Tag: Motley Fool

The S&P/ASX 200 Index (ASX: XJO) is having a dreadful start to the trading week so far this Monday. As it currently stands, the ASX 200 has lost a painful 2.07% and is back around 6,950 points. But the A2 Milk Company Ltd (ASX: A2M) share price is a conspicuous outlier.

A2 Milk shares are comprehensively defying the gloom on the markets today. The ASX 200 dairy share is currently up a healthy 9.06% at $5.355 a share. This move comes after A2 Milk reported its FY22 full-year earnings to the markets this morning.

As we went through at the time, these earnings saw A2 Milk report a pleasing 19.8% rise in revenues to NZ$1.45 billion. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose an even better 59% to NZ$196.2 million. Meanwhile, net profit after tax (NPAT) was up 42.3% to NZ$114.7 million.

But perhaps the biggest piece of news this morning was the announcement that A2 Milk would initiate a NZ$150 million ($133.65 million) on-market share buyback program.

Are share buybacks boosting the A2 Milk share price today?

A2 Milk’s managing director and CEO David Bortolussi said that “our on-market buyback of up to NZ$150 million demonstrates effective capital management and the improved confidence we have in our strategy, execution and outlook”.

This might be part of what is delighting investors today with this report.

Share buybacks, like dividends, are a form of capital return for shareholders. A buyback involves the company buying its own shares on the open market and ‘retiring’ them. This has the effect of reducing the supply of the shares. This, under the laws of supply and demand, should result in share price appreciation.

Further, buybacks reduce the overall share count for a company. As such, they are usually accretive to earnings per share (EPS) growth, seeing as there are fewer shares to divide a company’s earnings between.

Many investors (including the legendary Warren Buffett) prefer buybacks to dividends, seeing as the positive effects of share buybacks can be enjoyed without being initially taxed, unlike a dividend. So it’s perhaps no surprise that the A2 Milk share price is performing so well today.

At the current A2 Milk share price, this ASX 200 dairy share has a market capitalisation of $3.97 billion.

 

The post Everything you need to know about the latest A2 Milk share buyback appeared first on The Motley Fool Australia.

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More reading

• A2 Milk share price soars 8% as company regains money-making mojo
• A2 Milk share price on watch amid earnings beat and NZ$150m buyback
• 5 things to watch on the ASX 200 on Monday
• Earnings preview: Here are 3 ASX 200 shares reporting next week
• A2 Milk share price lags ASX 200 ahead of Monday’s earnings result

Motley Fool contributor Sebastian Bowen has positions in A2 Milk. 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 A2 Milk. 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 have a question for you:

What do you think the economy will be like on June 30, 44 weeks from now?

And with what level of confidence?

Now, let’s make sure you’ve considered all of the inputs into that decision: interest rates, inflation, local and global economic growth, currency, wages, government spending, the savings rate, house prices, and more.

Still confident?

Okay, let’s overlay the X-factors.

You know, like, oh… Maybe a pandemic? Geopolitical tensions (or worse). Terrorism. Drought. Floods. Fires.

And they’re just the ones I can think of.

How confident are you in your prediction, now?

But we’re not done.

Our predictions don’t count for much – no-one is paying attention, anyway.

But what if you’re, say, an ASX-listed company CEO.

And investors want to know what you’re expecting for the current financial year.

You get up in the morning, look at yourself in the mirror, and what do you think to yourself?

The best ones – the honest, self-aware ones – will shake their heads ruefully and mutter “Why are they asking me? I’m doing my best to run the business as well as possible, but I don’t have a crystal ball…”

The less-great ones – those for whom hubris and arrogance are regular bedfellows – will rely on their overinflated egos and self-assurance and think “I’m glad they asked. I’m so good, I can forecast these things with confidence!”

I jest.

A little.

But the biggest problem?

Both of our mirror-gazing CEOs will, that day, make a forecast anyway.

They’ll tell the ASX what they think will happen.

It’ll be (mostly) honest, based on their best guesses, usually with a strong dose of optimism and self belief thrown in.

And investors, who, like Mulder and Scully (from the X-Files – ask your parents) just ‘want to believe’ will duly listen, and factor those forecasts into their own investment decisions.

The blind leading the visually-impaired?

You betcha.

Why do CEOs do it?

Because, as John Kenneth Galbraith observed, “…pundits forecast not because they know, but because they are asked.”

Because investors have become so used to management forecasts, we expect it. We demand it.

Because CEOs want to be popular, and liked, and respected, and supported. So, when the market asks, they answer.

Which begs the question: Why do investors expect them to know?

The answer to this one isn’t much better.

Because we hate uncertainty. Because we want to believe that CEOs have magical powers of foresight. Because we like to believe they can somehow magically manifest the future they forecast.

Because, as one industry insider once said, in response to my question “Well, what else would we put into our spreadsheets?”

True story.

We turn a blind eye, choosing to believe the fiction, rather than question. Because it’s easier that way.

Doesn’t this whole thing just sound a little bit bonkers.

Or more than just a little bit.

We are so desperate to avoid uncertainty that we’ll willingly suspend disbelief in exchange for the emotional comfort of an almost-baseless forecast.

CEOs are so keen to please (and to be seen as being ‘in control’) that they’ll consciously and subconsciously go along with the charade, publishing a forecast because, well, we asked.

Truly, it is the stuff of collective delusion.

Worse, when those forecasts are missed, we blame the CEO, as if it was their fault.

Perhaps more insidiously, we slap those who guessed correctly on the back, praising their foresight.

My 9-year old knows better than that.

He might try the same thing, sometimes, but at least he’s honest enough to ‘fess up when we call him on it.

The bad news?

It’s not going to change.

The charade will roll on, month after month and year after year.

And if you reckon that’s bad, I have even worse news for you.

There is no-one more hell-bent than a CEO who’s given a public forecast.

They will move heaven and earth to hit that number.

Reckon that’s a good thing?

Ask anyone who’s worked for one of those CEOs.

The long term damage done in pursuit of short-term objectives is frightening.

I’ve worked for businesses that have sold weeks and weeks of extra inventory in the last week of a year, just to get a number.

I’ve known companies to destroy brand equity by giving massive discounts to try to get a few more drops of juice out of a dry lemon.

They tell themselves it’s a one-off.

They tell themselves they’ll make up for it next year.

But when ‘next year’ comes, there’s a sales hole already (from all of that end-of-year stupidity), so they end up having to go even harder, just to catch up.

And on and on it goes.

It is corporate madness. Pure and simple.

The solution?

I’m glad you asked.

I have a few:

– Look for great management. People who say ‘I don’t know’. Or who don’t give baseless / best guess forecasts.

– Ignore the predictions of those who do give forecasts. But know that they’ll be sorely tempted to make suboptimal choices if they start to fall short.

– Focus on the long term. And prioritise businesses they do the same.

Frankly, I will give a management team bonus points for refusing to give a forecast, even if the professional investing class cry foul.

I wish more of them did it.

In the meantime?

It’s up to us to choose wisely.

And to remember that we don’t have to play the investing game by rules that don’t make sense.

Fool on!

The post The most useless thing a CEO can do… appeared first on The Motley Fool Australia.

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More reading

• ASX 200 tech shares are getting hammered on Monday. Here’s why
• AVZ Minerals shares are scheduled to resume trading this week. Here’s what to watch
• A tough start to the week for the ASX. Plus a big week of data. Scott Phillips on Nine’s Late News
• Ready to get rich with stocks? You can’t go wrong with these 3 investments
• Core Lithium share price dips despite Tesla extension

Motley Fool contributor Scott Phillips 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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S&P/ASX 200 Index (ASX: XJO) tech shares are taking a beating today.

The broader market is facing a sharp sell-off as well, with the ASX 200 down 2.2% in early afternoon trade.

But the S&P/ASX All Technology Index (ASX: XTX) – which also contains some smaller tech stocks outside of the ASX 200 – is down a much steeper 4%.

ASX 200 tech shares in the red

Looking at some of the bigger companies in the sector, shares in global logistics software provider WiseTech Global Ltd (ASX: WTC) are down 3.7%, trading for $56.95 per share.

Cloud-based accounting software provider Xero Ltd (ASX: XRO) is under selling pressure as well, with the Xero share price down 5.1% to $83.50 per share.

Then there’s ASX 200 tech share NextDC Ltd (ASX: NXT).

The data centre developer and operator released some solid full-year results this morning. That included an FY22 statutory net profit after tax (NPAT) of $9.1 million, compared to the $23.6 million loss the company posted in FY21.

But those results have been unable to lift the company above the sea of red in the tech sector today, with the NextDC share price down 8.3%.

Why are investors selling today?

ASX 200 tech shares are under particularly heavy selling pressure today following a big sell-off on the NASDAQ on Friday, with the tech-heavy US index closing the day 3.9% lower.

The Aussie market is reacting to the same forces that drove down US stocks. Namely the decidedly hawkish speech delivered by US Federal Reserve chair Jerome Powell. Powell spoke at the Jackson Hole central banking summit in Wyoming on Friday morning (overnight Aussie time).

“Restoring price stability will likely require maintaining a restrictive policy stance for some time,” Powell told the gathered delegates. “The historical record cautions strongly against prematurely loosening policy.”

Powell noted that a period of higher interest rates would, over time, bring down inflation. But he admitted higher rates “will also bring some pain to households and businesses”.

Today’s market action looks to be a sign of that pain already hitting businesses.

Commenting on Powell’s speech, Cliff Hodge, chief investment officer at Cornerstone Wealth, said (courtesy of Bloomberg):

Powell can’t come right out and say that the Fed is fine walking us right into recession in order to crush inflation, but that is what this messaging unequivocally implies. What does this mean for markets? Drastically reduces the chance of a soft landing and the bull case for new highs this year.

ASX 200 tech shares are particularly susceptible to the pain of higher rates. That’s because most tech shares are valued on future earnings growth potential. And as interest rates rise, the present cost of that future revenue growth increases.

The post ASX 200 tech shares are getting hammered on Monday. Here’s why appeared first on The Motley Fool Australia.

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More reading

• NextDC share price powers down 7% despite turning a profit
• Here are the top 10 ASX 200 shares today
• Why are ASX 200 tech shares having such a cracker of a day?
• Why Domino’s, Iluka, Netwealth, and WiseTech shares are storming higher
• WiseTech share price surges 11% on record profits

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 WiseTech Global and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. 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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All eyes will likely be on AVZ Minerals Ltd (ASX: AVZ) shares this week. The company is expected to return to trade following an ownership dispute over its flagship lithium project.

The S&P/ASX 200 Index (ASX: XJO) mineral exploration company put its stock in the freezer way back in early May and has continued to extend its halt ever since. It’s now expected to return to normal trade on Thursday.

The last AVZ Minerals share price was 78 cents.

Here’s what market watchers need to know about the company’s dramatic dispute.

What‘s going on with AVZ Minerals shares?

The AVZ Minerals share price could be pulled from the freezer for the first time in nearly four months on Thursday, likely on the back of news of the company’s Manono Lithium and Tin Project in the Democratic Republic of Congo.

The company has 75% ownership of the project’s mining licence. The other 25% is owned by La Congolaise D’Exploitation Miniere SA (Cominiere).

Or is it?

This is where it gets complicated. Cominiere was to cede 10% of its stake to the government of the Democratic Republic of Congo after a mining licence was awarded in early May.

AVZ Minerals then planned to snap up the other 15% held by Cominiere, giving it a 90% share in the project.

But Cominiere allegedly went behind its partner’s back, selling 15% of its stake to another company: Jin Cheng. AVZ Minerals is arguing the sale breached an agreement between it and Cominiere and is, therefore, invalid.

Making the situation more complicated, AVZ Minerals previously agreed to sell a 24% stake to Suzhou CATH Energy Technologies.  

Therefore, if all goes wrong, the ASX-listed company could walk away with a far smaller stake in the project than it previously anticipated.

With all that in mind, market watchers should keep an eye out for news from the company this week. Most important will be any word on its mining and exploration rights for the Manono Project.  

However, the trading halt on AVZ Minerals’ shares could very well be extended once more before Thursday’s open.

The post AVZ Minerals shares are scheduled to resume trading this week. Here’s what to watch appeared first on The Motley Fool Australia.

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More reading

• A tough start to the week for the ASX. Plus a big week of data. Scott Phillips on Nine’s Late News
• Ready to get rich with stocks? You can’t go wrong with these 3 investments
• Core Lithium share price dips despite Tesla extension
• A2 Milk share price soars 8% as company regains money-making mojo
• Northern Star share price backtracks despite revenue lifting 35% to $3.7b

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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Motley Fool Australia Chief Investment Officer Scott Phillips joined Peter Overton for Nine’s Late News on Sunday night to discuss a big economic week ahead, including retail sales, the construction industry, home loan data… and a tough start to the week for the ASX.

[youtube https://www.youtube.com/watch?v=kD6q3kruHDo?feature=oembed&w=500&h=281]

The post A tough start to the week for the ASX. Plus a big week of data. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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More reading

• Ready to get rich with stocks? You can’t go wrong with these 3 investments
• Core Lithium share price dips despite Tesla extension
• A2 Milk share price soars 8% as company regains money-making mojo
• Northern Star share price backtracks despite revenue lifting 35% to $3.7b
• Michael Hill share price surges 7% on record profit

Motley Fool contributor Scott Phillips 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

A big hurdle to launching your investment plan is figuring out where to start. You might have a few high-profile stocks in mind, like Apple or Walmart. But concentrating all your money in one or two stocks doesn’t feel like a good idea.

Fortunately, a quality ETF or mutual fund can give you the best of both worlds. The right funds hold those high-profile stocks you like, plus hundreds of other positions too. You’ll get the long-term growth you want, along with diversification — all rolled up in each share.

Here are three types of fund that can anchor your investment strategy and deliver long-term returns. Over 20 years or more, you can expect these funds to grow about 7% annually on average, net of inflation.

1. S&P 500 index ETF

The S&P 500 fund is a popular choice for new investors, and for good reason. The S&P 500 index includes 500 of the largest, most successful public companies in the U.S. In terms of value, the index accounts for roughly 80% of all stocks — which is why the index is often used as a gauge for the overall market.

S&P 500 ETFs mimic the index’s performance. There are many S&P 500 funds out there, but the best choices are those with low expense ratios and minimal tracking errors.

• The expense ratio is the percentage of your investment that pays for the fund’s operating costs.
• Tracking error is the difference between the fund’s performance and the index’s performance. There is always a slight discrepancy here. Funds have expenses and timing issues, while indexes do not. A fund’s expense ratio typically accounts for most of the tracking error.

The table below shows three popular S&P 500 index funds, along with their expense ratios, size, and 10-year growth performance.

Fund Name	Expense Ratio	Net Assets	10-year Average Annual Growth
Vanguard S&P 500 ETF (NYSEMKT: VOO)	0.03%	$780 billion	13.76%
SPDR S&P 500 ETF  (NYSEMKT: SPY)	0.09%	$373 billion	13.65%
iShares Core S&P 500 ETF (NYSEMKT: IVV)	0.03%	$309 billion	13.75%

Table data source: Vanguard, SPDR, iShares

2. Total market fund

Another solid option is a total market fund, which replicates the performance of — you guessed it — the entire stock market.

Total market funds vary more in their holdings vs. S&P 500 funds, for a couple reasons. First, total market funds can track different indexes, such as the Wilshire 5000 or the Russell 3000. These funds can also either replicate their entire benchmark index or take a sampling approach.

Sampling means the fund holds a smaller representative group of stocks that mirrors an index’s performance. The advantage is that sampling can be more cost-efficient vs. owning every stock in a large index. As with S&P 500 ETFs, low expenses are better.

Even a total market fund that samples will provide diversification across thousands of stocks, including small, medium, and large companies.

See the table below for three total market funds with low expense ratios.

Fund Name	Expense Ratio	Total Net Assets	10-year Average Annual Growth
Vanguard Total Stock Market Index Fund (NYSEMKT: VTI)	0.03%	$1.2 trillion	13.42%
iShares Core S&P Total U.S. Stock Market ETF (NYSEMKT: ITOT)	0.03%	$43 billion	12.50%
Schwab U.S. Broad Market ETF (NYSEMKT: SCHB)	0.03%	$21 billion	13.39%

Table data source: Vanguard, Schwab, Fidelity

3. Quality-screened dividend fund

If you don’t like the idea of waiting decades to cash in on your investment returns, a dividend fund might be a better choice. To be clear, you’ll get rich faster if you reinvest those dividends. But the quarterly payments, even if they are reinvested, can feel more tangible than unrealized gains. And tangible returns are comforting — particularly in bear markets.

Quality-screened dividend funds invest in dividend-paying companies that meet thresholds for stability and reliability. The fund might track a quality dividend index, like the Northern Trust Quality Dividend Index. Or the fund may have its own screening methodology that looks at dividend payout ratio and dividend consistency, among other things.

The table below shows three screened dividend funds that may have roles to play in your portfolio.

Fund Name	Expense Ratio	Total Net Assets	Dividend Yield
Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD)   Â	0.06%	$38 billion	3.3%
FlexShares Quality Dividend Index Fund (NYSEMKT: QDF)	0.38%	$1.6 billion	2.3%
Franklin U.S. Low Volatility High Dividend Index ETF (NASDAQ: LVHD)   Â	0.27%	$686 million	3.4%

Table data source: Schwab, FlexShares, Franklin Templeton

Getting rich with broad-based funds

These funds won’t carry you to overnight riches, but you can double your invested capital about every 10 years. Repeat that process four times over, and you’ll be well richer than when you started. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Ready to get rich with stocks? You can’t go wrong with these 3 investments appeared first on The Motley Fool Australia.

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More reading

• A tough start to the week for the ASX. Plus a big week of data. Scott Phillips on Nine’s Late News
• Core Lithium share price dips despite Tesla extension
• A2 Milk share price soars 8% as company regains money-making mojo
• Northern Star share price backtracks despite revenue lifting 35% to $3.7b
• Michael Hill share price surges 7% on record profit

Catherine Brock has positions in Vanguard S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Vanguard S&P 500 ETF, Vanguard Total Stock Market ETF, and Walmart Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Core Lithium Ltd (ASX: CXO) share price is sliding today as negotiations with Tesla continue on a lithium deal.

Core Lithium shares are currently trading at $1.345, a 3.24% fall. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) is down 2.23% today. Pilbara Minerals Ltd (ASX: PLS) shares are falling 2.25%, while the Allkem Ltd (ASX: AKE) share price is down 1.58%.

Let’s take a look at what is going on with Core Lithium.

Offtake agreement termination date extended

Core Lithium announced today it has agreed with Tesla to extend the termination date on an offtake agreement to 26 October.

In March, Core Lithium announced it had entered a binding offtake term sheet for the supply of lithium to electric vehicle manufacturing giant, Tesla.

The deal involves Core Lithium supplying Tesla with up to 110,000 tonnes of spodumene concentrate over four years from the Finniss Lithium Project.

The plan is subject to the two companies entering a definitive product purchase agreement.

Previously, the final date for completion of negotiations was 27 August. However, with today’s announcement, this has now been extended to October.

Commenting on today’s news, Core Lithium said:

The extension allows Core and Tesla to complete negotiations for the definitive full form binding offtake agreement.

Core Lithium share price snapshot

The Core Lithium share price has exploded 320% in the past year, while it has gained 128% year to date.

However, in the past week, Core Lithium shares have lost nearly 4%.

Core Lithium has a market capitalisation of about $2.3 billion based on the current share price.

The post Core Lithium share price dips despite Tesla extension appeared first on The Motley Fool Australia.

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More reading

• Why are Core Lithium shares seeing so much action in August?
• Could Pilbara’s inaugural profit signal good times ahead for ASX lithium shares?
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Down 16% in a week, what’s next for the Core Lithium share price?
• Could ASX battery minerals shares be in for a boost next month?

Motley Fool contributor Monica O’Shea 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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Bust out a bottle from A2 Milk Company Ltd (ASX: A2M). The share price is giving shareholders something worth celebrating today.

While the S&P/ASX 200 Index (ASX: XJO) is underwater by 2.14%, the infant formula company’s shares look rosy. The catalyst behind such differing performances today is A2 Milk’s full-year results for FY22 — which have been well-received by the market.

In early afternoon trade, the A2 Milk share price is enjoying an 8.35% boost to $5.32. The move positions the company’s shares at their highest level since 30 March this year.

Getting back on track

Investors who have been around the block would recall the days when A2 Milk was considered a gemstone of the ASX. However, the COVID-19 pandemic poured cold water on the fiery performance of the New Zealand-based company.

Between June 2020 and December 2021, A2 Milk’s trailing 12-month profits sunk from NZ$388.2 million to a meagre NZ$20.2 million. As you might expect, the A2 Milk share price collapsed in lockstep with the dwindling earnings.

Fortunately, today’s full-year FY22 figures hint that those difficult days may be behind the company. As The Motley Fool Australia reported earlier, the strained milk business bounced back in the latest financial period. Both revenue and profits returned to growth, leaping 19.8% and 42.3% respectively.

Pleasingly, net profit after tax (NPAT) for the period came in at NZ$114.7 million — more than five times greater than the paltry profits at the end of December 2021. This would suggest the bulk of the uptick in growth occurred in the second half of the financial year.

Boosting the A2 Milk share price

Shares in A2 Milk are likely getting a positive nudge from its share buyback news today as well. With a closing balance of $816.5 million in net cash at the end of the reporting period and more profits on the horizon, management made the call to announce a buyback program.

Shareholders will benefit from a return of capital of up to $150 million. For reference, this represents 3.7% of the company’s market capitalisation at the current A2 Milk share price.

The post A2 Milk share price soars 8% as company regains money-making mojo appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler 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 A2 Milk. 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 Northern Star Resources Ltd (ASX: NST) share price is heading south on Monday.

This comes after the company released its FY2022 full-year results.

At market open, the gold miner’s shares dumped nearly 3%, but have since recovered some of those losses. However, the downturn is in line with a broader slump across the ASX today.

Currently, Northern Star shares are down 1.45% to $7.47.

Northern Star share price retraces despite ‘strong performance’

• Annualised gold sold of 1,561koz at AISC of $1,633/oz, in line with guidance
• Total revenue up 35% to $3,735 million
• Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 31% to $1,517 million
• Underlying net profit after tax (NPAT) down 27% to $273 million
• Final dividend down 43% to 11.5 cents per share, fully-franked
• Strong balance sheet with cash and bullion of $628 million as at 30 June

What happened in FY2022?

For the 12 months ended 30 June, Northern Star achieved gold production of 1,561koz at an all-in sustaining cost (AISC) of $1,633/oz.

Despite a challenging environment, this was in line with its guidance of 1,550koz to 1,650koz at an AISC of $1,600/oz to 1,640/oz.

The performance of the Western Australian production centres of Kalgoorlie and Yandal delivered FY2022 production and cost guidance. Production performance at the Pogo Operation substantially improved, with a milestone run rate of 250koz per annum achieved in the second half.

As a result of the strong production and gold price realised, the company generated record underlying EBITDA of $1.5 billion. This was underpinned by a 29% increase in gold sold and a 7% increase in the average realised gold price.

Similarly, operating cash flow was up 49% from the prior year to a record $1.6 billion. This compared to $1.1 billion in FY2021.

At 30 June, cash and bullion totalled $628 million. The company had drawn corporate bank debt totalling $100 million and has no scheduled repayments in the next 12 months.

The board declared a fully-franked final dividend of 11.5 cents per share, corresponding to 23% of cash earnings. This brings the full-year dividend to 21.5 cents per share, representing a 13% improvement over the prior comparable year.

In addition, Northern Star elected to return funds to shareholders via an on-market share buyback of up to $300 million.

What did management say?

Commenting on the results, Northern Star managing director Stuart Tonkin said:

These results, which include for the first time Saracen and 100% of the Super Pit, clearly demonstrate Northern Star’s cash earnings potential. Our strong performance in FY22 generated $1 billion in cash earnings, which underscores the sustainability of the cash flow from our high-quality assets located in tier-1 jurisdictions.

The fully franked final dividend of 11.5cps, within our dividend policy target and payable next month, will mean we have returned $1 billion cash to shareholders since FY12.

The announcement today of the first buy-back in Northern Star’s history presents compelling value and confirms the Board’s confidence in our strong balance sheet and cash generation outlook and aligns with our fiscal discipline and returns focus.

What’s the outlook?

Looking ahead, Northern Star provided the following guidance for FY2023:

• Gold sales between 1,560 and 1,680 ounces, weighted towards the second half due to the scheduled ramp-up of the Thunderbox mill expansion and Pogo stoping schedule
• AISC in the range of $1,630 to $1,690 per ounce (based on assumed average exchange rate of AUD: USD 0.70)
• Growth capital expenditure similar to FY2022 levels with $650 million forecasted (including $13 million corporate investment)
• Exploration expenditure of $125 million

Tonkin touched on Northern Star’s outlook:

We have made a solid start to FY23 and continue to progress the KCGM cutback with our new cost-efficient mining equipment. The SKO processing plant is now on care and maintenance, at Thunderbox we commence commissioning the expanded mill in Q1, while at Pogo we have removed surplus equipment, reflecting increased development rates across the fleet.

The Northern Star share price is 20% in 2022 after recording heavy falls from April onwards.

The post Northern Star share price backtracks despite revenue lifting 35% to $3.7b appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has positions in Northern Star Resources Limited. 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 Michael Hill International Ltd (ASX: MHJ) share price is firmly in the emerald green today, up 6.83% amid the company announcing its full-year results for FY22.

Shares of the iconic jeweller currently trade for $1.095 each. Earlier, they hit a high of $1.12 apiece shortly after market open.

Let’s go over the highlights of the report.

What did Michael Hill Report?

• Group operating revenue up 7% year over year (yoy) to $595.2 million
• Comparable earnings before interest and tax (EBIT) up 11.1% yoy to $62.9 million
• Statutory net profit after tax (NPAT) up 13.9% yoy to $46.7 million
• Unfranked final dividend of 4 cents per share

Michael Hill reported delivering “record sales, gross margin, and profit” during FY22. This was despite its retail stores losing an aggregate total of 10,000 trading days due to COVID-19 lockdowns and other restrictions during the period.

One highlight of the year was that Michael Hill reported its profit grew faster than sales. The company attributed this to “margin expansion driven by strategic initiatives across product, stores, digital and loyalty”.

A share buyback program will begin on 19 September and is expected to conclude on 28 August next year. A total of 19,414,267 ordinary fully paid shares, or 4.9% of this securities class, will be repurchased for a total value of around $22.7 million at the time of writing.

The unfranked final dividend of 4 cents per share has a record date of 9 September and a payment date of 23 September.

What else happened in FY22?

Michael Hill’s digital sales delivered record numbers with sales of $42 million, partly because customers were forced to shop from home during lockdowns. Online sales comprised 7.1% of the company’s total revenues. This channel is also becoming more important as part of its omnichannel marketing structure, the company said.

FY22 was also a year Michael Hill strengthened its balance sheet considerably, with the company noting the period ended with it holding $95.8 million in cash and no debt on its books. It was boosted by an influx of cash from the company selling its Canadian credit book for $14.2 million.

Michael Hill has 280 retail stores, noting that it closed six underperforming stores and opened one new one in Australia during the reporting period.

What did management say?

Michael Hill International managing director and CEO Daniel Bracken said:

Pleasingly, FY23 has started with both strong sales and gross margin performance. Our current bridal campaign has been extremely well received by customers and clearly demonstrates our commitment to brand elevation, our heritage, quality and craftmanship. With the significant impacts from Covid behind us, we are still mindful of potential economic disruptions. That being said, over the last few years, we have demonstrated the resilience of our business, strength of our brand and determination of our team.

What’s next?

Michael Hill strongly emphasises sales and margin growth, which it pursues through several avenues. One aspect is increasing membership of its Brilliance by Michael Hill loyalty programme, which provides a source of regular and profitable customers.

Another aspect is the ongoing evolution of its products, with the company noting the popularity of synthetic diamonds will likely increase moving forward. Further improvements to its artisanal factories in Australia are scheduled, which will help make its supply chain more robust.

Michael Hill is also expanding into new territories and offering a new range of services. One market, in particular, is Quebec, Canada where the company said it’s expanding its web presence. Some new services in the works also include bespoke design, financial services, and sustainability.

Michael Hill share price snapshot

The Michael Hill share price is down 21.4% year to date. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 7% over the same period.

The company’s market capitalisation is roughly $421 million including today’s price action.

The post Michael Hill share price surges 7% on record profit appeared first on The Motley Fool Australia.

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Motley Fool contributor Matthew Farley 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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