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The Challenger Limited (ASX: CGF) share price is down 10.53% this morning amid the release of the company’s results for the 2022 financial year.

Shares in the ASX-listed investment manager closed yesterday at $7.12 each and are currently trading for $6.37 a share.

Let’s check the results that seem to have investors concerned today.

Challenger share price dives on profit woes

• Normalised net profit before tax of $472 million, up 19% year on year
• Statutory net profit after tax (NPAT) of $254 million, down 57% from FY21
• Assets under management (AUM) of $99 billion, down 10% year on year
• Full-year dividend of 23.0 cents per share fully franked, up 15% from FY21
• Normalised pre-tax return on equity (ROE) of 11.9%, up 0.70% year on year

What else happened during the year?

Challenger’s before-tax profit came in towards the upper end of guidance for the year.

Meanwhile, the company said the 57% slide in its statutory NPAT was due to wider credit spreads and lower share markets “driving unrealised mark-to-market investment experience”.

The Challenger share price could be coming under some additional pressure from rising costs. While the company cited a modest 2% increase in expense management, that figure excluded the Bank, acquired in December 2020.

The Bank incurred a loss before interest and tax of $11 million. Challenger pointed to significant regulatory and integration expenses as driving the losses. It noted that market conditions have changed since the acquisition and that the Bank is now “unlikely to realise the expected benefits in the timeframe anticipated”. Challenger has commenced a strategic review of the business.

As at 30 June, Challenger remained strongly capitalised with a prescribed capital amount (PCA) ratio of 1.60 times.

The company also expanded its partnerships during the year, saying that a joint venture will be formed with global software provider SimCorp. As well, a definitive agreement with Apollo will also establish a joint venture.

What did management say?

Commenting on the results, Challenger CEO Nick Hamilton said:

Our Life business recorded book growth of 14%, driven by strong Life sales of $9.7 billion. Institutional sales were up 68% to $6.7 billion, reflecting our continued focus on expanding relationships with institutional partners. Retail sales increased by 11% to $2.4 billion.

The macro-economic environment presents both challenges and opportunities with rising interest rates supporting annuity sales and investment returns, however wider credit spreads and lower equity markets triggered unrealised market losses in the second half. Credit spreads have partially reversed in July…

We’ve also announced new strategic partnerships with SimCorp and Apollo, which will generate new and diverse sources of revenue.

What’s next?

Challenger offered normalised net profit before tax guidance of between $485 million and $535 million for FY23.

Hamilton said, “As we look into FY23, our business is in great shape. We remain strongly capitalised and well positioned to leverage and benefit from our unique competitive advantages, and deliver for our customers, our shareholders and our people.”

Challenger share price snapshot

With today’s intraday loss factored in, the Challenger share price is down 6% in 2022. That’s right in line with the year-to-date loss of 6% posted by the S&P/ASX 200 Index (ASX: XJO).

The post Challenger share price tumbles 10% on FY22 profit woes appeared first on The Motley Fool Australia.

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More reading

• Temple & Webster share price soars 21% on revenue lift
• Better ASX tech buy: Xero or Altium?
• 5 things to watch on the ASX 200 on Tuesday
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• 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Challenger 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 Woolworths Group Ltd (ASX: WOW) share price has risen by around 16% over the last two months. That compares to a return of approximately 7% for the S&P/ASX 200 Index (ASX: XJO). So, Woolworths has achieved more than double the returns of the index.

But, after a solid run over this relatively short period of time, could Woolworths shares still be an opportunity?

Acquisitions

In the last few months, the company has been busy making some deals.

One of the deals is the planned purchase of 80% of Mydeal.Com Au Ltd (ASX: MYD) for $1.05 per share. This represented a 62.8% premium to the closing price of MyDeal on the ASX of 65 cents on 19 May 2022.

Woolworths was attracted to this leading online marketplace business because of its marketplace capabilities, particularly in furniture, homewares and other bulky goods. It will “complement Big W’s existing general merchandise offering”.

At the time of the acquisition, MyDeal had 1,900 sellers with more than six million products.

In July, the company announced that it was buying Shopper Media Group for $150 million. This business was described as a leading Australian digital out-of-home media company, offering targeted shopping advertising through a national screen network of more than 2,000 screens in over 400 shopping centres.

Woolworths liked the idea of owning Shopper Media Group because of the ability to bring it together with Cartology, which is Woolworths’ retail media business. It wants Cartology to become the trusted media partner of choice for brands and retailers. This will allow it to provide clients with “more opportunities to reach their customers via seamless targeted advertising solutions.”

Trading update

In terms of a trading update, the latest investors have heard was the FY22 third quarter update. It said that group continuing operations sales were up 9.7% to $15.1 billion, with the Australian food division generating 5.4% growth to $11.4 billion.

A sizeable part of the increase was due to the Australian business to business (B2B) sales jumping 217% to $995 million, largely driven by PFD and Endeavour Group Ltd‘s (ASX: EDV) partnership revenue not being included in the prior year.

Woolworths revealed that trading momentum in the FY22 fourth quarter had continued in Australian food and Big W, with “strong” Easter seasonal trade.

Is the Woolworths share price a buy?

One of the latest ratings comes from Citi, which rates Woolworths as a buy, with a price target of $42.50. That suggests a possible rise of more than 10%. It thinks it can benefit from inflation.

At the opposite end of the opinion spectrum is Credit Suisse, with an underperform rating. The price target is $33.89, implying a possible drop of around 10%. Credit Sussie wasn’t a fan of the MyDeal acquisition.

The broker Macquarie is neutral on the business, with a price target of $36.40, implying a mid-single-digit drop. There are a few different factors for the broker to think about in the upcoming result, such as rising wages and food inflation. It could be tough to deliver growth in the first half of FY23 because the first half of FY22 included lockdowns.

The post Up 15% in 2 months, is the Woolworths share price worth taking a bite? appeared first on The Motley Fool Australia.

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More reading

• Woolworths share price slides following MyDeal ACCC nod
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• 3 reasons this broker says Woolworths shares are a strong buy

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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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.

What happened 

The crypto market went on a wild trajectory over the past 24 hours, shooting higher late in the day on Sunday only to crash again on Monday morning. At the end of the day, values are down almost across the board. 

Celsius Network (CRYPTO: CEL) was the wildest mover today, trading as high as $4.46 and as low as $2.70. That’s a gain of 65% from the low or a loss of 39% from the high, depending on what your reference point is. Ethereum (CRYPTO: ETH) didn’t swing quite as much but is down 5.7% from its high, and Solana (CRYPTO: SOL) is down 7.1% from today’s peak. 

So what 

The biggest news item of the day was a Celsius Network filing with a bankruptcy court that showed $6.6 billion in net liabilities compared with $3.8 billion of assets. There’s a $2.85 billion gap in funding, and on top of it there were 100,669 Bitcoin deposited by investors and only 37,926 Bitcoin remains. 

There’s been a short squeeze in Celsius Network tokens since the company filed for bankruptcy protection, but this was more concrete news today. A massive hole in the balance sheet won’t be filled without new capital, and that seems like a stretch. 

Reports over the past few days have indicated that Celsius Network is for sale, but in bankruptcy the courts and creditors hold all of the cards. It’s not clear who would want to buy the company or what value they would get after paying back some of customers’ frozen funds.

Ethereum and Solana are riding the Celsius wave today, it seems, with very little news out of either ecosystem. Ethereum continues to move slowly toward The Merge and investors have bid that cryptocurrency up sharply in anticipation. Solana’s network continues to be upgraded slowly, but activity has slowed like with most blockchains over the past few months. 

Now what 

The black cloud over crypto the past two months has been the insolvency of some of the biggest asset owners, like Three Arrows Capital and Celsius Network. They had immense leverage in the system, and that led to a collapse that still hasn’t fully played out yet. 

What we’ve learned today is more about the scale of the problem. Rumors have been circulating that Celsius Network indeed had a $2 billion to $3 billion hole in the balance sheet, and that appears to be the case after all. 

I’m not sure why markets surged after the Celsius report came out, but they’re trading lower today, and I think that’s natural. It’ll likely be months before creditors and investors find out what’s left to be divvied up, but it seems the entire market is taking a cautious approach until we learn more. 

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

The post Why Ethereum and Solana were trading wildly today appeared first on The Motley Fool Australia.

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More reading

• 3 reasons I’m buying this crypto hand over fist
• Why Ethereum, Bitcoin, and Dogecoin jumped this morning
• Why Bitcoin and Ethereum are rising today
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• Why Polkadot, Solana, and Cardano are 3 altcoins in focus today

Travis Hoium has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Ethereum and Solana. 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.

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

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The Temple & Webster Group Ltd (ASX: TPW) share price is rocketing today amid the company’s FY22 results.

The company’s share price is currently trading at $5.31, a 20.68% gain. For perspective, the  S&P/ASX 200 Index (ASX: XJO) is up 0.9% at the time of writing.

Let’s take a look at what Temple & Webster reported to the market.

Temple & Webster reports

Highlights of Temple & Webster’s results presentation include:

• Revenue lifted 31% on last year to $426.3 million
• EBITDA margin of 3.8%, towards top end of guidance
• EBITDA of $16.2 million
• Net profit before tax of $13.2 million, down 31% on FY21
• Cash balance of $101.1 million

The online furniture and homeware company’s revenue growth was driven by higher customer numbers and more revenue per active customer.

The EBITDA margin of 3.8% was towards the top end of the 2-4% guidance provided for FY22.

The FY22 EBITDA, although down on FY21, equated to a compound annual growth rate (CAGR) of 38% on a two-year basis.

Active customers jumped 21% to 940,000, while revenue per active customer lifted 6%.

The company’s trade and commercial division grew 39% compared to the previous financial year, while the home improvement category experienced 61% growth.

Management commentary

Commenting on the results, the chief executive officer Mark Coulter said:

Despite some significant domestic and global challenges, Temple & Webster has once again bucked the trend to deliver a great set of numbers.

Due to careful margin and cost base management, we were able to drive an EBITDA margin result at the top end of our 2-4% guidance, even in these challenging retail conditions, and after our investment into The Build.

We believe our flexible business model, our proposition around a great quality range at affordable prices, and our commitment to customer satisfaction and happiness will resonate even more strongly with customers during these tougher times

What’s ahead

Temple & Webster is forecasting an EBITDA margin of between 3-5% in FY23. This is an upgrade on the FY22 guidance.

The company has fast-tracked some margin optimisation and cost management programs due to FY23 cyclical headwinds.

Temple & Webster is predicting a return to double-digit growth in FY23.

Temple and Webster’s new headquarters in the inner-west of Sydney will be ready in the first half of FY23.

The company stressed “we remain committed to our profitable growth strategy”, adding:

We’re confident we have the people, platforms, brand and business model to achieve our goal of becoming Australia’s largest retailer of furniture and homewares.

Temple & Webster share price snapshot

The Temple & Webster share price has fallen 56% in the past year, while it has lost nearly 50% year to date.

However, in the past month, Temple & Webster shares have jumped 57%.

For perspective, the ASX 200 index has lost nearly 6% in the past year.

The post Temple & Webster share price soars 21% on revenue lift appeared first on The Motley Fool Australia.

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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 positions in and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. 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 Life360 Inc (ASX: 360) share price is bouncing around this morning following the release of the company’s first-half results today.

Shares in the family-focused safety platform provider slumped to $5 soon after the open — a fall of 9% from Monday’s closing price. However, at the time of writing, they have rebounded and are now up 3.27% at $5.68.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.52%.

Life360 share price drops amid higher costs

• Total revenue up 108% to $99.8 million year on year (YoY)
• Annualised monthly revenue up 65% YoY to $174.4 million
• Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $32.3 million, worsening from a $4.8 million loss YoY
• Adjusted net loss of $30.2 million, worsening from a $5 million loss YoY
• Monthly active users up 29% YoY to 42 million
• Paying Circles up 41% to 1.42 million

The above results are the first half-year results to include the company’s Tile acquisition.

What else happened in the half?

It was a period of heavy investment for Life360. While observing softness in consumer electronics, the company achieved a standout result for subscriptions.

According to the report, the second quarter represented the second highest ever quarterly growth for net subscribers. Positively, the company managed to add 111,000 net subscribers in the latest quarter. Consequently, subscription revenue in the first half improved drastically, rising 90% from the prior corresponding period to $36 million.

However, the bottom line did not improve year on year, as expenses enlarged by 132%. This was due in part to costs associated with integrating the Tile and Jiobit acquisitions made last year.

Although, the company believes future increases in average revenue per Paying Circle will eventuate thanks to bundling with these physical products.

What did management say?

Providing further insights into the result, Life360 CEO Chris Hulls said:

We are seeing resilience from our subscribers and users in the face of more challenging global macroeconomic circumstances, with our usual ‘back-to-school’ seasonal uplift underway. While we continue to monitor global macroeconomic conditions, in fact we continue to see strong growth in our user and subscriber performance, and maintain confidence in a very promising outlook.

Hulls added:

With the increasing value of our membership offering, we are currently market testing higher price points. Although early, the results demonstrate the value of our services and significant pricing power. We are exploring price increases as part of our overall strategy of expanding membership with hardware devices.

What’s next?

Fortunately for shareholders, management expects solid results for the half ahead. Importantly, the company is expected to have a considerably reduced cash burn, flowing through to a smaller adjusted EBITDA loss.

Furthermore, Life360 subscription revenue is slated to deliver above 55% growth for the calendar year. As a result, management is guiding for consolidated revenue between US$245 million and US$260 million.

Life360 share price snapshot

The Life360 share price has experienced a treacherous 2022. Since the beginning of the year, shares in the company have fallen 40% in value. This is inclusive of the phenomenal 140% rebound since 23 June.

It’s no secret that ASX tech shares have been battered and bruised amid a shift away from loss-making companies. Though, the Life360 share price has even substantially underperformed the S&P/ASX All Technology Index (ASX: XTX) this year, which is down 23% year-to-date.

The post Life360 share price rises as revenue more than doubles appeared first on The Motley Fool Australia.

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More reading

• 2 exciting ASX tech shares to buy now according to analysts
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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 positions in and has recommended Life360, Inc. 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.

What happened

The sentiment shift we’ve seen play out among major cryptocurrencies appears to be continuing this week. Today, Bitcoin (CRYPTO: BTC), Cardano (CRYPTO: ADA), and Polkadot (CRYPTO: DOT) each surged higher to start the week, building on gains these tokens have seen since bottoming in mid-June. As of 2 p.m. ET, Bitcoin, Cardano, and Polkadot appreciated 3.5%, 4.9%, and 6.8%, respectively, over the past 24 hours.

Bitcoin actually rallied more aggressively this morning, breaching the $25,000 mark for the first time since June. Broader market sentiment, which has shifted in a bullish direction as investors focus on catalysts such as Ethereum‘s upcoming The Merge over headwinds related to insolvencies and structural issues in this space, appears to be the key factor Bitcoin investors care about right now.

Cardano has seen continued interest, as this network approaches its own key update: its Vasil hard fork. Founder Charles Hoskinson has reiterated that this upgrade is unlikely to be delayed any further, noting no key issues with testing thus far. 

That said, Polkadot’s rise today is rather intriguing to consider, as a Polkadot-backed stablecoin, acala dollar (aUSD), was recently hacked, losing 99% of its value. As with many ecosystem-driven crypto projects, it appears investors are paying less attention to these headlines, choosing to focus on Polkadot’s ties to Ethereum in this market rally.

So what

It’s truly incredible to see the degree to which market sentiment has shifted in the crypto sector. Tokens such as Polkadot that encounter a hack, or tokens like Cardano that delay their upgrades, aren’t being put in the penalty box by investors. It’s risk-on again, with speculators, traders, and investors alike all jumping aboard. 

The multiweek nature of this crypto market rally has some investors thinking the bottom may be in. Whether this buying activity can hold up in the face of upcoming rate hikes and the potential for more macro headwinds remains unclear. However, this is the most exuberant the market has appeared since last year, to be sure.

Now what

We’re in an interesting period of time, in which most investors have become self-proclaimed economists. As the Federal Reserve has accelerated its rate hiking schedule, various risky asset classes (such as crypto) have been hit hard during the first half of this year. However, given a lag between the Fed’s last rate decision (July 27) and its next decision (Sept. 21), there’s a time frame in which investors can ignore the rate hike talk and buy the dip.

That said, through the end of the year, more headwinds could materialize if the Fed doesn’t stop hiking rates, like most in the market expect. This could be a Goldilocks period, which provides a significant bear market rally.

Alternatively, this rally could continue if expectations are proven correct. And should the major upgrades in store for Ethereum and Cardano prove fruitful, perhaps this rally is only the beginning. Time will tell.

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

The post Big buying activity boosting Bitcoin, Cardano, and Polkadot today appeared first on The Motley Fool Australia.

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More reading

• Will the next era of computing break the Bitcoin price or boost it?
• Here’s why the Dogecoin price has had such a great week
• Why Ethereum, Bitcoin, and Dogecoin jumped this morning
• Why Bitcoin and Ethereum are rising today
• Why this Bitcoin maximalist says all other ‘crypto is a scam’

Chris MacDonald has positions in Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. 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.

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

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The James Hardie Industries plc (ASX: JHX) share price is sliding in early trade on Tuesday after the construction materials provider downgraded its 2023 forecast. At the time of writing, James Hardie is trading down 3.46% at $35.40.

What did the company report?

• Global net sales up 19% to US$1 billion for the quarter ending 30 June
• Adjusted net income up 15% to US$154.3 million for the quarter
• North America fibre cement net sales up 28% to hit US$740.1 million
• Global adjusted earnings before interest and tax up 15% to US$208.4 million

What else happened in FY22?

The big development for James Hardie in the past year is the departure of its chief executive Jack Truong in January.

He was sacked immediately after employees complained about his behaviour towards subordinates. The company revealed it “undertook extensive due diligence” including retaining external counsel and a third-party consultant.

However, the remedial measures apparently did not have the desired effect on Truong’s behaviour.

“The board ultimately concluded that Truong’s conduct, while not discriminatory, extensively and materially breached the James Hardie code of conduct,” reported The Motley Fool at the time.

What did management say?

James Hardie interim chief Harold Wiens said “The James Hardie team has continued to deliver strong execution of our global strategy”: 

The global team’s success in delivering high value products is the result of (1) enabling our customers to make more money by selling more James Hardie products and, (2) marketing directly to the homeowners to create demand of our high value products through our customers.

What’s next?

The revised outlook for financial year 2023 is the major concern in James Hardie’s announcement on Tuesday.

The company previously forecast an adjusted net income range between US$740 million and US$820 million. That was downgraded to US$730 and US$780 million.

James Hardie chief financial officer Jason Miele gave the following reasons:

Our primary reasons for adjusting guidance downward are: continued inflationary pressures globally, our lowered expectations regarding Europe segment EBIT, the impact of a strengthening US dollar on the translation of our APAC and Europe earnings and housing market uncertainty.

James Hardie share price snapshot

The James Hardie share price hit an all-time peak late last year. However, this year so far it has lost 35.4%. 

In early trade on Tuesday, James Hardie had plunged 3.6%.

The stock currently pays out a dividend yield of 2.64%.

The post James Hardie share price slides following guidance downgrade appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo 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 is on the move on Tuesday morning.

At the time of writing, the mining giant’s shares are up over 5% to $41.05.

Why is the BHP share price charging higher?

The BHP share price is rising on Tuesday after investors responded positively to the Big Australian’s full year results.

For the 12 months ended 30 June, BHP reported a 16% increase in underlying EBITDA from continuing operations to a record US$40,634 million.

A key driver of this was the company’s coal operations, which delivered stellar earnings growth thanks to sky high prices of the black gold. This helped offset softer iron ore earnings due to a pullback in prices of the steel making ingredient.

This ultimately allowed the BHP board to declare a fully franked final dividend of US$1.75 per share, which took its full year dividend to US$3.25 per share.

What was the reaction from brokers?

Analysts at Goldman Sachs have been looking over the result and given their verdict. They were pleased with its earnings and dividend, which both came in ahead of their expectations.

The broker commented:

Better than expected result with underlying EBITDA/NPAT of US$40.6bn/US$21.3bn, 2%/5% vs. our US$39.9bn/US$20.3bn estimates (and vs. Visible Alpha consensus of US$40.6bn/US$19.4bn). Headline NPAT of US$30.9bn included a US$1.1bn increase in Samarco liability provision and exceptional gain of US$7.1bn on the petroleum demerger. BHP reported an EBITDA margin of 65% and record ROCE of 48.7% for the year.

Capital management: final dividend of US175cps (74% payout on continuing operations, above minimum 50% target), above our US140cps forecast (65% payout ex Petroleum) and VA consensus of US170cps.

Where next for BHP’s shares?

Goldman Sachs currently has a buy rating and $39.70 price target on its shares. This means the BHP share price is now trading ahead of this target following today’s gain.

Though, it is worth remembering that this rating and price target could change once its analysts have updated their financial model. Stay tuned for that later this week.

The post BHP share price charges 5% higher on ‘better than expected result’ appeared first on The Motley Fool Australia.

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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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The Goodman Group (ASX: GMG) share price is falling on Tuesday following the release of the company’s full year results.

In morning trade, the integrated commercial property company’s shares are down over 3% to $19.95.

Goodman share price falls despite guidance beat

• Revenue up 35.6% year over year to $5,156.4 million
• Operating profit up 25.3% to $1,528 million
• Operating earnings per share up 24% to 81.32 cents
• Full year distribution flat at 30 cents per share
• Total assets under management (AUM) up 26% to $73 billion
• Development work in progress (WIP) up 28% to $13.6 billion

What happened in FY 2022?

For the 12 months ended 30 June, Goodman reported a 25.3% jump in operating profit to $1,528 million and a 24% increase in operating earnings per share to 81.32 cents. The latter was ahead of the company’s upgraded guidance of 23% growth.

Management advised that this reflects the strong demand for industrial space in its markets. It notes that its customers’ need for more productivity and sustainability from their supply chains continues to drive demand. This underpinned a portfolio occupancy rate of 98.7% and like-for-like net property income growth of 3.9%.

It also allowed the company to pay a 15 cents per share final distribution, which brought its full year distribution to 30 cents. This was flat year over year.

Management commentary

Goodman’s chief executive officer, Greg Goodman, was pleased with the 12 months. He said:

Goodman Group delivered a strong result for FY22, reflecting the strong demand for industrial space in our markets. Our customers’ need for more productivity and sustainability from their supply chains continues to drive demand. By focusing our portfolio and $13.6 billion development workbook on key infill locations, we have had seen accelerating market rental growth, significant valuation uplift and subsequent outperformance of our Partnerships.

Assets under management have grown 26% to $73 billion, with an average total return of 21.4%6 for our Partnerships. Capital management activity has continued across the Group and Partnerships, where we raised $1.8 billion in third party equity and completed $8.5 billion of debt refinancings over the year. As a result, the Group’s balance sheet remains well positioned with low gearing at 8.5% and $2.8 billion of available liquidity and $18.1 billion available across the Partnerships.

Outlook

The company’s outlook appears to be what is weighing on the Goodman share price today.

Goodman is guiding to operating earnings per share of 90.3 cents in FY 2023, which represents an 11% increase on FY 2022’s earnings.

As a comparison, the team at Citi has been forecasting operating earnings per share of 97 cents in FY 2023. And while it is worth remembering that Goodman is traditionally conservative with its initial guidance, some investors appear to believe it could be too much of a stretch to reach Citi’s estimate.

In addition, despite Goodman’s earnings per share growth guidance, the company is expecting its distribution to remain flat again at 30 cents per share. This is to help fund the company’s significant development workbook and is in line.

Greg Goodman commented:

Demand is currently exceeding supply in our markets, supporting our development-led growth strategy and producing well-located assets for the Group and our Partnerships. In addition to strategic site acquisitions, the opportunities for regenerating existing assets support our future development workbook by providing value add opportunities, while reducing our environmental impact. Our production rate, depth of customer demand and strong margins are supporting the outlook for development earnings into FY23.

We have made a strong start to FY23 with a significant development workbook underway, continued underlying structural demand from customers, and a robust capital position across the Group and Partnerships. We believe the Group is positioned to continue to deliver growth notwithstanding risks associated with current market volatility and we expect FY23 operating EPS growth to be 11%.

The Goodman share price is now down 25% in 2022.

The post Goodman share price drops despite beating FY22 earnings guidance appeared first on The Motley Fool Australia.

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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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As fears of inflation and rising interest rates rattle the ASX, tech shares have been among the hardest hit.

The S&P/ASX All Technology Index (ASX: XTX) has tumbled nearly 25% this year as investors lose their appetite for high-risk businesses and turn their backs on lofty valuations.

The sell-off has been brutal and there could be more pain ahead. But for long-term investors, this pullback could be an opportunity to pick up quality names at a discount.

Two high-quality ASX tech shares that are down more than 30% this year are Xero Limited (ASX: XRO) and Altium Limited (ASX: ALU).

So which of these two ASX tech darlings could be a better buy?

The case to zero in on Xero shares

Gone are the days when accounting software was on discs that you’d have to install locally on your computer. And for small business owners, loading all of your data onto a USB to send to your accountant is a thing of the past.

Enter Xero, a ‘beautiful’ cloud-first accounting software platform you can access anytime, anywhere and from any device. 

After dominating the local Australian and New Zealand markets, Xero set its sights abroad. It now has a strong foothold in the United Kingdom and North America, where cloud adoption still has a lengthy runway. 

Being mission-critical to a small business’ operations, Xero’s software is incredibly sticky. In other words, it’s so embedded in its customers’ lives that it’s hard to give up. 

Not only does this lead to high rates of customer retention but it also gives Xero lucrative pricing power. Together with the addition of new features and add-ons, this has helped Xero increase its average revenue per user (ARPU) over time.

The beauty of Xero’s economics can be seen through the relationship between two metrics: customer acquisition costs (CAC) and lifetime value (LTV). After all, the basic idea for any sustainable business is that it costs less to acquire a new customer than what that customer pays over their expected lifetime.

In FY22, Xero reported an LTV-to-CAC ratio of 6.9. This means Xero estimates it gets $6.90 back for every $1 it spends to get a customer paying for its products. So while many investors are quick to point out Xero’s hefty marketing spend, I think it makes sense to invest in these channels at such attractive rates of return.

The case to add Altium to your portfolio

Altium provides software involved in the design of printed circuit boards (PCBs), which sit inside electronic devices.

As Altium’s investor presentations make sure to highlight, the company is a market leader with a wide range of applications and a who’s who of high-profile customers.

Since PCBs are used as the base in most electronics, Altium is exposed to the growth of a number of different industries, including automotive, aerospace, consumer electronics, and life sciences.

Altium is also a key player in the rise of connected devices, or the ‘internet of things’ thematic.

As I’ve written about previously, Altium ticks many boxes of a high-quality growth share. It’s a capital-light business that scales extremely well; it exhibits high switching costs which leads to sticky revenue; and it boasts a cashed-up, debt-free balance sheet.

Management has also shown tremendous execution to date and now has its sights set on an ambitious target of 100,000 Altium Designer subscribers and US$500 million revenue by FY26. For context, Altium reported 56,000 subscribers in the most recent half and booked US$191 million of revenue in FY21.

While acquisitions will likely play a part, the key to achieving these targets will be the success of the company’s new cloud platform, Altium 365. Taking the electronics design process into the cloud and building an ecosystem around it could be a game-changer for Altium. And importantly, it has the first-mover advantage. 

Which ASX tech share comes out on top?

There’s plenty to like about both of these ASX tech shares. 

Both have scalable cost bases, capital-light business models, sticky revenues, stiff industry tailwinds at their backs, strong balance sheets, and proven management teams.

So it’s no surprise that Xero and Altium are among the best performers in the S&P/ASX 200 Index (ASX: XJO) over the last 10 years.

While I own shares in both companies, I’m especially attracted to Xero’s delicious unit economics, the simplicity of the business, and how it’s evolving to take greater share of customer wallets.

Although Altium is a proven performer, COVID threw the business off course and in my eyes, it’s emerged as a riskier business. I’m keen to see how Altium has been faring in a post-pandemic world when it releases its FY22 results next week. 

The post Better ASX tech buy: Xero or Altium? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cathryn Goh has positions in Altium and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium and Xero. The Motley Fool Australia has positions in and has recommended 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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