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This ASX defence stock blitzed the All Ordinaries Index (ASX: XAO) today, ranking as the fourth best-performing share on the list. Electro Optic Systems Holdings Ltd (ASX: EOS) relished in the bidding after releasing its full-year 2023 results.

Shares in the ASX defence company closed the day 17.5% higher at $1.88. Investors quickly warmed up to the latest figures, propelling shares beyond their $1.66 opening price.

Turnaround takes this ASX defence stock skyward

• Record revenue of $219.3 million, up 59% from from prior year
• Gross margin of 44% up from 34%
• Underlying EBITDA of $5.7 million, up from a $42.9 million loss
• Record operating cash flow of $113.1 million, up from $51.6 million of negative cash flow
• Net loss after tax narrowed to $34.1 million from $53.6 million

What else went on during FY23?

After a few harrowing years, progress is being made on righting the ship at Electro Optic Systems. The company is still booking losses, but orders and cash flow are heading in the right direction.

Between the two segments, defence and space, the former posted the largest increase in revenue. Specifically, defence revenue from continuing operations rose 49.4% to $155.4 million in FY23. Whereas space revenue climbed 31.9% to $63.9 million.

EOS landed several significant contracts throughout the year. In April 2023, the company secured two contracts to supply Ukraine with remote weapon systems valued at US$120 million. Later on, in May, EOS signed another deal valued at A$202 million to ‘modernise communications across the Royal Australian Navy fleet’.

The current geopolitical uncertainty was highlighted in today’s FY23 presentation. The conditions push defence spending higher, creating a ‘supportive market’ for Electro Optic Systems.

Additionally, the company is seeing a shift to cannon-based air defence as drones become more common in conflict. Two defence products targeting this segment were launched in 2023: the Counter-Drone Kinetic System and the Integrated Counter-Drone Laser Dazzler.

Lastly, bolstered cash flows were used to pay down debt during the year. Still, $50 million of debt remains (down from $70 million), amounting to $72.6 million with interest.

Looking ahead

No forecast was shared in the FY23 results, which tends to be typical in this industry. Nevertheless, an optimistic image was painted amid ongoing unrest across multiple regions, driving increased enquiries among NATO countries.

One of the presentation slides read, “Market conditions are expected to remain supportive for the foreseeable future”, which is vague but positive.

How has this ASX defence stock performed?

Clawing out of a deep hole, the EOS share price has been on a tear over the last 12 months. What was once a 54 cents per share stock is now $1.88, equating to an increase of 248%.

Few companies can attest to delivering that level of performance over the past year. Not even fellow ASX defence stock DroneShield Ltd (ASX: DRO) has undergone such a rally during this timeframe, despite posting its own record result today.

The post Why this ASX defence stock soared 16% on Wednesday appeared first on The Motley Fool Australia.

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More reading

• Why APM, DroneShield, EOS, and NextDC shares are charging higher

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 positions in and has recommended DroneShield and Electro Optic Systems. 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 post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 shares just scored significant broker upgrades. Here’s how
• Why APM, DroneShield, EOS, and NextDC shares are charging higher
• Why are ASX lithium shares like Liontown having such a bumper session today?
• Why is the Chalice Mining share price rocketing 20% today?
• Guess which ASX 200 stock hit a record-high on ‘strong’ half-year result

Motley Fool contributor Sebastian Bowen 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 Block, Light & Wonder, and PolyNovo. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool Australia has recommended Light & Wonder. 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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It seems to have become highly fashionable on the ASX to question the valuation of the Commonwealth Bank of Australia (ASX: CBA) share price of late.

CBA shares have enjoyed an extremely lucrative few months. It was only back in late October that the share price of the ASX 200’s largest bank stock was sitting around $96. But CBA has rebounded spectacularly ever since and has even spent 2024 so far hitting a series of new all-time record high share prices.

Today, CBA is sitting at $116.30 a share (at the time of writing), less than $2 away from its most recent all-time high of $118.24.

But this 20% rise since October has prompted many ASX experts to question the valuation that investors are now pricing Commonwealth Bank at. Earlier this month, my Fool colleague James went through ASX broker Goldman Sachs’ rather dim view of the bank.

ASX experts call out CBA share price as overvalued

As we discussed at the time, Goldman reiterated its sell rating on the CBA share price, giving it a 12-month price target of just $81.98. That implies CBA shareholders could be facing an approximate 30% haircut over the coming year.

Here’s some of what Goldman said to justify its bearishness:

…we do not think this justifies the 55% 12-month forward PPOP premium CBA is currently trading on versus peers (ex-dividend adjusted), compared to the 29% 15-year average… despite historically good performance on balancing investment and productivity, we stay Sell.

Goldman isn’t alone in this line of thinking either.

As reported by The Bull, Philippe Bui of Medallion Financial Group has also recently given the CBA share price a sell rating. And lo and behold, valuation concerns were central to this view as well.

Here’s what Bui had to say:

The CBA is the best of the big four banks, in our opinion. However, in the absence of strong earnings per share growth, it’s difficult to justify CBA’s premium compared to the other banks.

Statutory net profit after tax of $4.837 billion in the first half of fiscal year 2024 fell 8 per cent on the prior corresponding period. The net interest margin of 1.99 per cent was down 11 basis points.

In our view, it will be difficult to pay out increasing dividends if earnings don’t improve.

It is hard to ignore CBA’s valuation compared to even the other members of the big four. At current pricing, the CBA share price trades on a price-to-earnings (P/E) ratio of 20.33. In contrast, ANZ Group Holdings Ltd (ASX: ANZ) is sitting on a P/E of just 12.55.

This in effect means investors are paying 62% more for a dollar of CBA’s earnings than a dollar of ANZ’s.

That’s something all CBA shareholders might want to keep in mind.

The post Why the CBA share price premium is ‘difficult to justify’ appeared first on The Motley Fool Australia.

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More reading

• Up 20% in 4 months, where’s next for the CBA share price?
• Here’s the CBA dividend forecast through to 2026
• Why is the CBA share price sinking on Wednesday?
• High rates, falling profits: Why are ASX bank shares losing out this reporting season?
• You need to act fast if you want to receive the next CBA dividend

Motley Fool contributor Sebastian Bowen 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 Goldman Sachs Group. 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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If you want to strengthen your income portfolio in March with some new additions, then it could be looking at the ASX 200 dividend stocks listed below that brokers rate as buys.

Here’s what analysts are forecasting from them:

NIB Holdings Limited (ASX: NHF)

Analysts at Goldman Sachs think that this health insurance company could be an ASX 200 dividend stock to buy.

The broker likes NIB as it “offers defensive exposure to the private health insurance sector which is experiencing favourable operating trend.”

It also highlights its “preference for NHF in this space reflecting strong underlying top line growth through policyholder growth and premium rate increases, greater diversity of earnings outside of regulated resident health insurance and valuation appeal.”

Goldman expects this to underpin fully franked dividends per share of 31 cents in FY 2024 and 30 cents in FY 2025. Based on the current NIB share price of $7.35, this will mean 4.2% and 4.1%, respectively.

The broker currently has a buy rating and $8.10 price target on its shares.

Transurban Group (ASX: TCL)

Over at Citi, its analysts are bullish on Transurban and see it as an ASX 200 dividend stock to buy.

Transurban is the toll road operator behind roads including CityLink, Cros City Tunnel, AirportlinkM7, and the East Distributor.

Citi is positive on the company and believes it is well-positioned to pay a dividend ahead of guidance in FY 2024.

The broker recently stated its belief that “TCL’s FY24 DPS guidance of 62c is conservative.” This is because of “strong toll price growth, traffic growth on new road completions and a slower increase in debt costs.”

Citi is forecasting dividends per share of 63.6 cents in FY 2024 and then 65.1 cents in FY 2025. Based on the current Transurban share price of $13.43, this will mean yields of 4.7% and 4.8%, respectively.

The broker currently has a buy rating and $15.60 price target on its shares.

The post Buy NIB and this ASX 200 dividend stock now appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Why Nanosonics, NIB, Santos, and TPG shares are falling today
• NIB share price falls despite 19% profit growth in FY24 first-half result
• 3 ASX dividend shares to buy before it’s too late
• 5 things to watch on the ASX 200 on Monday

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended Goldman Sachs Group and Transurban Group. The Motley Fool Australia has positions in and has recommended NIB Holdings. 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 GQG Partners Inc (ASX: GQG) share price has gone up 30% in 2024 and it has risen more than 60% in the last four months. Despite that, the ASX All Ordinaries (ASX: XAO) stock is still projected to pay a large dividend yield.

This business is a fund manager that is based in the US but is expanding geographically in places like Australia and Canada. It tracks its funds under management (FUM) across four strategies: US shares, global shares, international shares and emerging markets.

What drives the payouts of this business?

GQG has committed to a dividend payout ratio of 90% of its distributable earnings to shareholders. That means investors are getting a positive payout, while also leaving a bit of money within the business to invest or improve the balance sheet.

The ASX All Ords stock deliberately doesn’t charge much (or any) performance fees in a number of its funds. Therefore, the growth of its FUM is a crucial driver of revenue, profit and dividends.

At 30 June 2023, it had FUM of US$104.1 billion. The FUM had grown to US$120.6 billion by 31 December 2023, thanks to investment performance and FUM inflows as investors give GQG more money to manage. In the 12 months to December 2023, it saw net inflows of US$9.9 billion.

In the FY23 result, the company saw an average FUM of US$101.9 billion, a year-over-year rise of 14.7%. This led to a rise of 18.5% in net revenue to US$517.6 million and an 18.7% increase in net profit after tax (NPAT). FY23 distributable earnings rose 17.4% to US$297.9 million and the dividend per share rose 17.3% to US 9.1 cents.

Can the GQG dividend keep growing?

Things have started well for the ASX All Ords stock in 2024 – as of 31 January 2024, the FUM had grown to US$127 billion, which included US$1.9 billion of FUM inflows for the month. Remember, the average FUM in 2023 was US$101.9 billion, so US$127 billion is more than 24% higher.

The projection on Commsec suggests the business could pay an annual dividend per share of 18.2 cents in FY24, 19.9 cents per share in FY25 and 21.8 cents per share in FY26.

If those payments become a reality (which isn’t certain), these are the potential dividend yields.

The 2024 payout could translate into a dividend yield of 8.25%.

GQG’s 2025 payout may mean a dividend yield of 9%.

The 2026 payout projection equates to a dividend yield of 9.9%.

Despite the huge increase in the GQG share price, it seems the future dividends could still be very appealing.

The post This ASX All Ords stock is predicted to pay a 9% dividend yield in 2025! appeared first on The Motley Fool Australia.

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More reading

• Up 21% in a month: Can GQG shares climb even higher?
• This ASX passive income all-star just increased its dividend by 17%
• Why Fletcher Building, GQG, Pilbara Minerals, and Tyro shares are climbing today
• Up 55% in a year, GQG share price charging higher again on surging revenue results
• 2 cheap and ‘attractive’ ASX shares to buy now that you’ve not thought of

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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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a number of broker notes this week.

Three ASX shares brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Accent Group Ltd (ASX: AX1)

According to a note out of Bell Potter, its analysts have retained their buy rating on this footwear retailer’s shares with a $2.50 price target. This follows the release of a half-year result in line with expectations. In addition, Bell Potter was encouraged by the company’s start to the second half. Outside this, the broker believes Accent has a very positive outlook thanks to its scale and vertical brand strategy. The Accent share price is trading at $2.03 today.

Coles Group Ltd (ASX: COL)

A note out of Citi reveals that its analysts have retained their buy rating on this supermarket giant’s shares with an improved price target of $19.00. The broker was pleased with the company’s performance during the first half and believes it has more levers to pull to improve profitability. So much so, it is forecasting earnings growth comfortably ahead of expectations in FY 2025. The Coles share price is fetching $16.68 this afternoon.

NIB Holdings Limited (ASX: NHF)

Analysts at Goldman Sachs have retained their buy rating on this private health insurer’s shares with a trimmed price target of $8.10. Goldman notes that on paper NIB reported a strong headline underlying operating profit result. However, the quality of the result was disappointing according to the broker. Nevertheless, it remains positive due to its defensive exposure to a private health insurance sector which is experiencing favourable operating trends. The NIB share price is trading at $7.37 on Wednesday.

The post Top brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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More reading

• Why the Coles share price could keep rising after the result
• Is this the best high-yield ASX dividend stock for you?
• Invest $10,000 in these buy-rated ASX dividend shares with 5%+ yields
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Coles Group and NIB Holdings. The Motley Fool Australia has recommended Accent Group. 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 Jane Goldsmith for Nine’s Late News on Monday night to unpack the latest business news, including the average Australian wage now over $100k, worries for inflation, Endeavour Group Ltd (ASX: EDV) sales slow, and two e-commerce retailers turn a profit corner. 

The post Average wage tops $100k, worries for inflation, e-commerce flies: Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• Brokers say these ASX dividend shares are buys
• 5 things to watch on the ASX 200 on Tuesday
• Endeavour share price drops on half-year profit weakness
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Scott Phillips has positions in Adairs, Adore Beauty Group, and Kogan.com. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs, Kogan.com, and Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool Australia has recommended Adore Beauty Group, Kogan.com, and Lovisa. 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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It has been another busy day of earnings releases on Wednesday.

Some results have gone down well with investors, others have not.

For example, listed below are two ASX 300 shares that are being sold off following the release of their respective releases.

Here’s what they reported:

Australian Clinical Labs Ltd (ASX: ACL)

The Australian Clinical share price is down 10% to $2.35. This morning, the pathology services company reported a 6.4% decline in revenue to $337.3 million and an 80.5% reduction in profit to $5 million.

This was driven by lower COVID-related earnings and a challenging macro environment. The good news is that management believes things will be better in the second half. It said:

1H FY24 characterised by continued challenging macro environment with reduced referrer availability, increase in GP private billing and hospital challenges. Government initiatives introduced in November 2023 expected to start having a positive impact on 2H

Kelsian Group Ltd (ASX: KLS)

The Kelsian share price is down 12% to $5.79. This follows the release of the travel and transport company’s half-year results.

Kelsian, formerly known as Sealink, reported a 44.9% increase in revenue to $982.7 million. But due to weaker margins, it only achieved a 20.4% lift in underlying net profit after tax and before amortisation (NPATA) to $43.1 million.

The ASX 300 share’s management notes that “inclement weather in the all-important month of December, as well as a softening in demand for domestic travel in December did impact the result.”

Nevertheless, it appears positive on its outlook due to its significant growth opportunities. It said:

The Company is well placed to continue to deliver growth underpinned by economies of scale, efficiencies, and global procurement opportunities. Over the longer term the list of growth opportunities is significant, with many markets around the world liberalising and welcoming operational experts to support their decarbonisation agendas.

The post 2 ASX 300 shares crashing up to 12% on earnings updates appeared first on The Motley Fool Australia.

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More reading

• Why Flight Centre, Fortescue, Kelsian, and Neuren shares are dropping today
• 2 ASX healthcare shares with ‘compelling’ valuations to buy
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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 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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Three S&P/ASX 200 Index (ASX: XJO) shares just scored significant broker upgrades.

The analysts’ bullish assessments for these companies, including share price gains of up to 13%, follow on the release of yesterday’s earnings results.

So, without further ado, here are the three stocks with some sizeable potential gains ahead.

(Broker data courtesy of The Australian.)

Why these ASX 200 shares could surge in 2024

The first ASX 200 share earning a broker upgrade is medical device developer Polynovo Ltd (ASX: PNV).

For its half-year results (1H FY 2024) Polynovo reported a 54.9% year on year increase in sales to $42.2 million. That represents a new half-year record for the healthcare stock.

Meanwhile, revenue soared 65.6% from 1H FY 2023 to $48.8 million. And net profit after tax (NPAT) came in at $2.7 million, up from a loss of $3.8 million.

The Polynovo share price closed down 1.7% yesterday. But investor sentiment has turned sharply bullish today, with Polynovo shares up 9.3% in afternoon trade at $2.17.

Wilsons sees further upside potential even after that big boost. The broker raised Polynovo to an overweight rating with a $2.44 price target. That represents a potential 12% gain from current levels.

Which brings us to the second ASX 200 share receiving a broker upgrade, plumbing parts company Reece Ltd (ASX: REH).

Reece also reported its half-year results yesterday.

Among the highlights was an 8% year on year increase in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), which came in at $526 million. The company’s adjusted net profit after tax (NPAT) was up 6% to $224 million.

And passive income investors were treated to a fully franked interim dividend of 8 cents per share, in line with last year.

The Reece share price gained a whopping 18.3% yesterday. With some likely profit-taking going on shares are down 4.0% today, trading for $27.37 apiece.

Citi believes that it’s undervalued. The broker raised Reece to a neutral rating with a $28.90 price target, 5.6% above current levels.

Australian oil and gas giant tipped to outperform

Rounding out the list of ASX 200 shares receiving broker upgrades following their earnings results is oil and gas giant Woodside Energy Group Ltd (ASX: WDS).

Woodside reported its full 2023 results yesterday.

With the prices it receives for oil and gas both coming down sharply from 2022, so did Woodside’s revenues. Operating revenue of US$13.99 billion declined 17% year on year.

Underlying NPAT of US$3.32 billion was down 37% from the prior year. This saw the final, fully franked dividend cut by 58% to 60 US cents per share.

Still, those are some strong profit and revenue figures, with Woodside also reporting free cash flow of US$560 million. And the ASX energy giant still trades on a fully franked yield of 7.2%.

Woodside shares gained 0.9% yesterday and are down 0.5% today, trading for $30.15 apiece.

And Morgan Stanley sees some sizeable upside potential for the ASX 200 share from here.

The broker upgraded Woodside shares to an overweight rating with a $34 price target. That’s almost 13% above the current share price.

The post 3 ASX 200 shares just scored significant broker upgrades. Here’s how appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here’s everything you need to know about the Woodside dividend
• 2 popular ASX 200 healthcare shares tanking on earnings updates
• Reece share price jumps 13% on stronger than expected half-year 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 PolyNovo. 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 ASX dividend stock Charter Hall Long WALE REIT (ASX: CLW) is a strong option for passive income because of the large distributions it sends to shareholders every year.

The real estate investment trust (REIT) owns a variety of properties including industrial and logistics, convenience retail (service stations), high-quality retail, retail, social infrastructure, agri-logistics, Bunnings properties and so on.

Why it’s a good option for passive income

First, it is paying a large distribution yield. It’s achieving this partly by paying all of its rental profit to investors each year.

According to Commsec, the business is predicted to pay a distribution per unit of 26 cents in FY24. That translates into a forward distribution yield of 7.1%.

When the REIT reported its FY24 first-half result it said that its portfolio weighted average lease expiry (WALE) was 10.8 years. The WALE provides income security for investors according to Charter Hall Long WALE REIT, helping the passive income.

It also said that 99% of its portfolio’s tenants are blue-chip, meaning they’re the government, ASX-listed, multinationals or national tenants.

It’s challenging to know what’s going to happen with its costs (mainly due to interest rates) in the medium term, but the ASX dividend stock’s rental income is seeing annual growth. Charter Hall Long WALE REIT said 52% of leases are linked to CPI, with a 5.4% weighted average increase of CPI-linked leases in FY24, while 48% of leases are fixed, with an average fixed increase of 3.1%.

$3,100 of annual passive income

Owning enough Charter Hall Long WALE REIT units can mean getting $3,100 of annual investment income.

If we have 11,923 units, it’s projected to pay $3,100 of annual passive income in FY24. The same number of units could pay $3,219 in FY25 because of the projected 27 cents payment per unit, according to Commsec .

At the current Charter Hall Long WALE REIT share price, that would be a cost of $43,519 thanks to the strong distribution yield.

If the rental income can grow faster than interest costs in the next couple of years, then the distribution could keep increasing from the ASX dividend stock.

At the moment, it’s one of my preferred long-term REIT ideas because of its long WALE, rental income growth and good yield.

The post Buy 11,923 shares of this super ASX dividend stock for $3,100 per year in passive income 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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