronavirus pandemic

Integrated Research’s EBIT margin remains in a solid position, coming in at 28% for FY 2020 compared to 29% in FY 2019. Its net profit after tax margin was also healthy at 22%, the same level as recorded last year.

The company ended the financial year with a solid balance sheet. It had a net cash position of $4.7 million as at 30 June 2020.

Integrated Research achieved a number of major sales wins during FY 2020. These included major brands such as Australia and New Zealand Banking Group Limited (ASX: ANZ), BT, JP Morgan, NTT and Woolworths Group Ltd (ASX: WOW).

Multiple divisions perform strongly

The Unified Communications and Contact Centre was one of the top performing divisions for Integrated Research. Revenue totalled $59.8 million, which was an impressive rise of 17% on the prior year. Professional services revenue also grew strongly by 17% to $8.6 million.

The infrastructure division’s revenue increased by 9% to $28.7 million for FY 2020. Meanwhile, revenue for the Payments division totalled $13.8 million, which was a decline of 14%.

Commenting on the results, Paul Brandling, chair of Integrated Research, said:

IR has again delivered strong financial results for 2020 in a tumultuous global environment.  Our solutions have become even more relevant to enterprise customers and we believe the structural changes in market dynamics are an opportunity for the Company. We continue to invest in research and development to accelerate innovation and expand IR’s value proposition for customers across the globe.  

Outlook and dividend

Due to the global uncertainty surrounding the coronavirus pandemic, Integrated Research decided not to provide any forward guidance for FY 2021.

The company declared a fully franked final dividend of 3.75 cents per share. This took the total dividend for FY 2020 to 7.25 cents per share.

At the time of writing, the Integrated Research share price is down by almost 14%, sitting at $4.22 per share.

More reading

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Phil Harpur owns shares of Australia & New Zealand Banking Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Integrated Research Limited. The Motley Fool Australia owns shares of Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (Index:^AXJO) is holding up well during this month’s reporting season. But some popular stocks are starting to look overstretched and have been slapped with broker downgrades.

This doesn’t take anything away from the fact that profit results have been more resilient to COVID-19 than originally anticipated.

But the results don’t necessarily justify current valuations, especially in cases where some ASX stocks are breaking record highs.

Downshifting a gear

One stock that zoomed to new highs is the Carsales.Com Ltd (ASX: CAR) share price. Shares in the online auto classifieds group jumped 2% to $20.64 in late afternoon trade following its better than expected result.

But Morgans thinks now is the time to cut its recommendation on Carsales to “hold” from “add”.

Silver lining couldn’t ward off a downgrade

This is despite the fact that COVID-19 was not all bad news for the Carsales. While coronavirus made a big dent in the group’s bottom line, it may have perversely helped defer a structural headwind for Carsales.

Consumers were moving away from car ownership before the crisis but may now be dissuaded from using public transport.

“Covid has also given greater impetus to the consumers move to research and transact for cars online, which obviously plays directly into CARs wheelhouse,” said Morgans.

Nonetheless, with the stock currently trading above the broker’s upgraded price target of $19.17 (previously $14.58), Morgans was left little choice but to take it off its buy list.

Tasting a little too rich

Another stock that jumped to a record high is the Domino’s Pizza Enterprises Ltd. (ASX: DMP) share price.

Shares in the fast food chain jumped 2.8% to $86.02 at the time of writing and Goldman Sachs thinks its starting to look a little overcooked.

The broker downgraded its recommendation on Domino’s to “neutral” from “buy” even as the company delivered a decent profit result.

COVID skews results

While Domino’s earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 73% was a little under the broker’s estimates, it included $10.9 million in COVID store support.

Adjusting for this, EBITDA would be slightly ahead instead.

“Same store sales accelerated in 4Q20 to 12% (4.8% 3Q20) and have continued at 11% into 1Q21,” said the broker.

“In our view, the growth pipeline in each region remains solid. Operational execution continues to be strong, especially in Japan and Germany.”

However, the good news is already baked into the price. Goldman’s price target on Domino’s is $82.80 a share.

Not enough good news

Meanwhile, Credit Suisse lowered its rating on the WiseTech Global Ltd (ASX: WTC) share price to “neutral” from “outperform”.

The move comes after the logistics technology group delivered a 17% increase in FY20 EBITDA to $127 million, which is 6% ahead of the broker’s expectations.

“We found the result incrementally supportive of our long-term positive view on the opportunity,” said Credit Suisse.

“That said, we struggle to bridge the very strong share price performance with the new news in the result, particularly given the stronger-than-expected FY21 earnings guidance was partly supported by increased R&D capitalization.”

The broker’s 12-month price target on WiseTech is $28 a share. The stock fell 1.7% to $27.40 on Thursday.

More reading

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Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of WiseTech Global. The Motley Fool Australia has recommended carsales.com Limited and Domino’s Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Westpac Banking Corp (ASX: WBC) share price was sliding slightly today after the bank formally acknowledged the start of civil proceedings against it.

The issue relates to fees for no service uncovered by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

ASIC proceedings

The Australian Securities and Investments Commission (ASIC) has launched the civil proceedings against two entities within the Westpac group: BT Funds Management Limited and Asgard Capital Management. 

Allegations concern the inadvertent charge of financial adviser fees to 404 bank customers totalling $130,006, after a request had been made to remove the financial adviser from the customer accounts. The two Westpac entities accept the allegations and do not intend to defend the proceedings. However, the entities will make submissions regarding the appropriate penalty.

Additionally, BT Funds and Asgard Capital Management will make submissions on the penalty and will work with the regulator to resolve the proceedings as quickly as possible. 

Westpac self-reported the issue to ASIC in July 2017, and customers have been contacted and remediated.  

June quarter update

The proceedings follow Westpac’s decision to suspend its dividend earlier this week after its June quarter results.

It announced unaudited statutory net profit of $1.12 billion and cash earnings of $1.32 billion.

Net interest margin was down 8bps including notable notable items to 2.05% driven by low interest rates. 

Westpac increased its impairment charge to $826 million to cover potential losses induced by the coronavirus pandemic. 

Additionally,  its common equity, tier 1 ratio remains unchanged at 10.80%.

78,000 mortgages worth $30 billion are currently in deferral which is down from 135,000 mortgages worth $51 billion. Following the three month check-in, around half are expected to return to making payments.

What does this mean moving forward?

Given these uncertain times, it’s difficult to predict what the near future holds for the Westpac share price.

Westpac Group CEO Peter King said the bank had maintained its strong balance sheet and increased provisions for bad debts to support a “prudent approach” to managing impairments.

“While there have been some signs that the economy is performing better than early expectations, significant uncertainty remains, particularly given the unpredictability of COVID-19 outbreaks and their local impacts,” he said.

Westpac continues to offer its customers deferral support where needed and follow-up in periodic check-ins. 

The Westpac share price was down 1.26% to $17.18 in late afternoon trade today.

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Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The HT&E Ltd (ASX: HT1) share price is soaring 16.18% at time of writing following the release of the company’s half-year results. 

Half-year results

Despite advertising spend in both Australia and Hong Kong declining significantly due to the impacts of the coronavirus pandemic on the company’s operations, the HT&E share price has rallied today.

The media and entertainment company reported that revenue was down 29% to $93 million compared to $130.9 million in the prior corresponding period (pcp). 

Additionally, earnings before interest, taxation, depreciation and amortisation (EBITDA) were down 49% to $19.5 million compared to $38.1 million in the pcp.

Underlying earnings per share, excluding exceptional items and discontinued operations, were down 86% to 0.9 cents per share from 6.3 cents per share in the pcp. Exceptional items included the Jobkeeper government subsidy.

The company also advised it is facing an ATO branch matter, but stated it remains confident in its position and will pursue the matter fully through to litigation. 

HT&E reports that radio audiences have remained engaged with commercial radio reaching a record high to over 11 million people weekly. Listening in the home has replaced listening in the car through the use of smart speakers.

Management comments

Commenting on the results, HT&E chair Hamish McLennan said:

The fundamentals remain strong with the underlying business making a profit for the half and maintaining an industry leading balance sheet with $90 million of cash reserves and $251 million of undrawn debt, providing HT&E with flexibility and alternatives for growth.

[Australia Radio Network] is weathering the storm, with overall radio listenership increasing, and streaming and digital audio consumption growing. Our clear commercial strategy, together with great talent integration is winning share and our Q3 and forward bookings are showing improved momentum.

Trading update

In the Australia Radio Network segment, trading in July has improved and finished an estimated 27% down for the month, an improvement on the 46% drop in the June quarter. August and September are tracking similar to July. HT&E said this could improve further in Q4 if current restrictions in Melbourne are moderate and aren’t tightened elsewhere.

Additionally, HT&E advises that impacts from the coronavirus pandemic are continuing into Q3. It expects category spend in the Hong Kong outdoor segment could continue, provided restrictions lift and there is an absence of protest activity.

Furthermore, the company reported it remains on track to deliver total temporary operating cost savings in 2020 of $11 million–$14 million, before the current Jobkeeper subsidy benefit of approximately $9 million.

At the time of writing, the HT&E share price is up by 16.18%, trading for $1.40 per share.

More reading

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Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The worst performer on the S&P/ASX 200 Index (ASX: XJO) on Thursday was the Webjet Limited (ASX: WEB) share price.

The online travel agent’s shares finished the day with a decline of 12% to $3.24.

Why did the Webjet share price crash lower?

Investors were selling Webjet’s shares on Thursday following the release of its full year results for FY 2020.

The 12 months ended 30 June 2020 really were a tale of two halves for Webjet. The first half saw the company deliver record sales and profits and then the second half saw this wiped out in an instant because of the pandemic.

For example, in FY 2020 Webjet reported a 27% decline in revenue to $266.1 million. This might not seem like the worst sales result, but it’s when you dig deeper that the full impact of the pandemic can be seen.

Webjet’s first half revenue came to $217.8 million, which represents a massive 81.8% of its revenue for the year. Just $48.3 million of revenue was generated in the second half. And it’s worth remembering that travel markets weren’t truly disrupted until late February early March.

Unfortunately, things were much worse for its earnings. Webjet’s earnings before interest, tax, depreciation and amortisation (EBITDA) came in at a loss of $91.3 million for the year. That’s despite the company posting positive EBITDA of $46.4 million in the first half.

Admittedly, this statutory result includes a number of significant one-offs that should not repeat in FY 2021. But even if you exclude them, Webjet’s EBITDA fell 80% to $26.4 million. This comprises first half EBITDA of $86.3 million and a second half EBITDA loss of $59.9 million.

The good news for shareholders is that its operating costs have now been reduced materially. On its analysts call, management stated that its cost base is now ~$11.6 million per month. Annualised this comes to just under $140 million.

The big question is, how long will it take for Webjet to be generating revenue above $140 million to breakeven? Given its exposure to the domestic leisure market and the ongoing border restrictions, I feel it is unlikely to be profitable in FY 2021.

Should you invest?

In light of the above, I wouldn’t be in a rush to invest. Especially given its market capitalisation of $1.1 billion.

This market capitalisation means Webjet would have to be making a profit after tax of $55 million to be trading on a PE ratio of 20. I don’t see that happening any time soon unfortunately.

More reading

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Webjet share price crashes 12% lower: Is it time to buy? appeared first on Motley Fool Australia.

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Iron ore miner Fortescue Metals Group Limited (ASX: FMG) has been on a record run over recent times. Last week, the Fortescue share price reached an all-time high of $18.92.

In late afternoon trade, Fortescue shares are down 1.43% to $17.90 along with the S&P/ASX 200 Index (ASX: XJO), which has fallen 0.9% to 6,113.5 points at the time of writing.

With the iron ore spot price sitting at US$125.50 a tonne (at the time of writing) and the company’s FY20 results to be released next week, is now the best time to snap up Fortescue shares?

Fortescue at a glance

One of the world’s largest iron ore producers, Fortescue has grown from a small mining outfit to an important player in the industry. Fortescue’s core assets are located in the Pilbara region of Western Australia.

The company mines a lower iron ore grade content than its rivals BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO). At 62% Fe, Fortescue is able to seize on China’s sizeable demand for the product through a discounted rate below the benchmark price.

Q4 FY20 snapshot

Fortescue updated the market at the end of July with its quarterly production report. The mining giant highlighted record iron ore shipments of 47.3 million tonnes for Q4 and 178.2 million tonnes in the past year.

C1 costs for Q4 were US$13.02 per wet metric tonne (wmt). Though this was slightly higher than the past 3 quarters at US$12.94/wmt, additional costs were impacted by COVID-19 measures taken.

Fortescue now boasts the industry’s leading cost position and is on track for another bumper year as Chinese steel mills have been outstripping global iron ore supply.

Fortescue’s balance sheet remains healthy with cash on hand of US$4.9 billion, a $700 million increase from Q3. Net debt was US$300 million.

FY21 guidance

As Fortescue prepares to release its full-year earnings on 24 August, iron ore shipments are expected to be in the range of 175–180 million tonnes and C1 costs of US$13–US$13.50/wmt, based on the assumed Australian dollar exchange rate of $0.70.

Speculation has been rising that shareholders could be rewarded with record dividends as Fortescue has been capitalising on its strong output and the recent high price of iron ore.

The spot price for iron ore has increased 44.25% over the past 12 months.

It is estimated that dividends will be paid out close to $1 for every Fortescue share held. That represents an annual yield of 9.8% for investors – including the 76 cents per share dividend declared earlier this year.

Should you invest?

I think that the Fortescue share price is an interesting one to watch. It’s been a near perfect ride for the company. It was only back in February 2016 that the Fortescue share price was trading as low as $1.62. Long-term buy-and-hold investors would be grinning with delight.

Should its FY20 results exceed market expectations, I am confident the Fortescue share price will continue its meteoric rise.

Although iron ore demand and spot price will fluctuate, I would be happy being a buyer today to hold for the next 10 years.

More reading

• The latest ASX 200 stocks hit by broker downgrades
• COVID-19 panic: SMSFs fled shares, then missed market rally
• ASX 200 down 1%: Qantas results, Afterpay hits record high, Webjet crashes lower
• Sonic share price surges to record high as its profit results defy sceptics
• Why it may not be too late to chase ASX reporting season record breakers

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Is now a good time to buy Fortescue shares? appeared first on Motley Fool Australia.

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