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The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is trading in the bargain bin right now, according to one top broker.

Citi has tipped shares in the smallest of the ‘big four’ banking giants to surge 27%, as my colleague James reports. It’s also slapped the stock with a buy rating.

The ANZ share price closed Friday’s trade at $22.75.

Let’s take a closer look at why Citi believes now is a good time to jump on board the bank.

Citi slaps ANZ shares with $29 price target

Broker Citi tips the ANZ share price to add another quarter – and then some – after the bank announced its plan to snap up Suncorp Group Ltd (ASX: SUN)’s banking operations.

The two S&P/ASX 200 Index (ASX: XJO) financial giants announced the planned acquisition in July.

ANZ is expected to buy Suncorp’s banking business for $4.9 billion. It will also likely pay Suncorp a baseline of $50 million to continue using its brand for at least five years following the acquisition.

The ANZ share price rose 2.1% when it returned to trade following a $1.7 billion capital raise to help fund the purchase.

On announcing the acquisition, ANZ CEO Shayne Elliott said it represents “a cornerstone investment for ANZ”. And it will provide a decent boost to the bank’s loan book.

Suncorp Bank will come with $47 billion of home loans, $45 billion of deposits, and $11 billion of commercial loans, my Fool colleague Tristan reported at the time.

Elliott also told a media conference:

We’re acquiring a 1.2 million customer base, 700,000 of whom live here in Queensland, 400,000 of whom consider Suncorp Bank their main bank. That’s a very, very valuable franchise … Since March 2020, Queensland has recorded better economic growth, better workforce participation, and more interstate migration than any other state or territory in Australia. It contributes 18% to Australia’s GDP and we believe we can use the resources at our disposal to further contribute to its continued success.

Citi says the deal makes strategic sense and offers a reasonable price tag. The broker slapped ANZ shares with a $29 price target following its announcement.

It also tips the big four bank to offer $1.44 per share in dividends for financial year 2022 (ending 30 September) and $1.65 per share for financial year 2023.

The post Why is this top broker tipping 27% upside for the ANZ share price? appeared first on The Motley Fool Australia.

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More reading

• Is this why the Macquarie share price was ‘steaming ahead’ on Friday?
• Why did the ANZ share price go backwards in August?
• Brokers name 2 ASX dividend shares to buy this month
• What’s the outlook for ASX 200 bank shares in September?
• Why this analyst ranks ANZ shares at the bottom of the big-four-bank pile

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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The BHP Group Ltd (ASX: BHP) share price went up by around 5% in August. That handily outperformed the return of the S&P/ASX 200 Index (ASX: XJO), which only rose by 0.6%.

As the biggest business on the ASX, any movement of the BHP share price can have an outsized impact on the ASX 200 itself.

In the middle of the month, BHP announced its result for the 12 months to 30 June 2022. So, let’s start by looking at what BHP reported.

FY22 earnings recap

BHP revealed two sets of numbers.

The continuing operations numbers exclude the divested BHP petroleum business. That is, they show the performance of the businesses that the company’s still holding onto.

Profit from continuing operations grew 34% to US$34.1 billion and underlying attributable profitable went up 26% to US$21.3 billion. Net operating cash flow increased by 13% to US$29.3 billion. Continuing operations’ underlying earnings per share (EPS) went up 25% to US$4.21.

The company also improved its net debt position by 92% to US$333 million.

BHP boasted that the strong result was due to its “safe and reliable operations, project delivery and capital discipline” which allowed it to capture the value of strong commodity prices. Certainly, resource prices can be a key driver of the BHP share price.

Dividend

Investors may have liked to see that BHP declared a big dividend. Indeed, it could have been the dividend that encouraged investors to buy up BHP shares before they went ex-dividend on 1 September 2022. Between the end of July and now, the BHP share price has fallen by 5%.

The BHP board decided to pay a final dividend of US$1.75 per share, or US$8.9 billion. That brought the full year dividend to US$3.25 per share – an increase of 8% – and represented a payout ratio of around 77%.

That final dividend of US$1.75 per share is currently equivalent to a payment of A$2.57 per share. This translates into a grossed-up dividend yield of 10% at the current BHP share price, or 7% if excluding the franking credits.

What do experts think of the BHP share price?

Macquarie has an outperform rating on BHP but recently cut its price target after reducing its profit expectations over the next few years because of the lower demand and price for copper. The price target is $40, which implies a rise of around 10%.

UBS is less optimistic. It has a price target of $35.50, which represents a small drop in the BHP share price. The broker thinks that lower commodity prices will impact BHP’s profit over the next couple of years.

Morgans rates it as add with a price target of $48.40, implying a possible rise of more than 30%. The broker is confident based on the outlook for the potash project Jansen, and the strong earnings from coal.

The post Why did the BHP share price smash the ASX 200 in August? appeared first on The Motley Fool Australia.

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More reading

• 27% of ASX 200 shares cut dividends during earnings season. What’s next?
• Why are ASX 200 mining shares getting hammered on Friday?
• Is the BHP share price 7% cheaper after trading ex-dividend? 
• What’s the outlook for ASX 200 copper shares in September?
• Why is the BHP share price tumbling again on Friday?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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With ASX reporting season now in the rearview mirror, a horde of companies in the S&P/ASX 200 Index (ASX: XJO) will soon be returning some of their profits to shareholders in the form of dividends.

But before these dividends are paid out, companies must first determine which investors are eligible for the payment.

To do so, they set a cut-off date, which is also known as the ex-dividend date. This is the date that a company’s shares no longer trade with the upcoming dividend payment attached to it.

In other words, any shares you buy on or after the ex-dividend date won’t come with the recently-announced dividend.

With that in mind, the dividends on offer from the following five ASX 200 shares won’t be around for much longer.

Today is the last day to lock in dividends from these ASX 200 shares before they turn ex-dividend tomorrow. 

CSL Limited (ASX: CSL)

CSL is the highest profile name turning ex-dividend on Tuesday. The ASX 200 biotech giant will be trading without a final dividend of US$1.18, which is 10% franked. 

Investors holding CSL shares by the time the market closes today can pencil in a payment date of 5 October. 

Across the financial year, CSL’s net profit after tax (NPAT) slipped 6% to $2.3 billion. However, the company still maintained full-year dividends of US$2.22 per share.

This puts CSL shares on a trailing dividend yield of 1.1%.

Looking ahead, broker Goldman Sachs is forecasting FY23 dividends of US$2.52. This represents a prospective forward dividend yield of 1.3%.

BlueScope Steel Limited (ASX: BSL)

BlueScope shares currently come with an unfranked final dividend of 25 cents per share, which will be off the table tomorrow. The payment date has been set for 12 October.

Despite more than doubling its NPAT in FY22, the ASX 200 steel producer kept full-year dividends steady at 50 cents. 

But the company has been delivering shareholder returns through other means, repurchasing $638 million of shares in FY22 via on-market share buybacks.

After exhausting Australian tax losses in FY22, BlueScope expects to be able to begin franking dividends in FY23. 

BlueScope shares are currently printing a trailing dividend yield of 3.1%.

Origin Energy Ltd (ASX: ORG)

Today will be the last day to lock in Origin Energy’s partially franked final dividend of 16.5 cents, which will be paid on 30 September.

The ASX 200 energy share delivered a 30% increase in underlying profit in FY22. But full-year dividends exceeded profit growth, jumping 45% to 29 cents as the company lifted its dividend payout ratio.

Origin shares are currently trading on a trailing dividend yield of 4.8%.

Sonic Healthcare Limited (ASX: SHL)

ASX 200 healthcare share Sonic will be trading tomorrow without a fully franked final dividend of 60 cents.

Investors who own Sonic shares by today’s closing bell should see this payment arrive on 21 September.

Across the financial year, Sonic raised its total dividends by 10%, largely mimicking profit growth.

Sonic shares are currently sitting on a trailing dividend yield of 3.0%. This yield cranks up to 4.3% with the benefit of franking credits.

Super Retail Group Ltd (ASX: SUL)

Last but not least, Super Retail’s fully franked final dividend of 43 cents won’t be up for grabs for much longer.

Super Retail shares will trade ex-dividend tomorrow, with the payment date for this dividend pencilled in for 17 October. Shareholders have the option to participate in the company’s dividend reinvestment plan (DRP).

Sales were relatively flat in FY22 but normalised profit fell by 20% on the back of supply chain challenges and increased investments in various strategic initiatives.

As a result, the ASX 200 retail share cut its total dividends by 20%. 

Even still, Super Retail shares are flashing a notable trailing dividend yield of 6.9%. Including franking credits boosts this yield to 9.8%.

The post 5 ASX 200 shares turning ex-dividend tomorrow appeared first on The Motley Fool Australia.

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More reading

• Why is the CSL share price outperforming the ASX 200 on Friday?
• ASX 200 shares declared $42b of dividends in August. Here’s how you can get a slice
• Analysts name 2 blue chip ASX 200 shares to buy now
• How do CSL shares stack up against Cochlear following earnings season?
• Top ASX shares to buy in September 2022

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. and Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Sonic Healthcare Limited. 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 Pilbara Minerals Ltd (ASX: PLS) share price has gone nuts. It has risen by 75% since the middle of June.

Amazingly, the price of the ASX lithium share is flat for 2022. The business has simply recovered the ground it lost earlier in the year when fears about inflation and rising interest rates spiked, causing Pilbara Minerals shares to fall to around $2.

But, investors soon got over that negativity. Particularly as the business managed to tell the market that lithium prices remain strong.

Ongoing lithium price strength

As a commodity business, Pilbara Minerals’ shorter-term sentiment can be dictated by changes in the resource price. If prices go higher, it can largely fall to the company’s bottom line thanks to the revenue boost but a similar cost level.

In August 2022, Pilbara revealed the result of its eighth Battery Material Exchange (BMX) platform. A cargo of 5,000 dry metric tonnes at a target grade of around 5.5% lithia was presented for sale on the digital platform, with a mid-September 2022 delivery.

The miner said:

Strong interest continues to be received in both participation and bidding by a broad range of qualified buyers with a total of 67 bids received online.

Pilbara said it intends to accept the highest bid of US$6,350 per dmt.

Strong result

In the FY22 result, Pilbara Minerals reported that its revenue soared 577% to around $1.2 billion, up from $175.8 million.

The business generated $814.5 million of earnings before interest, tax, depreciation and amortisation (EBITDA) and $561.8 million of statutory net profit after tax (NPAT).

The company outlined a very confident outlook. Pilbara Minerals managing director and CEO Dale Henderson said:

Having recently approved the expansion to grow production by a further 100,000 tonnes per annum to a combined approximate 640,000 tonnes to 680,000 tonnes per annum, and with the company now progressing towards a final investment decision to expand production to 1 million tonnes per annum, Pilbara Minerals commences FY23 in an exceptionally strong position.

The business is in an enviable position, supplying product into a burgeoning growth market with a clear pathway for further production growth off a performing operating base. Further, chemicals participation with our downstream JV with POSCO and our midstream project provides another extension of value creation for our shareholders. A very exciting future lies ahead for our business and our shareholders.

Is the Pilbara Minerals share price a buy?

I certainly believe Pilbara Minerals can keep growing its profit thanks to the increasing demand for lithium. The midstream project seems very promising for the ASX lithium share to boost its margins. If lithium prices stay stronger, FY23 could be another good year.

Brokers are mixed on what happens next.

UBS has a sell rating on the business, with a price target of $2.60. That’s a potential fall of around 25%. It thinks there are better-value lithium plays on the ASX.

Macquarie rates it as outperform, with a price target of $5.60. That implies a possible rise of more than 50%. It’s expecting higher prices to help with stronger profits and cash flow.

The post Up 75% since mid-June, is it too late to invest in Pilbara Minerals shares? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• Piedmont Lithium share price falls 5% after plans to build the largest US lithium plant unveiled
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• The Pilbara Minerals share price surged 30% in August. What now?
• How I’d invest $20,000 in ASX shares today if I had to start from scratch

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. 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 Coles Group Ltd (ASX: COL) share price suffered a 6% fall during August.

However, between 22 August and the end of the month, it actually dropped by almost 10%.

It seems the supermarket business revealed its FY22 result and then some investor support disappeared.

Results are often the best time for investors to get a real insight into the performance of a business, its plans for the future, and what management thinks about its outlook.

It’s certainly an interesting time for supermarket companies like Coles amid the current inflationary environment. Suppliers want to pass on price increases so they can pay for their own elevated costs. But how much will Coles allow the price on the shelf to go up? And how will customers react to the higher prices?

Investors got some information from the company’s FY22 report.

FY22 earnings recap

Coles said that its total sales increased by 2% to $39.4 billion. Within that, the supermarket division saw 2.2% sales growth to $34.6 billion, liquor sales went up 2.5% to $3.6 billion, and Coles Express fell 5% to $1.13 billion.

The company reported earnings before interest and tax (EBIT) fell 0.2% to $1.87 billion and net profit after tax (NPAT) rose 4.3% to $1.05 billion.

Coles saw supermarket sales and Express revenue ramp up in the fourth quarter, with comparable sales growth of 3.7% and 1.1%, respectively.

In the second half of FY22, Coles supermarkets saw inflation of 3.8% which Coles put down to supplier cost price increases.

However, Coles also experienced higher costs. The cost of doing business (CODB) as a percentage of sales increased by 50 basis points to 21.4% due to COVID costs (approximately $160 million in FY22 compared to $90 million in FY21), higher fuel costs, and underlying cost inflation.

Outlook for the Coles share price

As I alluded to before, the outlook can have a sizeable impact on the Coles share.

Coles said that in FY23, its supermarket sales would be cycling against COVID lockdowns in the first half of FY22 (in NSW, the ACT, and Victoria), and price inflation in the second half of FY22.

It has seen “further cost price inflation” in fresh produce because of recent flooding, in bakery due to wheat commodity prices, and in packaged groceries due to various supply chain cost increases, including wages, packaging, raw ingredients, and freight.

In its liquor division, sales growth is also expected to be “impacted” by the cycling of COVID-19 lockdowns in the first half of FY22.

Coles Express weekly fuel volumes and sales are expected to benefit from increased mobility.

The ASX share noted that with increasing inflation and rising interest rates placing pressure on many households, it will continue to focus on delivering “trusted value”. But, it is seeing inflationary pressures on its own cost base in the form of higher wages, rent, fuel, as well as supply chain and capital costs.

Coles said its ‘smarter selling’ program is on track to deliver cumulative benefits under its four-year program of $1 billion in FY23, which is helping partly mitigate some of the underlying cost pressures.

Is the Coles share price a buy?

The broker Morgans rates Coles as a buy, with a price target of $20. That implies a possible rise of more than 10%. Morgans likes the defensive nature of the business but noted that its profit margin fell.

Citi also rates it as a buy, with a price target of $20.10. That implies a possible rise of around 15%. The broker notes that it has been growing market share, but decided to moderately reduce its profit forecast over the next couple of years.

The post Why did the Coles share price have such a rough trot in August? appeared first on The Motley Fool Australia.

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More reading

• Boost your income with these ASX dividend shares: analysts
• Why is the Coles share price having such a lousy end to the week?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Is the Endeavour share price a bargain after its big tumble in August?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. 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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Zip Co Ltd (ASX: ZIP) shares are on watch this morning.

This comes after the ASX buy now, pay later (BNPL) share was ousted from the S&P/ASX 200 Index (ASX: XJO).

Certainly, Zip is still very much trading on the ASX.

But every quarter S&P Dow Jones Indices reviews and rebalances the stocks within its various S&P/ASX Indices.

And as part of its September quarterly rebalance, Zip shares will no longer be part of the ASX 200 benchmark.

That’s because after shares in the BNPL company fell by 80% in 2022, its market cap has fallen to some $595 million. That means it no longer ranks among the biggest 200 listed companies in Australia.

While there were no changes in the S&P/ASX 20 Index or S&P/ASX 50 Index, there were plenty of shakeups amongst the other popular indices.

Why does this matter?

There are certain advantages for stocks, like Zip shares, to be listed on the bigger indices such as the ASX 200.

Firstly, those stocks tend to get more analyst and media attention and, therefore, will be more likely to attract the attention of retail investors.

Secondly, many fund managers are restricted to trading only the bigger stocks, often limited to the ASX 200. So getting ousted from the index means those fund managers will no longer be able to invest in Zip and some may be selling their holdings today.

How have Zip shares been tracking longer term?

Like the rest of the BNPL sector, Zip shares have been pounded by rising inflation and interest rates, with the company also facing significant levels of bad debts from its customer base.

Zip shares were star performers, however, during the recovery year following the 2020 pandemic-fuelled market crash.

From 20 March 2020 through to 19 February 2021, the Zip share price rocketed an eye-popping 872%. Since that peak, however, the ASX BNPL share has lost 93% of its value.

We’ll be watching closely to see how the company fares today.

The post Zip shares on watch amid ASX 200 ousting appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Zip and these shares have been kicked out of the ASX 200 index
• Why is the Zip share price tumbling 4% on Thursday?
• Why did the Zip share price zoom 11% higher today?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Westpac Banking Corp (ASX: WBC) shares are often seen as an option for generating income as an ASX dividend share.

The S&P/ASX 200 Index (ASX: XJO) bank share hasn’t had a great time since interest rates started jumping higher in June. Since 6 June 2022, the Westpac share price has dropped around 10%.

However, one of the benefits of a lower share price is that not only could it mean the share is better value, but that the prospective dividend yield could be even higher.

How big will the Westpac dividend be?

Every analyst has their own expectation of how much the ASX 200 bank share is going to pay.

Estimates on CMC Markets suggest dividend growth for shareholders over the next few years.

In FY22, Westpac is expected to pay an annual dividend of $1.23 per share. That would translate into a grossed-up dividend yield of 8.2%.

The projections imply dividend growth of 7.3% in FY23 to an annual payment of $1.32 per share. This would be a grossed-up dividend yield of 8.8%.

More dividend growth is expected in FY24. The dividend could grow by almost 10% to $1.45 per share. In that case, it would translate to a grossed-up dividend yield of 9.7%.

Commonwealth Bank of Australia (ASX: CBA) is also expected to keep growing its dividend between now and FY24, according to CMC Markets. However, the FY24 grossed-up dividend yield from CBA is only expected to be 6.3%, so Westpac is expected to be a more lucrative source of dividends than CBA.

Is the Westpac share price a buy?

A business isn’t necessarily a buy just because it pays a large dividend. But, with projected dividends that big, Westpac shares don’t need to do too much for the bank to deliver satisfactory total returns.

Some brokers are very confident about the outlook for the Westpac share price.

Citi rates it as a buy with a price target of $29. That implies a possible rise of more than 30%. The broker pointed out that bad debts are still low and the asset quality is strong. It’s also expecting the net interest margin (NIM) to keep rising over the next year.

While the broker UBS is currently neutral on the big bank, the price target of $26 implies a rise of around 20%. The bank may also report a credit release in the second half of FY22 thanks to its credit quality.

The post Are Westpac shares the answer for investors wanting dividend income? appeared first on The Motley Fool Australia.

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More reading

• Goldman Sachs says these ASX dividend shares are buys
• Is this why the Macquarie share price was ‘steaming ahead’ on Friday?
• Why is the ASX 200 diving 2% on Tuesday?
• How did the Westpac share price beat the other ASX 200 banks in August?
• What’s the outlook for ASX 200 bank shares in September?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. 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 AGL Energy Ltd (ASX: AGL) share price has been falling. Over the past month, it has dropped by around 15%. But after this sizeable fall, is the company in the buy zone yet?

It has been a tricky time for AGL with its profit being challenged and the company going through a demerger process that shareholders ultimately voted against.

The company also revealed a number of other factors to investors in its FY22 result, so let’s remind ourselves of what was recently reported.

FY22 earnings recap

AGL told investors that its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 27% to $1.22 billion and its underlying net profit after tax (NPAT) sunk 58% to $225 million.

AGL said that the fall in underlying profit reflected the “expected step down in trading and origination electricity earnings due to lower realised contracted and wholesale customer prices, increased costs of capacity to cover periods of peak electricity demand and the absence of the Loy Yang unit 2 insurance proceeds recognised in FY21″.

The total AGL customer services and total generation volumes were “broadly flat”, the company said.

It has been working on reducing its costs so that it can be more profitable. AGL reported that over $150 million of targeted operating cost reductions were delivered in FY22 and it’s on track to deliver $100 million of sustaining capital expenditure reductions by the end of FY23. This could be helpful for the AGL share price.

Fallout of the demerger

AGL decided to withdraw the proposed demerger and announced a review of its strategic direction. It’s reviewing four things: its existing strategies, its decarbonisation objectives, the optimal energy mix, and the capital structure.

Progress on this review is “continuing” and an update on the initial outcomes is expected at the end of September.

It’s also “well advanced” in selecting a new chair. The company expects to announce its new chair before the annual general meeting (AGM). It has also commenced a global search for a managing director and CEO.

Outlook for AGL and the share price

AGL said it believes FY23’s earnings will “remain resilient” through the current challenging energy industry and market conditions. Management explained why it thinks AGL can safely get through this period:

The strength of AGL’s large and diversified customer base, low-cost baseload generation position supported by strong fuel supply arrangements, robust risk management, with prudent margin management ensuring retail strength and stability in a highly volatile market.

The company thinks that it’s well positioned to benefit into FY24 from sustained higher wholesale electricity pricing as historical hedge positions progressively roll off.

Broker ratings on the AGL share price

Interestingly, with AGL shares currently sitting at $7.26, it’s at a 12% discount to the takeover price offered by Brookfield and Grok Ventures (Cannon-Brookes’ investment vehicle) earlier this year. It’ll be interesting to see if anything further comes from the consortium.

Morgans rates AGL as add, even though the broker thinks that FY23 could be another difficult year for the electricity market. The price target is $8.63, implying a possible rise of almost 20% over the next year.

Ord Minnett is even more optimistic. It rates AGL as a buy, with a price target of $10, implying a possible rise of close to 40%.

However, UBS is neutral on the business and the price target is $8.15, which still implies a possible increase of more than 10%. It’s expecting a slower recovery in electricity, though gas could make up some of the difference.

The post Down 15% in a month – is the AGL share price good value yet? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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The National Australia Bank Ltd (ASX: NAB) share price has been lifting of late. It’s gone up 18% since mid-June. After a strong run over the past two and a half months, is it too late to buy into the big S&P/ASX 200 Index (ASX: XJO) bank?

While NAB may be pretty similar to the other ASX bank shares of Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Westpac Banking Corp (ASX: WBC), there are some important differences.

One of the main factors that investors may focus on is earnings growth. Long-term profit growth could be an important driver of the NAB share price over time.

Certainly, NAB is growing its profit. Let’s have a look at the latest profit numbers and what experts think of the bank.

FY22 third quarter earnings recap

In the three months to June 2022, NAB generated $1.85 billion of statutory net profit and $1.8 billion of cash earnings. Year over year, cash earnings grew 6% with 10% growth when looking at cash earnings before tax and credit impairment charges.

The acquisition of Citigroup’s Australian consumer business was effective from 1 June 2022.

NAB outlined the effect of including and excluding the Citi acquisition compared to the FY22 first half quarterly average cash earnings before credit impairment charges and tax of $2.43 billion. Including the Citi acquisition, underlying cash earnings rose 3% and excluding the Citi acquisition underlying cash earnings rose 2%.

The big bank also said that the acquisition boosted the net interest margin (NIM) by 1 basis point (0.01%), it increased gross lending balances by $13.2 billion ($9.2 billion of home loans and $4 billion of credit cards and other unsecured personal lending). The deal also came with $9.4 billion of deposit balances.

In terms of its loan book, its arrears were in a good place at the end of June 2022. Over the quarter, loans that were at least 90 days overdue reduced from 0.75% to 0.7%. However, this quarter came before the significant increases in the Reserve Bank of Australia (RBA) interest rate really started flowing through to mortgage rates. Time will tell how the loan book performs in the coming months as households suffer a big increase in their mortgage costs.

Expert views on the NAB share price

There is a range of views on NAB.

The broker Morgan Stanley thinks the NAB share price will fall, with a price target of $27.20, implying a drop of more than 10%. The rating is equal-weight, which is like a hold rating. It thinks growth will slow and that banks could see higher bad debts in the future as higher interest rates bite.

UBS has a neutral rating on NAB, with a price target of $33. That implies a rise of close to 10% over the next year. It thought the third quarter was good and noted that a majority of borrowers are ahead on their mortgage payments.

The broker Ord Minnett rates NAB as accumulate, with a price target of $32.70. It’s expecting a good final quarter of FY22 and it’s also expecting revenue growth over the next two halves as interest rates rise.

Experts are expecting pretty big dividends from NAB. For example, at the current NAB share price, Ord Minnett is expecting the bank share to pay a grossed-up dividend yield of 7% in FY22 and 7.8% in FY23.

The post Are NAB shares worth buying in September? appeared first on The Motley Fool Australia.

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• Will this build value for NAB shareholders or alienate the bank’s customers?

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. 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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I think it is fair to say that Domino’s Pizza Enterprises Ltd (ASX: DMP) shares have been having a tough year.

For example, on Friday the pizza chain operator’s shares ended the week at $60.87, which is just a fraction higher than their 52-week low.

Time to buy Domino’s shares?

One broker that believes investors should be seizing on this weakness is Morgans.

According to a recent note, the broker has recently retained its add rating but trimmed its price target on the company’s shares slightly to $90.00.

Based on where Domino’s shares are trading today, this implies potential upside of almost 50% for investors over the next 12 months.

And with the broker expecting a $1.73 per share partially franked dividend in FY 2023, this adds a further 2.8% yield to the equation.

What did the broker say?

Morgans acknowledges that the last 12 months have been difficult for the company. However, it appears confident that the worst is over and “it will get better from here.”

The broker highlights that price increases and operating efficiencies should help offset inflationary pressures. It explained:

Higher prices, operating efficiencies and menu enhancements are already allowing DMP to offset cost inflation in ANZ and Asia. It’s been slower in Europe, but it appears progress is being made. With the prospect of some relief in commodity price inflation and reduced losses in Denmark, we expect margins to rise in FY23.

In light of this, Morgans is forecasting double digit earnings growth in both FY 2023 and FY 2024. It commented:

The transition out of COVID-19 tailwinds and into an environment of inflationary pressure and reduced consumer confidence made FY22 a challenging year for Domino’s Pizza. EBIT fell by 10.5% as both Asia and Europe reported reduced margins and same store sales growth. We believe it will get better from here. We forecast 12.9% EBIT growth in FY23, followed by 19.5% growth in FY24.

All in all, its analysts appear to see this as the potential turning point for Domino’s shares.

The post Morgans tips Domino’s shares to deliver 50% return appeared first on The Motley Fool Australia.

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More reading

• $20,000 invested in these ASX shares 10 years ago is worth how much now?
• Reason for hope as ‘worst month of the year’ starts off badly
• Here are 3 ASX 200 shares trading ex-dividend today
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• Domino’s share price sinks 7%, giving back most of Wednesday’s gains

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. 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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