The Dexus Property Group (ASX: DXS) share price is edging slightly higher to $8.53 this morning after the company released its FY20 earnings results.

Dexus is one of Australia’s largest Real Estate Investment Trusts (REITs) and the largest owner/manager of office buildings. As such, its results will likely be used as a performance barometer for the commercial and industrial property sector.

Commercial property has been savaged by the COVID-19 pandemic this year, particularly as the shift to working from home has left many office buildings vacant.

So how is the Dexus share price faring in this period of economic uncertainty?

FY20 performance

Dexus reported a net profit of $983 million for FY20, a 23.3% drop compared to the previous financial year. This was largely due to lower revaluations of property assets undertaken by the company compared to FY19.

The property group maintained rent collections at 98% for FY20, although this dipped to 92% in the fourth quarter. As of 30 June 2020, portfolio occupancy was 95.6%, which is lower than the 97% seen a year prior.

Despite the lower results, Dexus will pay a final dividend of 23.3 cents per share, taking its full-year dividend to 50.3 cents per security. This represents an attractive yield of more than 5% paid out to shareholders.

Dexus CFO Alison Harrop said the group enhanced its financial position by sourcing $1.85 billion of debt, including the issue of $700 million of 10 and 12-year medium-term notes. That increased debt duration to 6.9 years and further diversified funding sources.

“In this uncertain environment, we remain focused on maintaining the strength of our balance sheet,” she said.

Dexus also maintains a sturdy $1.6 billion of cash and undrawn debt facilities. The property group provided no guidance for FY21 due to the current economic uncertainty.

Should you invest?

With the Dexus share price reaching an all-time high of $13.51 in February of this year, COVID-19 has put a large hole in its current price performance. The group’s prominent exposure to office property is largely to blame for this.

I do like that the company maintained its dividend yield despite the pandemic. But with so much future uncertainty, I have my doubts about how well the Dexus asset portfolio can hold up in FY21.

In contrast, property competitors like Goodman Group (ASX: GMG) have thrived in recent weeks due to their exposure to warehousing and industrial property. This is a by-product of the unprecedented growth in e-commerce, leading to Goodman reaching an all-time high of $18.51 this week.

If I was trying to diversify my portfolio and gain some exposure to property, I’d look at a REIT like Goodman due to its quality industrial portfolio, rather than Dexus’ plentiful dead weight of office buildings. On this basis, the Dexus share price is just a watchlist item for me right now.

Foolish takeaway

The Dexus share price performance may hinge on how soon large numbers of people return to the office. With such an attractive dividend yield, a buy and hold strategy may be an option. A COVID-19 vaccine could make all the difference for a return of bustling Australian cities once more.

More reading

• 3 fantastic ASX 200 shares for retirees to buy
• Buy and hold these fantastic ASX blue chip shares
• Why I would buy CSL and these ASX 200 blue chip ASX shares
• Brokers name 3 ASX shares to buy right now
• Goodman Group share price lifts on FY2020 results

Motley Fool contributor Toby Thomas 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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At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is on course to record another solid gain. The benchmark index is currently up 0.8% to 6,172.1 points.

Here’s what is happening on the market today:

ANZ share price storms higher on Q3 update.

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is pushing higher today after the release of its quarterly update. That update revealed a solid 30% increase in cash profit from continuing operations to $1.5 billion in the third quarter. In addition to this, unlike some of its peers, ANZ has announced that it will pay a 25 cents per share fully franked interim dividend.

A2 Milk Company tumbles lower.

The A2 Milk Company Ltd (ASX: A2M) share price is tumbling lower following the release of its full year results. The fresh milk and infant formula company delivered a 32.8% increase in revenue to NZ$1,730 million. This was in line with its revenue guidance of NZ$1,700 million to NZ$1,750 million. On the bottom line, the company posted a 34.1% increase in net profit after tax of NZ$385.8 million. Investors appear to have been expecting an even stronger profit result.

CSL result impresses.

The CSL Limited (ASX: CSL) share price is storming higher after delivering a solid FY 2020 result. The biotherapeutics company posted sales revenue of US$8,797 million and a net profit after tax of US$2,103 million. This was a 7.2% and 9.6% increase, respectively, on the prior corresponding period. This was driven by solid growth from both its CSL Behring and Seqirus vaccines businesses during the year. Management is forecasting similar revenue and profit growth (in constant currency terms) in FY 2021.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Wednesday has been the WiseTech Global Ltd (ASX: WTC) share price with a 23% gain. This follows the release of a strong full year result and positive guidance for FY 2021. The worst performer is the Resolute Mining Limited (ASX: RSG) share price with a 16% decline. This follows a military mutiny in Mali where the gold miner operates.

More reading

• Why a2 Milk, Kogan, Nearmap, & Resolute shares are dropping lower today
• What if a Covid-19 vaccine never comes?
• Why Corp Travel, CSL, Domino’s, & WiseTech Global shares are storming higher
• The latest ASX stocks upgraded by brokers to “buy” today
• WiseTech share price jumps 12% on solid revenue growth and dividend

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. and WiseTech Global. The Motley Fool Australia owns shares of A2 Milk. 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 Covid-19 pandemic, for most people on the planet, will be the biggest global event they will experience in their lives.

The virus has so far infected more than 21.5 million and killed 770,000 people around the world.

However, the S&P/ASX 200 Index (ASX: XJO) has risen by more than 33% since the height of the initial panic in March.

So how can the share market be so optimistic? 

BetaShares chief economist David Bassanese told The Motley Fool that’s because investors are assuming a coronavirus vaccine would become available.

“It’s fair to say markets are counting heavily on a vaccine being available by at least early next year,” he said.

“We just need to look at earnings expectations by way of example – while they were revised down strongly in the immediate aftermath of the lockdowns in March and April, they have held up more recently. At present, markets are counting on only a relatively moderate decline in profits this year, and a recovery back to 2019 levels in 2021.”

But finance professionals and investors are not medical experts.

Humans have never been able to create a vaccine for the common cold and influenza. So what makes shareholders so confident that one will be created for Covid-19?

What will happen to share markets if a Covid-19 vaccine never comes?

The fact that current share prices have been inflated with the expectation of a Covid-19 vaccine makes the alternative scary.

“If there’s no vaccine we really face the prospect of an extended period of social distancing and even repeat lockdown cycles until such time as so-called ‘herd immunity’ has been built through each country,” said Bassanese.

And the trouble for equities is that continued restrictions smash confidence. Lower the confidence, lower the consumer spending, which leads to lower sales for public companies.

“This would crush hopes of a V-shaped economic recovery, and suggest corporate earnings have a lot further to fall.”

A drop in share prices would then be inevitable as it dawns on the market that a vaccine is not coming.

“While we’d likely see more monetary stimulus at this point, it’s hard to imagine the equity market could continue to ‘look through’ a more extended period of earnings weakness without some downward adjustment in prices.”

A spokesperson for Vanguard Australia told The Motley Fool that regardless of what happens with a vaccine, markets will be volatile at times.

“This can be unsettling for some investors. However, we always caution investors to expect share market fluctuations, and history shows they are better served by tuning out the market noise and sticking to a disciplined investment plan with diversification across a range of asset classes.”

Even if a vaccine comes, it’ll take years to produce and distribute

Russia has, to global scepticism, has already declared it has a vaccine.

But even when such a solution comes, years will fly by while enough quantity is produced then distributed to all parts of the globe.

“It has been estimated that to achieve sufficient levels of immunity among the global population with a two-dose vaccine, we would need between 12 billion and 15 billion doses – roughly twice the world’s current total vaccine manufacturing capacity,” University of Sydney associate professor Adam Kamradt-Scott told The Conversation.

“With the marked reduction in international passenger air travel, the movement of cargo has also slowed. This will need to be addressed with airlines ahead of any attempts to distribute the vaccine.”

More reading

• ASX 200 up 0.8%: ANZ to pay dividend, a2 Milk tumbles, CSL impresses
• The latest ASX stocks upgraded by brokers to “buy” today
• How the OZ Minerals share price is benefitting at Rio Tinto’s expense
• What you need to know about the ANZ share price and profit result today
• 5 things to watch on the ASX 200 on Wednesday

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. 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 Afterpay Ltd (ASX: APT) share price has hit a new, all time high of $76.98 before edging back to its current price of $76.05. This takes its gains since March to just under 765%. The high flying buy now, pay later (BNPL) provider is knocking on the door of the S&P/ASX 20 (ASX: XTL) with a market capitalisation of more than $21 billion. Investors are pushing the Afterpay share price higher ahead of the release of the company’s full year results on Thursday 27 August. 

How has Afterpay been performing? 

Afterpay has seen significant growth in volumes and customer numbers since the start of the pandemic. The adoption of online shopping has been accelerated by lockdowns and store closures, while the economic downturn has increased focus on budgeting. Afterpay’s solution is leveraged to both these shifts. Where customers use Afterpay’s solution, Afterpay pays the merchant for customer purchases (minus merchant fees) effectively lending customers the purchase price. Customers then pay Afterpay back over equal interest-free installments. 

BNPL customers boom 

Afterpay has seen a boom in customer numbers in 2020. The BNPL provider reported 9.9 million customers across the United States, United Kingdom, Australia and New Zealand at the end of June. This was a 116% increase year on year. Other BNPL providers have seen similar increases in customer numbers – competitor Zip Co Ltd (ASX: Z1P) reported a 63% increase in customers in F20, with 2.1 million customers at 30 June. 

BNPL share prices have followed customer numbers upward. Although the sector was heavily sold off in March, investors quickly realised its resilience and bought back in. The Afterpay share price fell 78% from a February high of $40.50 to a March low of $8.90. But by May, the Afterpay share price was trading above its previous high and has continued to climb ever since. 

Transaction volumes surging 

Afterpay is gaining customers at a record rate, and those customers are spending –  transaction volumes processed using Afterpay’s platform surged 127% in Q4 to $3.8 billion. This brought full year underlying sales to $11.1 billion, up 112% on FY19. Other BNPL providers such as Sezzle Inc (ASX: SZL) and Openpay Group Ltd (ASX: OPY) have also seen sales volumes surge. Sezzle reported a 57.5% increase in underlying sales in the June quarter while Openpay saw a 119% increase in the same quarter. 

Afterpay share price continues soaring

The Afterpay share price has hit yet another all time high today as the BNPL sector goes from strength to strength. Consumers were increasingly turning to BNPL solutions even prior to the pandemic. This shift has now accelerated, sending the Afterpay share price to new highs. 

More reading

• Afterpay and Mesoblast were among the most traded shares on the ASX last week
• Tech shares race to record highs as Bank of America tips BHP and Rio shares
• New investors should do this before investing in ASX shares
• If you invested $10,000 in Afterpay shares in March, this is how much you’d have now
• Are BNPL shares like Afterpay officially recession proof?

Kate O’Brien 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’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to record a solid gain. At the time of writing the benchmark index is up 0.8% to 6,173.9 points.

Four shares that have climbed more than most today are listed below. Here’s why they are storming higher:

The Corporate Travel Management Ltd (ASX: CTD) share price has jumped 9% to $13.26 following the release of its full year results. Although the corporate travel specialist reported a loss of $8.2 million, a better than expected performance in July caught the eye of investors. The company’s bookings in July were greater than in June. It feels this suggests a broad-based recovery in corporate travel activity is underway.

The CSL Limited (ASX: CSL) share price has jumped 6% to $310.91 after delivering a solid FY 2020 result. The biotherapeutics company delivered a 7.2% increase in reported sales revenue to US$8,797 million and a 9.6% lift in net profit after tax to US$2,103 million. This was driven by solid growth from both its CSL Behring and Seqirus vaccines businesses during the year. And while plasma collection difficulties will weigh on its performance next year, management still expects to deliver top and bottom line growth.

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price has stormed 8% higher to $82.83. This follows the release of a strong full year result in FY 2020. Domino’s delivered global sales of $3.27 billion, up 12.8% on the prior corresponding period. This was driven by strong online and same store sales growth. Digital sales were up 21.4% to $2.36 billion, which accounts for 72.1% of totals.

The WiseTech Global Ltd (ASX: WTC) share price has rocketed 22% higher to $25.47. Investors have been buying the logistics solutions company’s shares after it overcame COVID-19 headwinds to deliver a 23% increase in revenue and a 17% lift in EBITDA in FY 2020. Looking ahead, management provided FY 2021 guidance for EBITDA growth of 22% to 42%.

More reading

• The latest ASX stocks upgraded by brokers to “buy” today
• WiseTech share price jumps 12% on solid revenue growth and dividend
• Corporate Travel Management share price on watch
• The highest paid CEOs in the ASX 200
• Domino’s share price on watch as free cash flow surges 90%

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. and WiseTech Global. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended 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 Mineral Resources Limited (ASX: MIN) share price has fallen this morning despite the mining services company revealing its best full year result to date. At the time of writing, the Mineral Resources share price had dropped 1.7% to $28.36. Mineral Resources reported a 41% increase in revenue and a 127% increase in full year dividends, but this was not enough for investors who have sold off Mineral Resources shares. 

What does Mineral Resources do? 

Mineral Resources provides long-term contract services to Australia’s blue chip mining companies. The company has a portfolio of subsidiary businesses which offer a range of general mine services, contract crushing, infrastructure provision and recovery of base metals concentrate for export. Targeting stranded tenements and junior miners, Mineral Resources develops operations and secures life-of-mine contracts for its mining services business. 

How did Mineral Resources perform? 

Mineral Resources reported revenue of $2.1 billion in FY20, a 41% increase on FY19. This was driven by record mining services growth, higher tonnes in existing external contracts, and new external contracts won during the year. Statutory earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 420% to $2.01 billion with record iron ore sales and a strong achieved iron ore price. Underlying EBITDA grew by 63% to $334 million. This gave statutory NPAT of $1,002 million (up 507%) and underlying NPAT of $334 million (up 63%). 

Earnings per share increased 513% to 533 cents per share in FY20 and Mineral Resources will pay full year dividends of 100 cents per share, a 127% increase on FY19. Mineral Resources has demonstrated a strong financial performance since listing in 2006 at 90 cents per share. Over that time, earnings per share have grown at an annual rate of 30% per annum and total shareholder returns have grown at 27%  per annum. The Mineral Resources share price reflects this having gained more than 3000% over the past 14 years. 

What’s next for the Mineral Resources share price? 

Mineral Resource plans to double the mining services business over CY20 – CY22. Crushing and processing volumes are expected to increase with strong growth in contract mining and haulage thanks to new contracts signed in FY20. Mining services volumes are expected to increase 20% – 25% in FY21. In the commodity space, the company is developing mine operations with a 20 – 50 year life with a focus on iron ore. It is also working with the government to develop additional iron ore export capacity in the Pilbara. This would at least double current iron ore exports, with the first ore shipment planned in approximately 2 years.

More reading

• These record breaking ASX stocks just got downgraded by top brokers
• Here’s why the Mineral Resources share price rocketed 22% in July
• These were the best performing ASX 200 shares in July

Motley Fool contributor Kate O’Brien 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 market is holding up better than many feared during the reporting season, and these are the latest ASX stocks to be upgraded by brokers to “buy”.

The S&P/ASX 200 Index (Index:^AXJO) gained 0.4% in early trade as CSL Limited (ASX: CSL) and Domino’s Pizza Enterprises Ltd. (ASX: DMP) joined the ranks of stocks that beat profit expectations.

The number of pleasing earnings results so far have exceeded my expectations and leading brokers have just upgraded the following ASX stocks.

Upgrade on big earnings beat

One of these is the Monadelphous Group Limited (ASX: MND) share price. Macquarie Group Ltd (ASX: MQG) lifted its recommendation on the engineering contractor to “outperform” from “neutral” in the wake of its better-than-expected results.

Management posted a FY20 net profit of $36.5 million yesterday. While that represents a decline of nearly 28% over the previous financial year, the result was a whopping 34% ahead of Macquarie’s expectation.

The big beat was driven largely be expanding profit margins and the company’s dividend and cash flow also beat the broker’s forecasts.

MND share price doesn’t reflect rising iron ore prices

“Iron ore is now 32% of revenue and we see a healthy pipeline of work particularly in relation to stay in business capex to maintain high iron ore production rates,” said the broker.

“[Monadelphous] share price has substantially decoupled from iron ore price.”

While Monadelphous’ legal stoush with Rio Tinto Limited (ASX: RIO) remains a big overhang on the stock, the broker isn’t too fussed. It believes both parties will eventually reach a settlement that will avoid the worst-case scenario for Monadelphous.

Macquarie believes Monadelphous will generate a 46% growth in earnings per share in FY21 and its price target is $11.57 a share.

Superpit triggers upgrade

Another stock that’s found favour is the Saracen Mineral Holdings Limited (ASX: SAR) share price. The gold miner was upgraded to “buy” from “neutral” by UBS after Saracen unveiled its Superpit mine plan.

The Superpit project, which is jointly owned by Saracen and Northern Star Resources Ltd (ASX: NST), may not sound so super to some. This is because the miners won’t get to the high-grade Golden Pike ore until later in the mine plan.

Short-term pain for long-term gain

“In aggregate this means lower near-term production and a slightly lower peak production of ~700kozpa from ~FY28e,” said the broker.

But this isn’t putting off UBS. The broker sees value in the stock given its trading below its price target of $6.75 a share.

There’s also room for Saracen to surprise on the upside as the miner drills two exploration holes at the project. Depending on the outcome, the miner could upgrade its production forecasts in FY25 to FY27 and extend the life mine.

More reading

• Why Corp Travel, CSL, Domino’s, & WiseTech Global shares are storming higher
• How the OZ Minerals share price is benefitting at Rio Tinto’s expense
• The highest paid CEOs in the ASX 200
• Domino’s share price on watch as free cash flow surges 90%
• CSL share price on watch after posting US$2.1 billion FY 2020 profit

Brendon Lau owns shares of Macquarie Group Limited and Rio Tinto Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended 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 NRW Holdings Limited (ASX:NWH) share price has soared by more than 9% in early trade, following the release of the company’s FY20 results.

NRW Holdings provides a range of services to the Australian resources, civil infrastructure and urban development sectors. The company has 4 core operating segments: civil, mining, drill, and blast and mining technologies.

Impressive FY20 revenue and earnings growth

NRW delivered impressive FY20 revenue growth, up 83% to $2,062 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) growth was also very strong at 74%, coming in at $250 million for the full year. Meanwhile, normalised operating EBIT amounted to $140.9 million, which was up by a massive 120% on the prior year.

Normalised earnings per share was 21 cents for NRW, up significantly on 10.7 cents in FY 2019. Net earnings after tax increased 122% to $89.7 million, when normalised for acquisition intangibles.

NRW ended the 2020 financial year with a very strong balance sheet. Total cash amounted to $170 million on 30 June, up sharply from $105 million, 12 months prior.

Cash conversion reached a record high of 97% for NRW, while total debt repayments amounted to $82.4 million during the financial year.

Growth strategy progressing

NRW noted that the acquisition of BGC Contracting, which was finalised in December last year, had been successfully completed. BCG Contracting has now been fully integrated into the wider company.

Likewise, RCR Mining Technologies and DIAB Engineering have also been successfully integrated into the group. The latter 2 divisions are now on track to deliver combined annual revenues of $500 million. This is anticipated to be delivered via growth in maintenance, fabrication, shutdown and project works.

Commenting on the results, Jules Pemberton, NRW chief executive officer and managing director, said:

Growing record revenues to over two billion dollars during the year is a great achievement, however the highlight for me is the strong contributions made to that growth from all parts of the business. Doubling the earnings from last year also demonstrates that we can deliver work profitably and through our disciplined approach, produce outstanding cash conversion despite the magnitude of the challenges faced over the last 12 months.

Market outlook

NRW is confident that it is in a very strong position to tap in to a rising number of growth opportunities in the next 12 months. This will be underpinned by strong recent organic growth and the completion of a range of strategic acquisitions over the prior 3 years.

NRW reported its order pipeline is currently in a solid position. The group also highlighted the potential for additional infrastructure projects to be added to its pipeline as part of government initiatives to address the economic impact of of COVID-19.

The group’s pipeline of tenders and prospects for the 12 months has risen to $12.9 billion. NRW has forecast revenue for FY 2021 to be between $2.2 billion to $2.3 billion.

At the time of writing, the NRW share price is up by 9.28% to $2.12 per share.

More reading

• These were the best performing ASX 200 shares last week
• These were the worst performing ASX shares last week
• ASX 200 Weekly Wrap: Surging commodity prices snap ASX 200’s losing streak
• These were the worst performing ASX 200 shares last week
• Latest ASX stocks upgraded by top brokers to “buy” today

Motley Fool contributor Phil Harpur 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 Tabcorp Holdings Limited (ASX: TAH) share price is in a trading halt this morning after launching a $600 million equity raise following a full-year $870 million loss.

Why the Tabcorp share price is one to watch

For the year ended 30 June 2020 (FY20), Tabcorp reported a 4.8% slump in group revenue to $5,224 million. Lotteries & Keno contributed 56% of revenue while Wagering & Media (40%) and Gaming Services (4%) made up the rest.

That flowed through to earnings before interest, tax, depreciation and amortisation (EBITDA) which fell 11.5% lower to $995 million.

The Lotteries & Keno segment was the only unit to report positive growth across revenues, EBITDA and EBIT during the year.

Tabcorp cited the coronavirus pandemic as a the major contributor while a non-cash goodwill impairment charge hit the company’s bottom line.

The Aussie wagering group reduced goodwill in its Wagering & Media segment by $905 million while Gaming Services goodwill took a $185 million hit.

Profit before significant items was down 31.6% to $271 million while the company booked a statutory $870 million loss after tax.

The Tabcorp share price is one to watch when it emerges from the current halt after reporting a 42.9 cents per share (cps) loss and paying no final dividend for FY20.

That means the full-year distribution totalled 11.0 cps, down 50% on FY19 dividend figures.

Positively, the group’s integration of Tabcorp and Tatts is now “substantially complete”. Tabcorp reported that cost synergies were on track with revenue synergies unable to be measured due to COVID-19.

Those impacts have been significant and forced a number of measures to be taken by the wagering group. The pandemic has seen the cancellation or postponement of many sports, although domestic racing has continued.

Capital management and equity raising

Tabcorp has looked to furlough staff and slash costs with a renewed focus on capital management reflected in its prudent dividend policy.

That has seen Tabcorp launch an entitlement offer to raise approximately $600 million of equity from shareholders. This comes as Tabcorp looks to strengthen its balance sheet and move towards a lower target gearing range.

Eligible shareholders are entitled to 1 new Tabcorp share for every 11 shares held on the record date of Monday 24 August.

The 0ffer price of $3.25 per new share represents a 10.6% discount to its theoretical ex-rights price and an 11.4% discount on the Tabcorp share price at yesterday’s close.

The Tabcorp share price will be worth watching when it returns to the boards in coming days.

July update

Investors will react to the latest results once Tabcorp shares resume trading this week. Despite reporting some softer numbers, it has been a strong start to FY21 for the wagering group.

Lotteries & Keno revenue is up 4.7% in July with strong ACT digital growth a primary driver. Wagering & Media revenue has increased thanks to many sports now having resumed.

However, Gaming Services has seen revenue drop 52.2% in July largely thanks to venue closures in Victoria.

More reading

• Why Tabcorp is the latest “conviction buy” recommendation from this top broker
• Why Cochlear, NAB, Tabcorp, & Telstra shares are tumbling lower
• ASX 200 edges lower, Melbourne enters stage 4 lockdown
• ASX 200 up 0.1%: Big four banks tumble, Flight Centre sinks, SEEK cancels final dividend
• Why ANZ, Flight Centre, SEEK, & Tabcorp shares are dropping lower

Motley Fool contributor Ken Hall 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 Bigtincan Holdings Ltd (ASX: BTH) share price has climbed steadily after the ASX software company reported a big jump in annualised recurring revenues over the June quarter.

Since crashing in mid-March to a 52-week low of just $0.265, the Bigtincan share price has surged more than 230% to $0.89 in mid-morning trade today.

What does the company do?

Bigtincan develops software to streamline and automate sales and marketing functions for its business clients.

Bigtincan’s flagship sales enablement automation platform is a centralised, integrated software solution designed to support businesses throughout their entire sales and marketing lifecycle. That’s from onboarding and training new staff, to engaging new customers and providing accurate reporting.

How is Bigtincan performing?

Despite the challenges of operating during COVID-19, results for the June quarter were strong across just about all key financial metrics. Quarterly customer cash receipts were up 89% against the prior comparative period to $10.4 million, while annualised recurring revenues were up 53% year-on-year to $35.8 million. The company reiterated its FY20 guidance for organic revenue growth of between 30% and 40%.

The software company’s balance sheet was also healthy with $71.9 million in cash and equivalents as at June 30. This had been strengthened by an oversubscribed $35 million institutional placement and $7.5 million share purchase plan, both of which occurred within the June quarter.

Bigtincan says it will use these funds to invest in its technology and pursue potential M&A opportunities, which means some exciting announcements could be on the horizon.

Should you invest?

Bigtincan isn’t quite the same growth company it was last year. In 2019, the Bigtincan share price soared more than 160%. So far this year – after all the share market volatility stemming from COVID-19 – its share price has only managed to gain 29%. This is still well short of its January high of $1.08.

However, the company’s underlying results have remained strong, and it has built a solid foundation for future growth despite tough market conditions. It anticipates customer retention rates to remain stable during FY20, and even reported some significant new customer wins in the most recent quarter – including one of the largest technology companies in the world.

There is even the potential for the ongoing impacts from COVID-19 to continue to drive growth. With people continuing to work remotely, there could be sustained high demand for digital solutions for activities such as staff training, coaching and ongoing development.

There are obvious risks to an investment as well. Bigtincan is still a small company with a market cap of only $335 million. With most economic indicators pointing to a severe downturn lurking on the horizon, small-cap growth stocks aren’t quite the exciting investment opportunity they were 12 to 18 months ago.

However, Bigtincan joins a growing list of junior ASX tech companies, like internet communications company MNF Group Ltd (ASX: MNF) and software developer Objective Corporation Limited (ASX: OCL), that are showing their ability to adapt – and even thrive – in the challenging conditions created out of the COVID-19 global pandemic.

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Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Objective Limited. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended BIGTINCAN 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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